Amway Lands Food Concession
The extension adds five more years to the existing contract, which now runs until April 15, 2010. It also gives Amway two additional five-year options that, if exercised, would give the company the exclusive food-service rights at the building until April 15, 2020.
In return, the CAA will get a bigger cut of the concession and catering revenue, and Amway will be responsible to pay for capital improvements at the convention center.
The contract is expected to be worth at least $4 million annually to Amway.
Starting on April 16, 2005, the CAA will receive:
- Twenty-five percent of gross concession revenues up to $4.25 million per year and 30 percent of all dollars above that amount.
- Fourteen percent of gross catering revenues up to $4.25 million per year and 20 percent of all dollars above that amount.
- Nearly $650,000 in capital improvements between now and April 15, 2010.
- Up to $12,500 annually of capital-improvement funds if yearly combined concession and catering gross revenue is between $4 million and $4.25 million.
"These numbers will go up each year based on the CPI index," said Dick Wendt, general counsel for the CAA.
Currently, the CAA gets 25 percent of gross concession receipts minus alcoholic beverage sales, 10 percent of DeVos Place gross catering receipts, and 20 percent of gross alcoholic beverage sales except for those drinks that are sold with meals.
Due to the construction of DeVos Place, the CAA hasn't received, nor will it get, any revenue for capital upgrades to the Grand Center during the current five-year agreement. Prior to the project, the board got $400,000 per contract term.
Until recently, the CAA also received 9 percent of the gross catering receipts from events held in the Welsh Auditorium. But that building closed on Labor Day and has since been razed. The new convention center ballroom is going up on the old auditorium property. The ballroom will double as a dining hall that can seat up to 4,000.
"The (new) agreement falls within industry norms," said Rich MacKeigan, SMG general manager.
Joseph Tomaselli, president of the Amway Grand Plaza Hotel, and Mayor John Logie, CAA chairman, abstained from voting on the extension. Tomaselli didn't vote for obvious reasons. The mayor didn't because his law firm, Warner, Norcross & Judd, represented Amway in the negotiations.
Wendt added that Tomaselli did not participate in the contract extension talks.
The Amway Hotel Corp. has held the food and beverages contract at the convention center since 1980. The agreement was amended in 1981 and again in 1985.