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Agreements indicate multiple ways for Fritzel entities to profit from Rock Chalk Park project

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An entity controlled by Thomas Fritzel will be the exclusive provider of all concessions on the Kansas University portions of the proposed Rock Chalk Park project, according to documents released today.

And that's not the only way Fritzel or his related entities could turn a profit from the project that has been billed largely as a public sports village.

I’ve quickly read through four separate agreements involving Fritzel’s Bliss Sports, Kansas University Endowment’s RCP LLC and Kansas Athletics. The documents are complicated, and I’m not promising I’ve caught every detail. I’ve put a call into Fritzel for more explanation, but haven’t yet heard back from him. But here’s what I’ve gleaned from the documents.

• A signed operating agreement between KU Athletics and Bliss Sports states Bliss “shall have the exclusive right to control and manage concessions associated with any use of the stadiums, including athletics-sponsored events, developer-sponsored events and third-party sponsored events.”

In other words any event held on the KU portion of Rock Chalk Park — this agreement doesn’t cover the city’s recreation center — will have its concession needs served by Bliss Sports.

But the agreement goes on to say that “any net revenues” generated from concession sales will be deposited into a special escrow-like account called a “maintenance fund.” That fund can be used by KU Athletics to make repairs at Rock Chalk Park over the years.

That sounds like a pretty good deal for the university, and it may well be. But what is not clear from the agreements is what, if any, controls will be placed on how Bliss runs the concessions.

For example, would Fritzel be allowed to create another entity — let’s call it Fritzel Foods — that would serve as the supplier for the Rock Chalk Park concessions business? If so, the hypothetical Fritzel Foods could purchase the supplies needed for the concessions business, turn around and sell the supplies to the concessions business for a profit, and seemingly none of those profits would have to be deposited into the maintenance fund.

I’m not saying that’s the intention, but I am asking whether there is anything that prevents it.

The details related to the concessions business were surprising because Fritzel had not made any such details clear when he gave an interview to the Journal-World on Jan. 18.

“It will be run just like Allen Fieldhouse, 100 percent like Allen Fieldhouse,” Fritzel said when describing whether his entities would be in a position to make any money off the Rock Chalk Park. “The important thing is Kansas Athletics controls everything.”

The agreements released by Fritzel today were signed Feb. 12. The documents indicated they replaced a previous set of agreements signed on Oct. 12. What those agreements called for is not known.

• Bliss, in addition to KU Athletics, will have the right to charge “reasonable parking fees” for any event on the KU portion of the project. Both Bliss and KU Athletics must agree to the parking rates, but the agreement states: “It is the intent of the parties that as a general rule, at a minimum, parking fees will be charged for conference-wide collegiate athletic events; statewide, regional, national and world-wide sporting events; and third-party sponsored events.”

City Manager David Corliss told me this afternoon that the city will want to create a separate agreement to make it clear that the City Commission would have to approve any parking fees on a per-event basis. It has been proposed that the city would contribute money to help build the parking lots that would serve both the city and KU portions of the project. Corliss said that means the city will want to be involved in setting parking policy for the development.

Like the concession revenue, the parking money would go into the maintenance fund. Like the concessions revenue, the questions of how Bliss would be allowed to operate the parking system remain.

• Bliss would have the authority to use any of the stadiums and other KU-related facilities rent-free. KU Athletics would have limited ability to deny Bliss use of the facilities. Bliss could host private athletic events at the park without city approval. Any non-athletic events hosted at the park would require a special use permit from the city.

• As previously reported, KU Athletics will pay $1.3 million a year for 30 years to Bliss Sports to cover Bliss’ costs to finance the project. Also as previously reported, Bliss will maintain ownership of the facilities for 50 years. What has not been previously disclosed is that the lease also calls for KU to pay lease payments in years 31 through 50 as well. Fritzel made no mention of that provision when interviewed by the Journal-World in January.

