Minneapolis parks' Red Bull and Pepsi dealings put Coke contract at risk

The Minneapolis Park and Recreation Board appears to have strayed from its obligations under a lucrative but restrictive contract with Coca-Cola.

The park board signed the $440,000 contract with Coke (pdf) five years ago, promising to sell only Coke products and not sell competitors’ products. Yet drinks from competitors such as Pepsi and Red Bull are being sold and advertised at several park board outlets—even from a vending machine at the park board’s headquarters building.

And by selling a $25,000 permit to Red Bull for the drink company’s photo cube installation on the Stone Arch Bridge last month, the park board appears to have violated broad prohibitions against promotional activity by competitors in park board-managed places.

At stake is a deal potentially worth $500,000 or more in funding to the park board and the Foundation for Minneapolis Parks, taking into account the park board’s 32 to 40 percent cut on sales of Coke products. Coke could terminate the contract and demand reimbursement if it finds the park board has failed to “substantially perform any of the promises set forth in this Agreement.”

General Manager Don Siggelkow signed the five-year contract nearly five years ago, on Aug. 20, 2003. But he told the Minnesota Independent today that the contract is in force through the end of this year. The park board would issue a request for proposals, he said.

Coca-Cola’s main office in Atlanta referred questions to an official at the local Midwest Coca Cola Bottlers who has so far been unavailable for comment.

Siggelkow said he is unaware of instances in which the park board is out of compliance with the Coke contract. When I offered several examples, he asked whether I am a lawyer (I’m not) and suggested that I get a lawyer to say whether the park board is out of compliance.

Here are photos taken within the last few days at the Lake Harriet Refectory building and at a Lake Calhoun vendor’s concession stand. The Refectory sells Red Bull and Pepsi products from the snack bar window, under a Red Bull sign. The vendor displays five Pepsi products, including Gatorade and Aquafina (only two for Coke) alongside a menu board that lists Gatorade. The park board’s contract exempts only “fresh-brewed unbranded coffee and tea products, unflavored dairy products, water drawn from the public water supply or unbranded juice squeezed fresh at the Facilities.” In all other beverage categories, the contract obligates the park board and its concessionaires to sell only Coca Cola products.

Here is a photo of the Red Bull trademark on display at the Stone Arch Bridge last month. As you might guess, this was by no means Red Bull’s only presence during the 10-plus-day event. Under the Coke contract, “No permanent or temporary advertising, signage, or trademark visibility for Competitive Products will be displayed or permitted anywhere at the Facilities.” The term “Facilities” includes “real property owned, managed or controlled by the MPRB.” The park board does not own but has responsibility under a separate government agreement for activities and maintenance on the deck of the Stone Arch Bridge, which links parkland at either end.

And here is a vending machine at the Minneapolis Park and Recreation Board’s headquarters building on West River Parkway. The offerings include Pepsi, Diet Pepsi and Mountain Dew, a Pepsi product.

INSERT VENDING MACHINE PHOTOS HERE

Not shown but coming up next month is the Minneapolis Bike Tour, for which Chippewa Spring Water is a sponsor, as it was last year. The park board and Chippewa logos comingle on the event’s Web page, in apparent violation of the park board’s contract with Coke.