OCEAN CITY – With some concerns allayed, resort officials this week agreed to a terms sheet with the OC Air Show to ensure the annual event returns for the next three years and beyond.
Last week, Tourism and Business Development Director Tom Perlozzo presented a terms sheet for negotiations on a three-year contract with the OC Air Show promoter. The terms sheet was not a contract, but merely an outline of sorts for some of the issues between the town and promoter, which will provide a framework for negotiations on the actual three-year contract.
Last week, the Mayor and Council voiced some concerns about certain elements in the proposed terms sheet and the issue was tabled until this Tuesday’s work session until some of those issues could be addressed. On Tuesday, Perlozzo presented a modified terms sheet, which allayed some of the Mayor and Council’s concerns.
One of the major issues raised last week was a desire to always have a major jet team act headlining the OC Air Show, such as the U.S. Air Force Thunderbirds or the U.S. Navy Blue Angels. While the air show promoter has generally been successful in landing one of those two major acts, typically in alternating years, the town’s elected officials wanted some guarantee in the contract language that every effort was being made to make that happen. Again, Perlozzo explained the modified terms sheet presented on Tuesday was just a framework for the pending formal contract.
“It’s a term sheet,” he said. “It’s not a contract at this point. We believe this is a good deal and we recommend moving forward to the contract phase. There are some changes based on your last meeting. Some of those are normal variable costs.”
Perlozzo said the air show has a great track record of honoring its commitments. He said there was a discussion after least week’s meeting when the terms sheet was first presented about securing one of the major acts desired by the Mayor and Council.
“We did talk to the air show promoter after last Monday’s meeting,” he said. “He did express a desire to bring in a major act every year. The Thunderbirds are confirmed for 2023, and he will find out about the Blue Angels for 2024 in December. Please keep in mind that the Department of Defense has the final say in deploying either.”
Indeed, the modified terms sheet presented on Tuesday includes language to that effect. “The major military jet team headline act will include no less than one of the following: the U.S. Air Force Thunderbirds, the U.S. Navy Blue Angels, the Canadian Air Force Snowbirds, or two or more U.S. military single ship jet demonstrations,” it reads. “We spoke with [OC Air Show promoter] Bryan after the Monday night meeting to confirm his desire to continue to request both the Blue Angels and the Thunderbirds. We did mention that we are willing to assist with any roadblocks associated with the opportunity to secure both.”
Another issue raised when the terms sheet was first presented last week was the impact on the beach rental franchisee in the air show’s footprint from 13th Street to 17th Street. A clause in the terms sheet says the promoter can provide tables, chairs and umbrellas in the event area, however, the beach rental franchisee should be compensated by the promoter for lost business. The modified terms sheet states the following: “Subject to town of Ocean City code provision, the OC Air Show shall execute a mutually-agreeable contract with the beach franchise vendor operating within the venue from the period of load-in to load-out.”
Even before the Mayor and Council took up the issue during Tuesday’s work session, beach rental franchisee Patrick McLaughlin voiced some of his concerns about the terms sheet as originally proposed last week.
“We do experience impacts with the special events, including the air show,” he said. “We appreciate the events, and the air show is just one example. There should be a part of the process that includes the beach franchisee. We’re in the beach rental business. We’re not in the air show business.”
McLaughlin said there needed to be a formal plan in place for addressing compensation for the beach rental franchisees, who, according to the code have exclusivity in the areas which they hold franchises.
“There should be a mechanism in place where the promoter approaches the beach rental franchisee,” he said. “We want to support all of the events. The air show is not just two days. It’s a load-in, load-out process. It’s a big deal. We pay a lot of money for these franchise rights.”
City Solicitor Heather Stansbury said the terms sheet explains that arrangement and it will be part of the formal contract once it is negotiated and inked.
“The reality is this,” she said. “The contract the beach vendor signs acknowledges there could be special events from time to time that disrupts normal business. They need to work out that compensation with the special event promoter. That’s the fair thing to do. It might be something we need to consider in future years.”
Mayor Rick Meehan said the terms sheet as presented appears to address the beach rental franchisee issue.
“It’s time to move this forward,” he said. “We all recognize the importance of the air show. It should be the responsibility of the OC Air Show to reach out to the beach franchisee with an agreement.”
Perlozzo agreed that was part of the modified terms sheet.
“This issue is going to boil down to what’s fair for the beach franchisee,” he said. “That’s in this terms sheet and the promoter has promised a concerted effort to ensure what’s fair.”
Council President Matt James asked if the 30-day window for negotiating with the beach rental franchisee on compensation was the right number.
“Is 30 days appropriate?” he said. “We don’t want to be in a position where it’s two days before the event and they start closing the beach.”
Meehan said he was confident the air show promoter would work closely with the beach rental franchisee on what is fair.
“That can be worked out,” he said. “I think we have a great promoter and operator and it’s one of our signature events.”
Satisfied their concerns from last week were allayed, the council voted unanimously to approve the modified terms sheet and move forward with negotiations on a formal three-year contract. Perlozzo said a three-year contract represented a departure from the typical year-to-year memorandum of understanding with the air show promoter.
“It used to be a one-year memorandum of understanding,” he said. “Under this plan, there is a three-year contract in place. If they failed to secure a headline act as defined, the contract would be breached.”