Tuesday, 22 January 2013

Movin' On

The announcement that the Sacramento Kings appear headed to Seattle was the latest in a recent string of franchise or event relocations.  The New York Islanders announced that they are moving to the Barclays Center in Brooklyn after more than 40 years at the Nassau Coliseum in Nassau County, New York and in snowboarding, the Burton U.S. Open is set to debut in Vail, Colorado next month after more than 30 years in Vermont, the last 27 at Stratton Mountain.  These relocations underscore the need, from a tenant standpoint, for a lease or other governing document to provide for flexibility, including the possibility of ending a lease or other venue relationship.

Over the course of a tenancy, especially a long-term tenancy, many things can change.  The economics of the venue itself may change (does the venue have enough concession or restaurant space, or luxury boxes), technology may (and does) change (does the venue support digital or social media platforms for spectators), even weather patterns may change (at the Burton U.S. Open, the last few years have been beset by unusually warm or even rainy conditions).   The lease or governing documents for teams or events should take these type of possibilities into account and provide some type of relief for the tenant -- the right to leave before the end of the lease term if certain economic and other parameters such as attendance aren't met, a window for opting out after a certain period or time, or even the right to buy out of a lease for a sum certain or agreed upon formula.  It sounds easy, but pushing back will be the landlord trying to tie the down into the lease for the long-term.  Just as drafting the appropriate document will require a lot of forethought on other issues, such as signage rights, renovations, and even the effect of work stoppages, serious attention should be devoted to the cirucmstances on which a lease can be terminated early so that the tenant can relocate.

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