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Motorcycle rally promoter cuts ties with Hollister

City officials say the search is on for a new promoter, as the previous one still owes $90,000 that was due July 1

Hollister Mayor Ignacio Velazquez said the Fourth of July Hollister Freedom Rally motorcycle event downtown will continue despite the formal announcement Tuesday that the promoter of the rally will not organize next summer's event. 

"The show goes on," Velazquez told BenitoLink Tuesday afternoon. "The rally's here and there are several promoters who would like to do it. It's unfortunate that (ConvExx) chose not to do it."

City Manager William Avera told BenitoLink that the promoter still owes the city half of the $180,000 it was contracted to pay in three installments -- two $45,000 payments, which were made, and a $90,000 payment that was due on July 1, which has not been paid. He also said that his is sure that the city's pursuit of the money it is owed "will end up with some sort of (court) case."

In a press release sent out Tuesday afternoon, ConvExx said it "regretfully" announces that it would not return to produce the rally in 2016. 

"Unfortunately, responsibilities of parties associated with the production of the Rally were not met, and ConvExx had to make the difficult decision to not continue its role in the production of future rallies on behalf of the city of Hollister," the promoter said, without addressing specific dollar figures.

Velazquez said the reasons for the pull-out are "tricky" as there is "some money still owed to the city. At some point, yes, we fully expect to be paid."

Avera was more blunt, saying, "There's absolutely zero debate about what's owed. A contract is a contract regardless of what your feelings are after it's over. The rally was never set up to be a money-maker -- we always shot for cost-recovery. That was always my biggest goal. We invested money into some of the infrastructure for the rally because the (city) council committed a couple of years ago that we'd do this for 10 years in a row."

The mayor said the promoter had issues with the language of the contract, which was actually agreed to with the Hollister Downtown Association working on behalf of the city. "Part of it is the understanding of the contract and what was agreed upon and what he feels he should pay," Velazquez said. "For a contact, you all agree with something and if you want to change for the following year you change it the following year."

Avera agreed, saying that the city is "always expected to make good on our end (of a contract) and we believe we did. We certainly know that the promoter didn't keep up his part. The council, the city and the HDA all had an arrangement and an agreement, and one of the parties that had a direct contract with the HDA fell short on their end of the deal. I don't know it it really matters to me if it's one year, two years or three years" to receive the money he says the city is owed, "I think we'll prevail in the end."

Rally Chairman Chuck Schwartz said in the release, "We are certainly disappointed that we will not be able to help with the rally in the future. We went into this relationship with the hopes of building upon the great tradition of the Hollister Motorcycle Rally for the long term. We believe the rally has great potential for the future; however we could not come to an understanding with all the interested parties associated with the rally for the future."

He called the 2015 rally a "huge success," with an estimated attendance of more than 40,000. He also cited positive feedback from rally vendors, attendees and local businesses.

"ConvExx is very proud to have produced a successful event for the City of Hollister this past July, and wish the Hollister community only the best for the future," the release said.

Velazquez said that "there are several promoters calling right now excited about the opportunity" to promote the 2016 rally. "It's just unfortunate that (ConVexx) chose not to continue and watch it grow."

The hiring of the next promoter will not be done with a typical bid process, where the lowest bidder is selected, Velazquez said. 

"Part of the issue we've had in the past is trying to do it that way," he said. "There's only so many promoters that do these type of things, so we'll see which one stands up and has a proven track record. We'll see what they have to offer and go from there."

Avera expected that the council will quickly move to direct staff to release a proposal that will qualify individuals and firms who are interested in promoting the rally, "That's gotta happen pretty quickly," Avera said, noting that Hollister Police Chief David Westrick preferred to have arrangements for the rally made by December to allow for ample planning time.

The next contract involving a promoter and the city likely will not involve the HDA, Avera said. "I don't think the HDA has any desire to be involved again. We went with them because we felt they'd be a great liaison between the city and the promoter, and we hoped it would help their organization generate money."

While it was assumed that next year's rally was a sure thing, Avera said the pullout of the promoter will give the council something to ponder.

"These are policy decisions," he said. "If the council wants to have a rally then we'll do what the council wants. If somebody comes up and proves that they have the wherewithal to do it and do it in a short amount of time," staff will recommend moving forward. However, he does remain concerned about the difficulty in getting promoters to pay the city on time, which was an issue with the rally's previous promoter as well.

"We want to make sure we receive all of our money," Avera said. "If I'm recommending a contract to the council and somebody doesn't want to make good on the contract, that reflects poorly on me. I'm going to try to ask that all of our money is collected and into our office prior to the event," which was the goal this past summer. "That'll always be my recommendation from here forward. It's very difficult to get money from people after the event is over."

Holding a motorcycle rally in Hollister without a promoter is not an option for the city, Avera added. "We can't have an event if we don't have somebody to put it on," he said. "The city certainly doesn't have the wherewithal to do it alone."

Velazquez, who owns The Vault in downtown Hollister -- which was rented out during the rally -- recused himself from the promoter negotiations last time around to avoid the perception of a conflict of interest. This time, however, he said, he plans to be involved.

"I want to make sure I'm more involved in the negotiations," he said, noting that he can participate as long as he doesn't make more than $20,000 off of the event. "I'll work that part out. If I have to be closed for the year, I'll be closed for the year," he said, referring to his rental of The Vault during the rally weekend.

 

About:
Adam Breen (Adam Breen)

Adam Breen has been a San Benito County resident since 1980 and graduated from Sacred Heart School and San Benito High School before earning a bachelor's degree from California State University, Fresno. A father of two sons, Adam has taught newspaper and yearbook at SBHS for the past decade, after six years as a magazine editor for Santa Clara University. He previously was editor of the Hollister Free Lance.

