Venue Contracts: Negotiating the best possible terms for your event.
Are you the person in charge of selecting a venue? If so, this little article might be useful for you. Below I discuss a few basic terms to be on the look out for in venue contracts. Plus I share a few other important considerations for selecting the venue for your event. It doesn’t matter if you are booking a wedding or a conference, venue contracts are almost always negotiable. Nothing herein contained should be construed as legal advice. Always seek attorney review before you sign any contract. Further, before you get to contract, consider allowing your attorney the opportunity to negotiate a few basic terms.
Hosting an event such as a concert, a banquet or fundraiser can be a fun and exciting undertaking. But contract mistakes can be terrible and expensive. So get it right but making sure you understand the terms upfront.
There are so many elements for an event to consider the least of which is your selection of venue. Other elements include capacity, event goals and technical requirements. Venues can be thought of as any place where your event happens. If you are hosting a birthday party and you rent a pavilion at your local park the park’s pavilion is the venue. If you are bringing a band to perform on your campus the venue is likely the building or area of campus that you use to host the band and your guests. What about the other elements I mentioned at the top of this paragraph?
Trivia Question: When the March for Life hosts its annual national March for Life in Washington, D.C., what is the venue? Is it the streets where marchers march? Is it the National Mall where the Rally is held? Is it the hotel where the March for Life Conference is held? Answer: All of the above. Each location where an aspect of the national March for Life occurs is technically a venue. But for purposes of this article we are most focused on venues where contracts are created for hosting the event. The venues I am thinking about include hotels, convention centers, stadiums, banquet halls, etc.
- How do I select the right venue for my event? This article assumes you know your basic requirements for selecting the appropriate venue. Important considerations for your event might actually impact your venue decision. For example, how many people do you need to attend? Do you need food and beverage? Do you need parking? Do you need hotel rooms? Do you need audio visual or other technical assets? If you are booking an artist of national figure does their contract (or rider) stipulate certain venue requirements for staging or production? The majority of this article assumes you know what you need in terms of venue selection. If you don’t know what you need, feel free to drop me a line and we can speak about your event.
- How do I negotiate the best possible terms for my venue contract? The answer is in the question: “Negotiate!!!” Contracts for stadiums are going to be very different than contracts for hotels. Either way, stadiums and hotels are in the business of making money. These venues leverage their buildings and accommodations to maximize revenue. One of the best ways for venues to earn money is to rent out their facilities to third-party event organizers. Most big venues have iron clad terms and conditions along with boiler-plate designed to maximize their profits and minimize their risks. But it is important to remember that all contracts are negotiable. It’s your money they want. A few considerations on leverage and your power to negotiate:
- Where is the venue located? Are there “other” venues nearby that have similar facilities? If so, never go with the first offer. Even if you love the particular location try to leverage the “other” locations as a way to gain concessions or more favorable terms. For example. If Hotel One requires a food and beverage minimum of $100 per person. See what Hotel Two can offer. Try to negotiate each point where they will be flexible. Do not be afraid to play both sides and let them know you are doing it. Try saying something like this: “Hotel One – we are looking for the most competitive deal. Can you beat or match Hotel Two?”
- Does the venue require you to use their F&B or their AV (audio visual)? Most venues have strict rules for F&B requiring use of their F&B departments. Sometimes however you can negotiate a buy out or third-party vender to cover your F&B needs. Why would this matter? Well it would matter if you need to feed volunteers or staff. Pizza from Dominos for $100 might be all you need. However it’s possible the hotel could charge you hundreds if you are required to use them (even for pizza).
- Be Aware of Corkage Fees! Some venues, in fact many venues, have so-called corkage fees. Many years ago I fellow I know hosted a wine and cheese party in his hotel room. There was a major conference going on at the hotel at the time. He invited guests from the conference to attend his wine and cheese party in his room. A few hours later he received a knock from the hotel manager. They threatened to charge him a corkage fee per bottle of wine or boos that he had opened. Luckily it was an honest mistake and the hotel manager let it go. But be aware!
- Corkage fees continued. At another event I was part of we offered guests a wine hour. The hotel required a $15 per bottle corkage fee! The wine had been donated and likely only cost around $5 a bottle. Be aware!
- F&B Exclusivity. Many years ago I rented out a baseball stadium for a charity concert in South Florida. The venue had an exclusive deal with a vendor for all concessions. This means no one could sell or buy concessions at the facility without going through the venues exclusive concession vendor. Somehow we managed to negotiate a deal whereby the vendor would give us a percentage of the F&B sales. This particular event was for charity so it worked out. Our argument was we could get a few restaurant vendors to come in as sponsors. In fact we did! Even though the vendor had an exclusive we also negotiated that one of our big sponsors (Miller’s Ale House) could host their own food at a particular location within the venue. We negotiated the heck out of this deal.
Venue Contracts are generally one-sided (favoring the venue). Make sure you are protected against unilateral changes. A few basic terms I would attempt to negotiate into any contract:
- Mutual Consent for modification to terms including changes to facilities or particular rooms. This is critically important. Be sure your contract very clearly states which room or rooms your event will utilize. Be sure the contract indicates these rooms are necessary for the event. Last include language that requires notice by the venue of any changes along with mutual agreement. In other words the venue should not be able to arbitrarily change rooms or other terms without first getting your approval. Why would a room change? This would most likely happen because the venue double books the facility. But other factors could also cause a venue to change facilities or rooms such as renovations for example.
- Termination Clauses. Most venues require termination far in advance of your event dates. Many venues even require you to pay out of pocket fees such as hotel rooms or F&B minimums even if you cancel the event. So make sure you negotiate some “outs” for your event.
- During COVID it became necessary to include COVID and more broadly “pandemic or public health crisis” language as a mechanism for termination without fault.
- Some hotels will insist on payment schedules based on the amount of time between cancelation and the event date. These schedules are almost always negotiable.
- Vendors. Many venues require use of their vendors for things like conferences, booths and expos. These services can be ridiculously expensive. At a recent event an exhibitor at an expo asked for an extra 8’foot table. The vendor who had the exclusive services contacted wanted $500 to move a table! These sort of terms and exclusive deals can seem arbitrary and unfair. The bottom line is to make sure you understand your needs and the venue requirements upfront.
There are many more parts of a venue contract to consider. Remember all terms are negotiable. If the venue is unwilling to negotiate then consider other venues. Particularly in big cities never settle for terms that don’t work for your event. Remember the venue wants your business. So make them work for it by carefully reviewing their terms and conditions. Negotiate!
Contact Royce to discuss your venue contract. Royce can also help you negotiate the most favorable terms possible. Book a consultation today.