The rate of the lease for years 31-50 will be the “fair market rental value” of the property as determined by Bliss and agreed to by Kansas Athletics.

City commissioners tonight are scheduled to take their biggest vote yet on the recreation center project. Commissioners are being asked to approve a development agreement that spells out how the city would help pay for infrastructure at Rock Chalk Park, rebate approximately $1 million in building permit and other city fees the project normally would be required to pay, and provide a 10-year property tax abatement for the project.

Corliss said his recommendation will continue to be for commissioners to proceed on the project. “I’m not seeing anything in these agreements that is still not a good deal for the University of Kansas and the community,” Corliss said.

Commissioners meet at 6:35 tonight at City Hall, Sixth and Massachusetts streets.

The city now has posted the full agreements. They can be found here.

Comments

Sclair 1 year, 1 month ago

Absolutely - this is a done deal. Nothing the citizenry can do. Agree that when it's enevitable, just lie back and enoy it.

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likeitis 1 year, 1 month ago

Citizens of Lawrence...prepare to bend over as you reach down to pick up the tab... ...and experience true Bliss.

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Richard Heckler 1 year, 1 month ago

Here's another scenario that might come back to bite taxpayers in the butt. This one gets built.

There is an equity issue no matter what and this new giant facility will not make that go away.

That still leaves North Lawrence and Southeast Lawrence without a rec center. Both have had a major influx of population and still growing. SE Lawrence does have Prairie Park Nature Center however athletic events cannot be scheduled.

There is an equity issue no matter what and this new giant facility will not make that go away.

WE taxpayers know this field house scenario will cost we taxpayers more than $31 million after all infrastructure is installed etc etc etc. Traffic Lights/water lines etc etc get expensive.

Considering the total cost will be more than 31 million no matter how the picture is painted why not build a neighborhood rec center in NW Lawrence with 3 gyms, North Lawrence with two gyms, and Southeast Lawrence with 2 gyms ? This is going to come up. Spend an estimated 11 million on each each facility.

Schedule local athletic events according to where most team members reside.

Jumping in a car to drive across town is not practical thinking. Not any longer. 29 cents a gallon polluting gasoline went bye bye bye some time ago. A ton of people in Lawrence do not bring home $60,000 or more in wages such that a lot of the loudest promoters do and some are on a tax dollar payroll.

In fact it seems this 1994 sales tax money was to provide "neighborhood" rec centers. SE Lawrence is going to want a swimming pool one day.

2

oneeye_wilbur 1 year, 1 month ago

Oh, Corliss claims something about the city being involved in the parking. Mr. Corliss and commission cannot run sound parking business downtown, Is David Corliss really serious?

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oneeye_wilbur 1 year, 1 month ago

I do not care what KUEA or the athletic dept wants to do with Fritzel , or to Fritzel but the City rec center should have no connection. NONE.

The City of Lawrence should in NO uncertain terms buy land from The Endowment Association.

Dale Seuferling can find another sucker. After the way KU disposed of three lots on Indiana St where the new apts have built by Fritzel, I would not trust any decisions being made by representatives at KUEA , KU, or Zenger's dept.

Who is Bliss? Come on Chad!

We cannot depend on the city manager and commission either to make sound business decisions. They have not thus far.

I am concerned also about those running and conflict. Chestnut's wife writes for the Journal, Worl works for the Chamber and after watching Chestnut and others on the city commission and planning commission strip away zoning and usage from an entire neighborhood, Oread, they have no scruples.

I see Bellome signs with his. Not good!

More on the others later.

Even Channel 5 news is not reporting what we read..

What is the urgency?

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Keith Richards 1 year, 1 month ago

Let's not forget Fritzel's $17 million property tax break over 30 years on the project. No income tax in KS because LLC's are exempt. He is going to get filthy rich off of us taxpayers.

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nekansan 1 year, 1 month ago

So KU builds parking and road infrastructure, the City pays for a big chunk of it, and then they capture revenue by charging for parking on said infrastructure and do with it as they please? Sounds like a great deal if you are KU, not so much for me a city taxpayer!