Comments

Submitted by (Bill Mifsud) on

If the rally was a huge success was in Convexxx puling out? Is there more to the story? How much money was made last year? Convexxx is will now in the promoting business and he wants out.

"Another one bites the dust..." Timing, distance and choice of headline bands along with ticket pricing took its toll here. Law enforcement, under Chief Westrick, won an award for the way security was managed at this event. 

We need to plan and execute an event that will be better publicized, promoted and attract crowds who will patronize the event; i.e. spend money and forward taxable proceeds to the City of Hollister. To be perfectly clear, the promoter agreed to pay the City of Hollister $90,000 by July 1 and failed to do so subsequently when it was discovered that the event lost money. Hollister will now have to sue the promoter for breach of contract to recover the money Convexx is contractually obligated to pay the city. 

I believe the annual motorcycle rally has the potential to be successful but finding the right promoter who will honor contractual obligations has proven futile thus far. 

Well, this story scooped me.  I was going to write about this issue, but the City Manager was gone and I was waiting for him to return to get the financials and other data concerning the city's collection of fees and share of the returns.

My initial view is that our inability to get a promoter who wants to stick with it and advance the rally with the principle of continuous improvement - you never start at the top - is a very serious problem. It means that we, essentially, start over from square one every year.  A promoter who is on the way out for whatever reason is not going to bother doing and in-depth analysis of  last year's performance with the object of improving next year,

I lent my enthusiastic support to bringing the rally back, but if the rally just turns into a financial giveaway of public funds to certain businesses without lasting advancement for the city, then I have a big problem with it.

Something is wrong if we continually suffer financial loses or severe financial distress, keep changing our promoters annually, and can't settle it down to an easy event that takes care of itself.  I will ask for the financials later this week and should have them in two weeks,

Marty Richman

Here's what I learned from various sources:

  • Using the HDA as a 'middle man' to manage the contractual obligations did not prove successful. 
  • The promoter wanted 100% rights to all tee shirt sales but signed an agreement that allowed a third private party to sell tee shirts and blames/faults the city as part of the reason for lost revenue (...but $90k?).
  • The city is taking a hard line on the contract terms. Pay the $90k or move on and get sued for breach of contract. For better or worse, the city should consider some sort of arbitration and compromise; learn from the failures, make adjustments to improve attendance and revenue and revise the contract to spread the $90k loss over three years for example.
  • In my opinion, the promoter gambled heavily and spent big bucks on headline bands hoping that people would be willing to pay $25 per ticket to see the Fabulous Thunderbirds on July 3 and $50 per ticket to see the Guess Who on July 4. That was a huge and costly mistake. 
  • I agree the rally has the potential to be successful and that the rally promoter and the city should be receptive to understanding the business analysis data based on financial reports as you suggest. Otherwise, the rally will learn nothing from past mistakes and continue to hope that the next promoter will somehow do everything right and turn a profit on its very first attempt or get fired and sued for breach of contract. It will be tough to attract promoters based on those parameters. 
Submitted by (Bonnie Flores V...) on

It seems to me that if you allow a promoter to collect all the money from contracts and cash income this problem will continue. Where are your checks and balances. The city should control the money, contracts and cash from beer booths etc. The promoter will make more that enough money on PROMOTION. The City could reimburse the promoter after city expenses are covered.

Submitted by (William McCarey) on

Has anyone looked at Sturgis to see how that small town successfully handles a much larger rally each year? What is their secret?

In my opinion, Hollister and Sturgis are on different scales of commercial competency. Sturgis encourages and promotes tourism to its event and rally enthusiasts spend about a week on average there. Investors support the hospitality industry to accommodate tourism in Sturgis while Hollister has a reputation of discouraging motorcycle enthusiasts and limits attendance to 2-3 days. Support for the rally from local law enforcement under new leadership has improved in recent years, but security costs to manage the event in the past foiled the rally and discouraged attendance leaving rally enthusiasts turned off and unwelcome. Unfortunately, the Hollister motorcycle rally has diminished in popularity from enthusiasts over the years and the expectation for a promoter and vendors to make money in 2-3 days is a formidable effort. 

From what I have read, Sturgis attracts motorcycle fans who will spend about a week at the event. Local entrepreneurs invested in developing properties into campgrounds with amenities and commerce that appeal to touring motorcycle enthusiasts. In contrast, Hollister is equipped to attract such touring enthusiasts for 2-3 days. There is almost zero incentive based on the checkered past of the Hollister rally for investors to consider doing business here to improve the hospitality industry; i.e. San Benito County has 200 + beds/motel rooms.  

The economy has gone through two recessions since the Hollister rally started in 1997. At present, the economy is in a rebound and people have disposable income to enjoy spending at a special event like the Hollister motorcycle rally. Sadly, it appears Hollister lacks the competency to partner with a promoter who can turn things around and commit to a long term relationship with the recognition that it will take a few years of careful management and probably negative revenue to rebuild consumer confidence to attend the Hollister motorcycle rally in my opinion. 

Submitted by (Bill Mifsud) on

Sturgis has a event spread out in different areas not confined to four city blocks. Use the airport or bolado park as alternate venue areas. The event will lose money every year if it continues on the same course. The concert area this year felt like you were a can of packed sardines.

Exactly. The event needs to benefit the whole area, not just the city. And holding different events in different areas encourages the kind of movement and breathing room you're talking about.

If we can stick to one promoter for a number of years, I think the event will pick up the kind of steam needed. Year one with a new promoter is like year one of a new business, the hardest year for any business.

Submitted by (Tod) on

The only people that make money working with the city is the Union and it's members.

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