17 th Annual REAL PROPERTY SYMPOSIUM THURSDAY, MAY 4 8:00 a.m. 9:45 a.m. HOSPITALITY, COMMUNITY RECREATION AND COMMON INTEREST DEVELOPMENTS GROUP: HOT TOPICS GROUP AND PROGRAM CHAIR: Gary A. Poliakoff Becker & Poliakoff, P.A., Fort Lauderdale, FL SPEAKERS: CURRENT AND EVOLVING TRENDS IN CONDOMINIUM DEVELOPMENT Daniel Orvin Buist Moore Smythe McGee PA, Charleston, SC LEVELING THE PLAYING FIELD - PARIMUTUELS VS. INDIAN GAMING - THE FLORIDA EXPERIENCE Alan Koslow Becker and Poliakoff PA, Fort Lauderdale, FL NON-EQUITY MEMBERSHIP CLUBS - ARE THEY TIMESHARE? William Guthrie Baker & Hostetler LLP, Orlando, FL Steven D. Peterson Ballard Spahr Andrews & Ingersoll, Salt Lake City, UT CLUSTER MARKETING Stephen C. Barth HL.com Inc., Houston, TX - 11 -
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A.B.A. RPPT Presents: Cluster Marketing in the Lodging Industry Stephen Barth Attorney & Mediator, Professor, Founder HospitalityLawyer.com P.O. Box 22888 Houston, TX 77227 713-963-8800 University of Houston 229 C.N. Hilton College of Hotel and Restaurant Management Houston, TX 77204-3028 713-743-2415 * 713-743-2538 fax www.hospitalitylawyer.com Stephen C. Barth, P.C. 2006-65 -
1 A.B.A. RPPT Presents Cluster Marketing in the Lodging Industry Stephen Barth Attorney & Mediator Professor, Conrad N. Hilton College of Hotel & Restaurant Management, University of Houston Founder, HospitalityLawyer.com (Based on the collective effort of Stephen Barth, John Nevins, Ron Nykiel and Jim Makens) 2 Cluster Marketing Multiple Lodging Facilities Common Market Sharing business leads, inquiries & personnel 3 The Model Super Sales Coordinator Allocates meetings to appropriate property Share rates, forecasts, yield projections 4 Company Owned & Operated Serious Economies of Scale upon Vertical and Horizontal Integration in the Common Market. 5 Enter Management Companies Management Contracts with Different Owners and Sometimes Different Brands 6 Management Company Perspective Economies of Scale Data Collection Database Marketing Collateral Production Co-oping Fam Trips Multi-property Advertising Joint Sales Blitzes Shared Human Resources 7 Management Company Perspective Mitigate Competition among themselves by sharing sales data; rate, yield projections, bookings, etc. www.hospitalitylawyer.com Stephen C. Barth, P.C. 2006-66 -
8 9 10 11 Owner Perspective.Pluses Reduced Overhead Increased Lead & Group Sales Generation Movement of Business to the owner s property Increased rates (reduced competition) Super Sales Director Expertise that they couldn t afford on their own. Owner Perspective.Minuses Property Quality and Priority in the Cluster Possible migration of business away from the property Disclosure of proprietary information (and potential loss of it upon termination of the contract) Owners Perspective.Minuses Huge, Huge, Huge Trust Issue Regarding fair allocation of leads and booked business. The Legal Perspective Anti-Trust Acts Sherman Act (1890) Clayton Act (1914) Federal Trade Commission Act (1914) Robinson-Patman Act (1936) (Most states have mini-antitrust acts) 12 13 14 Anti-Trust Acts Prohibit price discriminations, price fixing, monopolies and restraints of trade. Cluster Marketing Concept With different economic entities even with a common management company Per Se Violation A Joint Sales Agency designed to limit competition. 15 Exception If all owned and managed by same economic entity then a Intracorporate Conspiracy and may be permissible. www.hospitalitylawyer.com Stephen C. Barth, P.C. 2006-67 -
16 Exceptions? Permissible Purchasing Activities Collective Collateral or Media Purchases (but be careful) 17 Conclusion- If it passes the Anti-Trust Test (which is doubtful) the management company must have Owner s Consent (Fiduciary Obligations) www.hospitalitylawyer.com Stephen C. Barth, P.C. 2006-68 -