1

Hudson Luce 1 year, 1 month ago

I'd have to wonder, the way in which this thing is being handled, whether any of the city commissioners have a conflict of interest on this project - they might want to recuse themselves on the vote just in case this winds up in court.

It might be a better idea to table this until after the new commission is sworn in.

5

jack22 1 year, 1 month ago

I can see it now, we'll drive out to the recreation center on a busy weekend and there will be a guy at the gate asking for $10 to park our car. We'll explain that we're there to use the gym and aren't interested in the sporting event they're hosting and they'll say, "sorry the gym is closed" or "there's no parking available for the gym, please come back some other time." I guess that's the problem when you're building a huge facility with inadequate parking that's supposed to serve both the public and a private institution alike. Instead of both getting exactly what we want we'll each have to share something that should have been built separate from each other in the first place.

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Richard Heckler 1 year, 1 month ago

Too many issues keep surfacing on this matter to be approved any time soon IF ever.

Pull it from the agenda...

6

Armstrong 1 year, 1 month ago

Multiple revenue streams covering several years. In the real world that is known as a sound business plan.

2

pizzapete 1 year, 1 month ago

I guess it isn't enough that we're paying for all the infrastructure to make his land usable or that we're paying him twenty-five million to put up a building that will make his land more valuable to rent or sell for other commercial uses. It's not enough that we're allowing him to buy building materials tax free, setting aside a special tax district for his profit, and giving him a ten year tax abatement to boot. To squeeze even more money out of us Fritzel is going to set up his own little tourist trap as well. It doesn't matter if you live here or are from out of town, if you want to go to a KU event and need to park, eat, drink, etc., you'll have to pay Fritzel extra for that, too.

15

COjayrocks 1 year, 1 month ago

AS INDICATED ABOVE, these agreements have to do with Bliss and KU Endowment's relationship not the relationship between the city and Bliss, or the citizens and Bliss for that matter. Fritzel made a VOLUNTARY DONATION to the KU Athletics Department and everyone is trying to crucify him for what he could hypothetically make off of concessions, he has a right to make money off of his generous offer. Too many people out there on a witch hunt.

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Phil Minkin 1 year, 1 month ago

After being burned by Fritzel at the Oread, Varsity House, on fake grass issues why does the city continue to deal with this tax evader?

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Larry Sturm 1 year, 1 month ago

I think Fritzel should pay all of his taxes on other projects before a penny is spent on this project.

11

hedshrinker 1 year, 1 month ago

How can the city get in bed with this, which seems totally designed to benefit the developer?I just have to say that I am of course pre-inclined to oppose anything which lines wealthy developers' pockets, along with KU Endowment and KU Athletics. Where is the benefit to the City's regular citizens in this when the City would be at the bottom of the priority list for use of the facilites even , much less considering the cost of land, building and maintenance. Plus it's out on the western fringe, ie not accessible to many regular City folks. No wonder Fritzel neglected to mention the totality of these agreements and/"modified" them in talking with the media, etc. I'm sorry, this totally reeks, unless I'm missing something.....I'd be in a state of Bliss if I was negotiating this sweet deal, too.

9

msezdsit 1 year, 1 month ago

fritzel is just being a good samaritan, honest, he's not doing it for the "multiple ways he could profit.

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Number_1_Grandma 1 year, 1 month ago

Just say 'NO' commissioners!

The more we know the more it stinks. I'm sure we don't know all the facts yet either.

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irvan moore 1 year, 1 month ago

if mr. corliss is not seeing anything in these agreements that that is not a good deal for the city the commissioners might want to hire a city manager with better eyesight

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El_Mysterioso 1 year, 1 month ago

Corliss said his recommendation will continue to be for commissioners to proceed on the project. “I’m not seeing anything in these agreements that is still not a good deal for the University of Kansas and the community,” Corliss said.

Corliss should be fired!

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