STURGIS | The city of Sturgis is being fleeced, and city officials are not doing anything about it, according to the man whose father is considered the founder of the Sturgis motorcycle rally.
Jack Hoel, the son of Pappy Hoel, told the Sturgis City Council and City Manager Daniel Ainslie on Monday night that the city should not have 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 in 2011 cost the city nearly $50,000 that included royalties paid for land the city leased and banner sales to official sponsors, Sturgis Mayor Mark Carstensen said.
Going forward, the city will not have to pay those royalties. The contract passed Monday is retroactive to the 2012 Sturgis motorcycle rally, the mayor said.
Under the five-year contract approved Monday, the city will continue to pay 10 percent to SMRi for the use of the Sturgis trademarks which, in addition to the name Sturgis, includes Sturgis Motorcycle Rally, Sturgis Bike Week, Take the Ride to Sturgis, Sturgis Rally & Races, and Black Hills.
Ainslie said the city received $269,440 from the 2012 rally as a result of its sponsorship license agreement. He says the revenue that is derived from the agreement is vital to the city's annual budget. Ainslie said the revenues generated the vast majority of the profit from the 2012 rally.
Each year the city of Sturgis enters into agreements with businesses such as Jack Daniel’s, Geico, Harley-Davidson, Coke, Budweiser and Dodge, which become “official” sponsors of the 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. The city also 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.
Ainslie said the 10 percent royalty is included in 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. “Give 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 rally events.
Maverick Publishing publishes some of the largest titles in the motorcycle magazine industry, such as American Cycle, Amercian Bagger and Urban Bagger.