6160_05_p107-109 3/31/06 2:51 PM Page 107 GAMING LAW REVIEW Volume 10, Number 2, 2006 Mary Ann Liebert, Inc. Gaming at Florida Pari-Mutuels: Racinos Are a Sure Bet for the Sunshine State ALAN B. KOSLOW and DAVID S. ROMANIK JUST FOUR DAYS into the new year, the State of Florida finally joined the casino party, overcoming decades of failed constitutional amendments and legislative initiatives that had sought to win approval for casino-type gaming. Under legislation authorized with a stroke of the pen of Gov. Jeb Bush, four pari-mutuel facilities in the cities of Hallandale Beach, Dania Beach, and Pompano Beach in South Florida s Broward County were given the green light to move forward with Las Vegasstyle, Class III slot machine gaming. With July 1, 2006, set as the deadline for finalization of administrative rules governing their day-to-day operations, the four Broward pari-mutuel facilities Pompano Park Harness Track, Hollywood Dog Track, Gulfstream Park Thoroughbred Track, and the Dania Jai-Alai Fronton are effectively first out of the gate, leaving behind other pari-mutuel facilities in neighboring Miami-Dade County not yet authorized to have slots. Their first-mover status positions them to reclaim some of the gaming customers previously lost to unregulated competition at Indian casinos in Florida. All four Broward facilities already have either begun substantial facilities upgrades, have plans on the table awaiting governmental review, or are in the strategic planning process. The newly enacted slot machine legislation, effective on Jan. 4, 2006, is found in Chapter 551 Alan B. Koslow is a shareholder and lead attorney in the Gaming and Entertainment Law Group of Becker & Poliakoff in Ft. Lauderdale, Fla. He is also the vice-chair of the American Bar Association s sub-committee on gaming law. David S. Romanik, an attorney in the Gaming and Entertainment Law Group at Becker & Poliakoff, is former CEO and general counsel to Gulfstream Park. of the Florida Statutes. The salient features of the law are as follows: 1. Slot machine gaming is authorized only at existing and operating pari-mutuel facilities in Miami-Dade and Broward Counties, provided that a majority of voters in a countywide referendum have approved slot machines at such facility in the respective county. 1 2. The facility may be operated 365 days per year, 16 hours per day. 3. The maximum number of machines is 1,500 Vegas-style (Class III) slot machines per facility. 4. There is an annual license fee of $3 million per year. 5. The tax payable to the State of Florida is 50 percent of net slot revenue. 6. The machines will not accept coins or currency, but will be ticket in/ticket out. 7. The minimum age to play the machines is 21 years. 8. If the administrative rules governing the day-to-day operations of the facilities are not finalized by July 1, 2006, then the facilities would be entitled to temporary licenses so as not to delay further the operation of the slot machines. This new legislation authorizing gaming in Broward County comes as a result of the statewide passage by voters of Florida s Constitutional Amendment 4 2 in November 2004 1 FLA. STAT. 551.101 (2005). 2 FLA. CONST. art. 10, 23. 107
6160_05_p107-109 3/31/06 2:51 PM Page 108 108 an admittedly scaled-back version of unsuccessful casino gambling initiatives of the past, but nevertheless a monumental achievement given the crushing defeats suffered in the three prior attempts over as many decades. Specifically, Amendment 4 limited gaming to slot machine gaming only and limited the potential gaming venues to the seven operating parimutuel facilities in Broward County and Miami-Dade County provided that local voters in these counties approved slot machines via a referendum. In a special local option election in March 2005, the voters in the two counties split on the authorization issue. While Broward voters approved the addition of slots at the four parimutuel facilities in their county, the voters in Miami-Dade who had strongly approved Amendment 4 just five months earlier in the 2004 general election rejected the addition of slots to three pari-mutuels located in their county, Flagler Dog Track, Calder Race Course, and Miami Jai-Alai Fronton. The unsuccessful special slots election in