Port bonanza in extended cruise contracts
Written by Susan Danseyar on December 8, 2015
County commissioners have unanimously authorized administrators to extend agreements with Geneva-based MSC Cruises and London’s Disney Cruise Line to expand their operations at PortMiami, bringing an expected $9.6 million and $7.8 million in revenue, respectively, in the next two years, with MSC’s payments to total $90 million by the end of its 11-year agreement.
MSC, an Italian cruise line owned by privately-held Mediterranean Shipping Company S.A., is the fourth largest cruise operator in the world. In fiscal 2014, it moved its South Florida cruise operations from Port Everglades to Miami’s seaport and agreed to handle at least 80,000 passenger operations yearly here.
The agreement commissioners approved last week extends the preferred berthing agreement, which expires on Oct. 1, 2016, an additional 11 years to Oct. 1, 2027 with a five-year option to renew subject to further negotiations.
Minimum annual passenger guarantees to the port remain the same. However, said Deputy Mayor Jack Osterholt in a memo to commissioners, the cruise line will guarantee a minimum 425,000 movements a year beginning when it brings the new MSC Seaside in fiscal 2018 and each year thereafter for the term of the agreement.
MSC guarantees $7 million revenue for the county in fiscal 2018, escalating to $9.8 million in fiscal 2027, representing a 3% increase each year in docking and wharf fees.
According to Mr. Osterholt, guaranteed revenues to the port under the agreement are $90 million. However, he said, should MSC continue to come into the port with a seasonal ship, based on terminal availability, along with the year-round Seaside vessel, the anticipated revenue to the county would approximate $150 million during the term.
In exchange for the long-term agreement and increased guarantees, the port will spend about $25 million to upgrade Terminal F to accommodate the Seaside’s size and additional passengers.
The county can also elect to make additional improvements to increase capacity for even larger vessels for which the port is competing.
The port is recognized as world-class “with a diversity of cruise brands appealing to a range of passenger budgets,” Mr. Osterholt wrote. “The growth of MSC at the port will strengthen Miami’s offerings of luxury cruise brands to passengers around the world.”
The agreement with Magical Cruise Company Ltd., doing business as Disney Cruise Line, extends its original agreement to Oct. 1, 2018, with the company having the option to a one-year renewal. Disney will pay the county about $7.8 million over that span.
Should Disney fail to meet its annual guarantee of 100,000 passengers in any year, it is to make a shortfall payment to the county within 30 days of the end of that year.
Mr. Osterholt pointed out Disney committed in its original contract to a minimum of no fewer than 100,000 passenger movements each fiscal year but actual volumes exceeded that: 147,700 passengers in fiscal 2013, 186,000 in 2014 and 222,300 in 2015.
The port will seek to continue to accommodate Disney vessels at Terminal F. However, the seaport has the right to schedule Disney at another terminal if thaqt doesn’t interfere with preferential berthing rights of another cruise line and if Disney approves in advance.
Mr. Osterholt said Disney continues to strengthen Miami-Dade County’s offerings of family-oriented brands to passengers throughout the world.