Reason for litigation: limited naming rights at Bielenberg Sports Center
The City of Woodbury and the Minnesota United may be squaring off once again — this time over naming rights to Bielenberg Sports Center.
The Woodbury City Council went into closed session following its Aug. 26 regular meeting to “discuss with legal counsel litigation threatened by Minnesota United Marketing LLC.”
Two days later, the city identified the nature of the threat as limited naming rights.
The soccer club had recently agreed in concept to make HealthEast the sponsor of the city’s signature sports facility, while the city had been simultaneously talking to one of HealthEast’s competitors about becoming a tenant in the building that would bear HealthEast’s name.
The United recently met with the city for preliminary and prospective discussions, according to an exchange of letters between City Attorney Mark J. Vierling and Steve Gaskins, who represents the soccer club.
“The HealthEast proposal originally sent in by (the United) was subsequently repudiated by (Minnesota United Football Club chief manager Nick) Rogers as only being a concept and not an actual proposal,” Vierling said in an Aug. 19 letter.
In an exchange of letters between the two parties’ lawyers, the city took the position against renaming Bielenberg without city approval.
Gaskins wrote Aug. 12 that the city’s position seems “specifically designed to ensure that the company cannot exercise its naming, sponsorship, branding, and advertising rights” via a marketing agreement for Bielenberg Sports Center.
“The staff’s positions, if maintained, will force the company to seek the intervention of a court,” Gaskins said, “in order to be able to exercise its naming rights under the contract. These positions go to the heart of the naming rights granted to the company and profoundly impact the scope, and thus value, of those rights.”
“Until the city has [a formal] application, and the city council has taken final action on it, I believe your client has no cause for action,” Vierling countered.
Though Woodbury and Rogers signed a termination agreement that ended a public-private partnership between Woodbury and the United in May, a marketing agreement remains in effect between the two.
The public-private partnership was developed after the team’s management, Rogers and team owner Bill McGuire approached Woodbury staff in 2013 with a proposal to make Bielenberg Sports Center the official training facility of the Minnesota United. As part of the proposal, the United intended to build a 7,253-square-foot space for the team’s locker and training rooms.
Through negotiations, the parties developed two contracts — one to cover the construction and use of the training space, the other a marketing agreement that gives the United exclusive marketing rights for Bielenberg Sports Center.
However, last fall, the United’s management decided to end the partnership with the city, for the training facility space. The shell of the space was already constructed, but no interior work had been completed at the time.
The City of Woodbury and the United officially announced the end of the partnership for the facility in January, but a termination agreement between the two parties was not signed until May. Later the same month, the City of Woodbury hired a broker to find a new tenant to fill the space vacated by the United.
Prominence of a name
Last Friday, the Woodbury Bulletin obtained an exchange of letters in which Vierling states the city’s position on the United’s limited naming rights and Gaskins suggests an impending lawsuit if the city’s position remains unchanged.
In the correspondence, Vierling characterizes the United’s naming rights as limited and the soccer club’s talks with HealthEast as preliminary and prospective. City officials believe the logo for a renamed Bielenberg Sports Center must be approved by the city, and the current name must remain predominantly in the new name.
Any new logo must meet city approval, Vierling argues, and that the United does not have unilateral authority to approve signs at the facility. Signage must also meet city code or receive specific approval from the city council. The marketing agreement says that the “United and the city will work together to develop a mutually agreeable logo.”
In writing, Vierling argued against the United’s position that the words “Bielenberg Sports Center” need only appear as a subtext or be surrounded by a sponsor’s name.
Attorneys argued via their letters about the definition of the word “prominent,” with Vierling defining it as “more powerful” and Gaskins leaning toward surrounding “Bielenberg Sports Center” with the sponsor’s name, so long as the current name constitutes the “main” or “most part” of the new name for the facility.
Vierling’s letter also refers to an email sent by City Administrator Clint Gridley that suggests HealthEast wasn’t aware of the potential tenant and competitor’s proposal for Bielenberg.
Gridley expressed an ethical position of the city, that the United should “act reasonably in disclosing to any potential sponsor the identification of significant partners and tenants of the city that are proposed … so as to avoid any unnecessary conflict,” Vierling wrote.
The marketing agreement between the City of Woodbury and Minnesota United remains in place so the United can recoup some of the $975,000 spent to build the shell for the space that was to be the locker and training rooms.
The agreement gives Minnesota United “exclusive naming, sponsorship, branding and advertising rights” for most of the fields and fieldhouse at Bielenberg Sports Center. It prohibits the United’s marketing staff from soliciting sponsorships from any sexually oriented adult entertainment businesses, or alcohol or tobacco businesses, and all sponsorships are subject to approval by the city.
The contract is in effect through Dec. 31, 2023. During that period, Minnesota United Marketing LLC is required to annually pay the city 10 percent of the gross revenues. For the first five years, Woodbury will receive a guaranteed minimum payment of $25,000. The minimum increases to $35,000 for years six and seven and $50,000 for the eighth year through the end of the contract.
The first payment $25,000 was due to Woodbury by Dec. 31, 2014. Emails between Rogers and City Administrator Clint Gridley indicate the payment was received after Jan. 7, 2015.
Amendments were made to the marketing agreement in May, while the termination agreement was signed on the Bielenberg Sports Center space. The amendments clarify that the rights of both parties do not change and that the United is still allowed to do the marketing. However, the parties agree in the amendment that the United does not have rights to marketing space leased by other tenants. Both the former United team space and a second-floor restaurant area are going to be leased by the City of Woodbury, which owns the addition constructed by the United.
The Bulletin has requested further information under Minnesota’s Data Practices Act.
Michelle Leonard contributed to this report.