Hall deal includes $1 million "break up" fee

By Leon Stafford

The Atlanta Journal-Constitution

The non-profit organization overseeing the Chick-fil-A Bowl will have to pay the National Football Foundation $1 million if Atlanta fails to get the College Football Hall of Fame up and running, according to a document detailing the deal.

Peach Bowl Inc., the parent of the Chick-fil-A Bowl, would pay the "break-up" fee if organizers behind the hall fail to raise the $50 million needed to build the attraction or are unable to find a site to build it on, according to Atlanta's letter of intent to the federation.

The fee would also be due if bowl leaders back out of the deal before a definitive agreement is signed in late December, said Gary Stokan, president and chief executive officer of the Chick-fil-A Bowl.

"We can terminate this, as can they," Stokan said. "We're not planning to. We're going to get this done. We're going to make every obligation in this letter of intent become reality."

The letter, which Stokan released Wednesday, offers a peek into the deal the Chick-fil-A Bowl struck to lure the museum to Atlanta from its home in South Bend, Ind.

The federation will get 3 percent of tickets sales, according to the letter, and play an active role in the design of the 50,000-square-foot building. The 30-year agreement allows Atlanta to extend the hall's stay by five-year increments.

The 20-page letter of intent also stated that a new non-profit organization, headed by Stokan, will be created to oversee the hall's operations.

In addition, the letter offered an out-clause if there is a breach of contract.

"The License Agreement will also be terminable by either party if the other party commits a material breach of the License Agreement and does not cure such breach within 90 days after receipt of written notice," the letter reads.

What isn't in the letter is how Atlanta will pay for the hall. Organizers said previously $5 million will come from the bowl, $5 million from Atlanta-based fast-food giant Chick-fil-A and another $1 million from the Atlanta Development Authority.

Alison Tyrer, a spokeswoman for the Georgia Department of Economic Development, has said the state has committed to helping, but that no specific amount has been mentioned. Any funding would have to be approved by the Georgia Legislature and bowl leaders have said they will take their request to the Assembly.

The remaining money will be raised through sponsorships, Stokan said.

"This is a great opportunity for the city to have a facility like this," Stokan said. "The opportunity to draw hundreds of thousands of people would be good for the brand."

Stokan announced the museum's move late last month, ending several years of efforts to snag the hall. Boosters hope it will be a boon to tourism, drawing at least 500,000 visitors a year.

The hall struggled in South Bend since opening in 1995. Expected to attract about 200,000 people a year, visitation dwindled to about 60,000 annually.

Bowl officials think they can meet their expectations because of Atlanta's ability to attract big sports events, including the SEC championship, the Atlanta Football Classic and the Super Bowl.

Organizers of a Black College Football Hall of Fame, a virtual museum with an annual induction of top athletes in the field, is expected to announce Friday that it will also be headed to Atlanta.

Boosters also think the NFF's College Football Hall of Fame will shine a spotlight on the city for its annual induction ceremony, the first of which organizer's plan to hold 2011.

Stokan said the bowl has done a budget analysis of the hall, but final numbers are not ready. He also said an economic impact study is underway, but is incomplete.

The letter says bowl parent Peach Bowl Inc. has "identified approximately 1 acre of real property (the "Site") which it believes will serve as a suitable location for the Hall." Details on the site, however, were not included and officials have insisted that they are investigating four different sites.

Stokan said "break-up" fee was included as a safety net for the NFF.

"That was structured basically because they had to make a commitment to leave South Bend and ... they wanted to make sure they have a place to land," he said.

Ken Winkler, an attorney with the Buckhead firm of Berman Fink Van Horn P.C., said “break-up” fees are not unusual and have, in fact, become more prevalent.

“Given the scope of the Hall of Fame project, the $1-million break-up fee appears reasonable,” he said.

Jeff Berman, also with Berman, explained that break-up fees are included in many agreements to compensate a party for its expenses and lost opportunity if the other party fails to perform its obligations.