Miami-Dade was marked by a paltry 10 percent voter turnout in contrast to the 80 percent turnout generated by the hotly contested presidential election in the November 2004 general election. Clearly, the lesson learned is that elections involving issues with potentially emotional or religious overtones should be exposed to the largest number of voters possible, to avoid a disproportionate turnout of singleissue voters with an emotionally negative reaction to the issue. Under Amendment 4, the slot machine issue cannot be put on the ballot again in Miami-Dade County until March 2007. While the three Miami-Dade pari-mutuels address the pros and cons of a renewed campaign to secure local approval, the four Broward parimutuels face other challenges, even as they move forward with their expansion plans under the new legislation. The biggest challenge facing Broward operators is how they can best achieve a return on their new and substantial investment, given some restrictions in the new law including a 50 percent tax on net slots revenue. The pari-mutuel operators are confident that, notwithstanding the restrictions, the demand for this new gaming product in Florida will be KOSLOW AND ROMANIK so overwhelming that their ventures will enjoy unmitigated success. While each of the operators has a slightly different developmental concept, it is clear that a metamorphosis from a traditional pari-mutuel design to entertainment complexes will occur at all of the facilities made necessary in part by the need to leverage entertainment and tourism revenue to build a bottom line that cannot be sustained solely through slot revenues burdened by heavy taxation. As the Broward operators build out their facilities, they are in close contact with the State s Division of Pari-Mutuel Wagering, which is tasked with the job of writing the implementing rules and regulations for the new law. The Division is basing its proposed regulatory framework on those in place in other gaming jurisdictions, including Nevada, and New Jersey, and is taking into consideration issues such as licensure for permit holders, manufacturers, and distributors; testing processes and criteria for slot machines; occupational licensing issues; and hiring standards for employees. These issues and others will be considered as part of the State s public rulemaking process, which has a legislatively imposed goal of finalizing the rules by July 1, 2006. State legislators also will be revisiting the implementing legislation, passed during the 2005 special session of the Florida Legislature, to clarify various issues that were either not addressed or need further review and guidance. The new law provides for temporary licenses to be issued to permit holders for the operation of slot machines if the administrative rulemaking process by the Division is not completed by the July 1 deadline. Meanwhile, the four pari-mutuel operators in Broward have the opportunity to reclaim some of the gaming customers lost to unregulated Indian casinos that have continued their build out in South Florida. All eyes are on Gov. Bush, who has indicated his willingness to enter into goodfaith negotiations with the Indian tribes of Florida to arrive at a compact that would allow Indian casinos to offer Vegas-style (Class III) gaming, now that it is authorized in the state of Florida under the recently enacted legislation. All this has left the Broward pari-mutuels feeling flush and optimistic about the future of
6160_05_p107-109 3/31/06 2:51 PM Page 109 GAMING AT FLORIDA PARI-MUTUELS their new slots businesses. While they know that no law is ever carved in stone, they appreciate the important milestone just achieved and are solidly committed to establishing gaming and entertainment meccas as the first step on the road to bringing Vegas-style gaming and 109 entertainment to the Sunshine State long known as a tourist destination for its weather and attractions, and now one of the country s most populated and fastest growing states, with an estimated 1,000 new residents arriving each day.
