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Details on Ocean Pines’ agreement with Matt Ortt Co.

By Josh Davis, Associate Editor

(April 12, 2018) The Matt Ortt companies will collect $100,000 a year for the next wo years to manage the yacht club in Ocean Pines and the beach club in Ocean City, according to a copy of the management contract between the Ocean Pines Association and Matt Ortt Companies.

A copy of the two-year contract obtained by Bayside Gazette shows that it was signed on March 29 by Association President Doug Parks and Matt Ortt. The two-year agreement gives the company rights to manage the yacht club in Ocean Pines and beach club in Ocean City.

The agreement involves a $12,500 monthly management fee with eight payments due May 2018 through Dec. 2018, totaling $100,000, and eight payments due May 2019 through December 2019, also totaling $100,000.

Per the agreement, the yacht club is to be open seven days a week, May 1 through Sept. 30, and operate on a “reduced schedule of a minimum of three days a week from October 1 through April 30, except as agreed upon by the parties.”

The beach club will be open seven days a week, “from Saturday of Memorial Day weekend through Monday of Labor Day.”

Additional to the flat management fee, Matt Ortt Companies can earn bonuses several ways.

The first year of the agreement includes a budget bonus and a profit bonus. The budget bonus would pay “fifty percent of every dollar of net income generated … that exceeds the budget,” up to $50,000 at each facility. The yacht club budgeted a $92,961 net loss and the beach club budgeted a $101,308 net gain.

Also included is a profit bonus “if the combined net income for the facilities results in a net profit of more than $100,000” based on a sliding scale: 10 percent for $1 to $25,000, 20 percent for $25,001 to $50,000, 30 percent for $50,001 to $75,000, 40 percent for $75,001 to $100,000, and 50 percent for upwards of $101,000.

The year-two bonus structure is a little more complicated, essentially offering a doubled bonus if the combined net income of both facilities in fiscal 2020 is greater than the combined net income of fiscal 2019.

According to the contract, “For example, if at the end of year two of this agreement the net combined income of both facilities is $60,000 greater than the net combined income of the facilities for year one, the bonus will be equal to the total bonus paid for year one plus $18,000 (30 percent of $60,000).”

If the net income of both facilities were lower during the second year, the company would receive the total bonus from year one “less fifty cents for every dollar under the [2019] net combined income.”

Additionally, Matt Ortt Companies will receive 5 percent commission on gross banquet revenue for private events and 2 percent commission on gross banquet revenues for association clubs and organizations.

The association can terminate the agreement without cause from Jan. 1 to March 31, 2019, without paying damages “in the event that the combined year to date net losses for the facilities through December 31, 2018 … exceed $24,499.99.”

If that requirement is not met, the association is responsible for management fees through the date of termination and any bonuses due. If the agreement were to be broken without cause, the association would pay damages of $50,000.

Matt Ortt Companies is responsible for management and operation of the facilities, including food and beverage, janitorial services, and banquets and other special events. The company can set its own hours of operation and “determine the menu, portions and prices.”

The agreement requires “ongoing surveys to determine customer satisfaction” to be provided to the association once a month, as well as monthly profit and loss statements.

Also included in the contract, “[the] manager shall have sole authority to hire, fire, and manage its employees and consultants.” The association will pay for “service charges for telephone services” and “provide the point of sale software and hardware for use by” the company.