The 10th season of the Memphis Grizzlies begins in the fall of 2010 which is under two years from now. What is significant about this fact? Well, I have attached the complete Memphis Arena Use and Operating Agreement between Memphis and Shelby County and Hoops, L.P.
The Mayor told the citizens of Memphis and Shelby County that he had to sign the agreement and that it was a good deal for Memphis because the Grizzlies (Hoops L.P.) had agreed to pay all operating expenses as expressed in the section 7(b) (page 19 of 53) of the operating agreement.
This section says: (b) Operating Expenses. In addition to the rent (rent consists of $1.15 per ticket, no ticket sales, no rent) required to be paid by HOOPS, HOOPS shall be responsible during the entire Term for all costs and expenses of every kind and nature related to the use, occupancy, possession and operation of the Arena Complex, including without limitation all operating loses. In addition, HOOPS shall be obligated to reimburse CITY/COUNTY in the amount of any deductible related to insurance coverage maintained by CITY/COUNTY in accordance with Section 9(a)(i) hereof.
However the hooker here is the next section, Section 8, Arena Repairs and Maintenance (page 19 of 53) Section (a) states that during the term of the agreement, the City and County will be responsible for and, at its cost shall make all Capital Repairs as shown in Exhibit B (pages 48 and 49 of 53). In other words, the big ticket items are to be paid by the tax payers, not HOOPS. HOOPS is responsible for (1) making all minor repairs, (2) undertake normal and routine maintenance, (3) provide adequately trained janitorial, maintenance and support staff and keep the Arena in a safe, uncluttered, clean, sanitary and sightly condition and (4) provide security for the Arena Complex 24 hours a day, 365 days a year. In addition the City and County have to pay for all fire insurance policies and other perils.
And for this, we gave up the right to have events in the unpaid for Pyramid and the Coliseum. [See section 21, 29 and 30(b), pages 34 of 53, 37 of 53 and 38 of 53]. Also HOOPS has a way to get out of the agreement if Memphians do not buy enough seats under Section 31(page 40 of 53), EARLY TERMINATION RELATING TO SHORTFALLS.
This terrible, stupid agreement was signed by Mayor Herenton and Mayor Rout on June 29, 2001. Mr. Heisley has stripped the investment of the well meaning local Memphis investors of their equity. No one ever accused Mr. Heisley of being dumb like our two Mayors.