becker poliakoff www.becker-poliakoff.com bp@becker-poliakoff.com Alan B. Koslow (Shareholder) 3111 Stirling Road Ft. Lauderdale, Florida 33312 Tel: (954) 985-4169 Fax: (954) 985-4176 akoslow@becker-poliakoff.com Alan B. Koslow is a graduate of Queens College (B.A., 1977) and graduated 2nd (of 235) in his class at the Hofstra University School of Law ( J.D., 1980), where he served as editor of The Hofstra Law Review. Mr. Koslow is the shareholder in charge of the Firm s growing gaming, entertainment and sports law practice. He is also one of a handful of Florida attorneys to be a member of the prestigious International Association of Gaming Attorneys and is Vice Chair of the Sports, Entertainment and Gaming Committee of the Hospitality, Community Recreation and Common Interest Developments Group for the American Bar Association. He is also a member of the Florida Bar Committee on Entertainment and Sports Law. Mr. Koslow has considerable experience in the areas of gaming and pari-mutuel law through his representation of national, publicly traded casino and lottery companies, gaming machine manufacturers and distributors, and parimutuel operators, such as Pompano Harness Track. He was instrumental in helping win passage of Amendment 4, the ballot initiative which amended the Florida Constitution in 2004 allowing for slot machines at pari-mutuel facilities in Broward County. He has been working closely with industry leaders and legislators on legislative and legal efforts to implement the amendment on behalf of his many gaming clients. He has also drafted legislation previously to authorize new products for Florida s pari-mutuel industry. On behalf of Pompano Harness Track, he helped lead the negotiation and closing on the definitive acquisition agreements for the track and was successful in securing an agricultural tax exemption for half of all track land, thus saving thousands of dollars in property taxes His prominence in these areas has lead him into other aspects of entertainment law, including sports, film, television, and products licensing. He served as Chairman of the Broward Alliance s Film and Television Commission which directs the County s efforts to attract and support movie and television projects He is the editor of Entertainment Law & Business, the Firm s newsletter for the hospitality, gaming sports, and entertainment industries. His article, Victory in Florida: Broward County Scores Slots Electronic Jackpot was published in Global Gaming Business (April 2005). He was recognized by South Florida CEO magazine as one of the Top 100 Most Powerful People in South Florida and Florida Trend magazine recognized Mr. Koslow in 2004 among its Legal Elite in the area of Government Law. This designation was based upon a poll of Florida attorneys, who selected peers in the top 2% of their respective practice areas. Mr. Koslow also has substantial knowledge, experience, and expertise in municipal law, land use, zoning, redevelopment, incentives, property tax relief and related issues. His clients include developers, entrepreneurs,
hotels, restaurants, gaming companies, pari-mutuels and others, all of who value his insights and knowledge of governmental processes and the laws that govern them. His experience is based on his more than five years as a municipal attorney, first as deputy and then city attorney for the City of Hollywood, Florida. He was responsible for directing all aspects of the City s legal matters, including litigation in state and federal court, legislation, land use, zoning, annexation and redevelopment, franchise and contract negotiations and general representation of the city commission, departments, and pension fund. As City Attorney, he also served as Legal Counsel to the City s Community Redevelopment Agency. Mr. Koslow has experience as Bond Counsel, Underwriters Counsel and Issuer s Counsel on over $2 billion (in the aggregate) in tax exempt financings. An active and visible member of the civic and charitable community, Mr. Koslow is past President of the Marti Huizenga Boys and Girls Club of Hollywood, Chair of the Hollywood Art and Culture Center, Chair of the ArtServe Board of Directors, Co-chair of the Capital Campaign for the Broward Outreach Center, a Trustee Board Member of the Hollywood Chamber of Commerce, Board Member of the Fort Lauderdale Film Festival and Board Member of Broward Cultural Council. He has been recognized for his service to the community with numerous awards including ArtServe s Professional ProBono Award, Broward Outreach Center s Community Covenant Award and the Chamber of Commerce Community Spirit Award. The Broward County Board of County Commissioners recognized Mr. Koslow for his contributions to the Broward Cultural Council by issuing a proclamation that designated the Alan B. Koslow Appreciation Day in Broward County. 2 becker & poliakoff, p.a. www.becker-poliakoff.com