“The city of Sturgis is knowingly being fleeced and no city officials are doing anything about it” says Jack Hoel, son of Pappy Hoel, who is considered the founder of the Sturgis motorcycle rally. He told the Sturgis City Council and City Manager Daniel Ainslie Monday that it’s a crime the city has to pay for the use of its own name.
“This is nothing but a gift to SMRi,” Hoel said as the city finalized its contract renewal with Sturgis Motorcycle Rally, Inc., which owns the rights to the Sturgis name as it relates to the annual motorcycle rally. The contract last year cost the city nearly $50,000 — of that, nearly $27,000 went to SMRi for official sponsorships, and the remainder on city leases of land to official rally sponsors.
Under the new 5-year contract, the city will continue to pay 10 percent to SMRi for the use of the Sturgis trademarks which, in addition to the name Sturgis, also includes Sturgis Motorcycle Rally, Sturgis Bike Week, Take the Ride to Sturgis, Sturgis Rally & Races, and Black Hills as it relates to the Sturgis motorcycle rally. But, going forward, the city will not have to pay royalties on the lease agreements.
Ainslie said the city received a total of $269,440 from the 2012 rally as a result of the sponsorship license agreement. He says the revenue that is derived from the agreement is a vital item within the city’s annual budget. Ainslie says the revenues generated the vast majority of the profit from the 2012 rally. “If the city does not enter into this agreement, the city will not legally be able to sell these sponsorships,” he said. “This would be a significant impact on the city’s budget.”
When the city first entered into this agreement it was said the funds generated would help revitalize the city’s Chamber of Commerce, but that relationship has somehow faded away and SMRi derives the brunt of the funds, Hoel said. “Paying this outside entity is wrong,” Hoel said. “These people are holding up the city for using its own name.”
Each year the city of Sturgis enters into agreements with businesses such as Jack Daniel’s, Geico, Harley-Davidson, Coke, Budweiser and Dodge, to become “official” sponsors of the annual Sturgis motorcycle rally. The contract also gives the city additional rights to publish the official magazine of the Sturgis motorcycle rally and the official pocket guide to the Sturgis motorcycle rally. And, the city owns the official internet website for the Sturgis motorcycle rally and social media outlets such as Facebook and Twitter. “The 10 percent royalty payment is identical to the previous agreement which was originally entered into between the city and the chamber,” Ainslie said. “This agreement had been assigned from the Chamber to SMRi.” Ainslie said the 10 percent royalty is already included within the 2013 city budget.
Also at Monday’s meeting, the city authorized Ainslie to sign an agreement with Maverick Publishing of Spearfish to publish the official magazine and official pocket guide for the 2013 rally. In the past, the magazine and guide were published by the city through its sponsor agent. “Despite producing a high quality publication, the city sustained a net loss of approximately $15,000,” Ainslie said. “Given the history of loss, the city sought a different arrangement where the city would not be directly responsible for the costs associated with the production of the publication.”
The new arrangement will allow Maverick Publishing to label their magazines as the “Official Magazine of the Rally.” In return, the city will receive 10 pages at no cost on which advertisements of sponsors and exhibits can advertise. The city also has the option of purchasing additional pages if needed. The magazine will continue to have a complete list of events that will occur during the rally. (Source. Deb Holland, Meade County Times-Tribune)