Thoughts and Opinions On Today's Important Issues

Wednesday, February 24, 2010

Same Old With The Arena Profits

It's ok. We can find money for the arena shortfall but not for daycare. Strange set of values at City Hall.

Just read the 2009 and 2010 stories on the Arena's falling income and compare.

Poor Edgar. The Arena was not supposed to be ready yet. The Administration report had at least another year of "negotiating" with Project Ice Track before they would get screwed. You see Edgar wanted the arena started but not finished while he was Mayor or rather, just opened when he was Mayor since if the revenues came short, he would get blamed.

Project ice Track moving to Tecumseh caused heartburn and the deal had to be signed prematurely as far as Edgar was concerned.

Cluck, cluck, cluck. The chickens are coming home to roost.

  • WFCU Centre profits fall short
    May 7, 2009

    If non-OHL events lose money annually at the WFCU Centre it will fall on to the backs of city taxpayers, according to an agreement with operator Global Spectrum.

    The facility manager — which receives a $90,000 annual management fee from the city — has admitted this week in a report to council non-hockey events expected to come in droves has so far failed to materialize. The result has the WFCU Centre generating less than half of the anticipated profits being turned over to the city.

    It was expected $1.5 million would be the net benefit for city pocketbooks from WFCU operations in 2009, but is now instead projected to be $705,131 — over $800,000 less than anticipated.

    Global Spectrum has dropped its projection for non-OHL events in 2009 at the arena from 71 to 39.

    "It’s still profitable but not as much as we hoped at this point," said city treasurer, Onorio Colucci.

    The city could have chosen to go on its own to book shows at the arena, Colucci said, but turned to the expertise of Global Spectrum — the same company that manages the John Labatt Centre in London and more than 70 similar facilities across the U.S. and Canada.

    "If they do really well, they get a share," Colucci said.

    Any profits generated by Global Spectrum belong to the city up to $300,000 annually, according to the city’s contract. Anything over that, the agency keeps 50 per cent of the next increment up to $400,000; 20 per cent up of anything over $400,000; and 25 per cent of any amount over $500,000.

    It is a 20-year deal — but based on certain criteria either party can walk away with 30-days notice, said Jan Wilson, the city’s executive director of recreation.

    The $811,000 shortfall in profits has left the city’s recreation department facing a 12 per cent reduction in its 2009 budget — slated to be $6.5 million — unless council decides to either pull funds from another department or add more revenues from the tax levy. The department’s 2008 budget was $7.4 million.

    A report to council Wednesday pointed to the region’s economy and difficulty booking non-OHL events as reasons for lower revenues. But ice and floor rental revenues at the WFCU Centre are also $300,000 lower than anticipated.

    "Times are tough and people are cutting back," Colucci said. "People can’t afford hockey and ice skating, so there are less people and that lowers the ice time. We feel it’s temporary and it will come back.

    Global Spectrum officials said Thursday being a new venue has been the main hurdle to attracting more shows to the arena.

    "It takes time to get on the radar with promoters and proving yourself," said Rich Trella, general manger of events for Global Spectrum at the WFCU Centre.

    The economy has also been a factor with not as many acts touring or wanting to risk coming to a smaller market such as Windsor, he said.

    "We expect with time we will get more as we get familiar with promoters," Trella said. "Those who have come in are happy with the amenities. There has been a lot of positive feedback, so that will help get the word out about the facility."

    The 71 non-OHL events annually will remain a target, but Trella guesses it will take at least a couple years for Global Spectrum to get there.

    "When we go into new facilities, sometimes it takes awhile," he said. "It takes time to get going with promoters and them to realize money can be made here...

    City administration remains uncertain on future budget projections for the WFCU Centre beyond 2009, Colucci said.

    "Clearly it’s bringing in lower revenues than projected in our budget, but the critical thing is it’s still profitable," he said."

Latest arena news. Note it came out 3 months earlier than last year. Can't have bad news coming out so close to the Municipal election:

  • "Number of non-OHL events at WFCU Centre way below prediction
    February 12, 2010

    The WFCU Centre drew only 18 non-OHL events — a quarter of the 71 spectacles Windsorites had been promised — in its first full year of operation. [They could not even hit their revised number of 39. This is reassuring: 71 remains a "target" and our expensively hired manager "guesses" it will take at least a couple years for Global Spectrum to get there. ]

    The lacklustre performance is forcing city council to withdraw $676,551 from a municipal reserve fund to help balance the recreation department’s 2010 budget. [Isn't that around the amount that Municipal daycare costs]

    “It’s extremely concerning,” Coun. Bill Marra said of the need for another deep draw on reserves after a previous injection of $811,000 for the same purpose last year. [I wonder if Administration can estimate what next year's results might be. Ooops, cannot do that because they would really cause a problem "City administration remains uncertain on future budget projections for the WFCU Centre beyond 2009]

    Global Spectrum, the management company hired to attract and handle bookings at the east-end sports and entertainment facility, blamed the ailing economy and the facility’s newness for 2009’s poor performance. But Marra questioned why those factors weren’t part of the original business plan projections.

    “It’s common sense to me — they should have recognized that. They didn’t come anywhere near their target,” he said. [I thought we retained the firm because of "the expertise of Global Spectrum — the same company that manages the John Labatt Centre in London and more than 70 similar facilities across the U.S. and Canada."

    Wow, sounds like Serco. Watch Edgar (aka Eddie) kick them out and take this over too now. Let's set up another private company for which he can be the Chair. Oh dear, we heard these excuses before..."A report to council Wednesday pointed to the region’s economy and difficulty booking non-OHL events...being a new venue has been the main hurdle to attracting more shows to the arena."It takes time to get on the radar with promoters and proving yourself,"]

    The city ended up pocketing less than half the $1.5 million net income initially projected from WFCU Centre operations in 2009. As recently as last spring, city council was being advised that the facility would see 39 rather than 71 events, but the year ended with the $65-million facility hosting only one special event every 20 days. [Half of the revised number]

    Administration is forecasting a second consecutive under-performing year. This year’s projection is for 40 non-OHL events, down from an originally forecast 71 shows in the big bowl. [That might mean less than 10 real events. I see that Administration is doing some projections. Why not pretend to give us hope]

    A spokesman for Global Spectrum, a division of U.S. giant Comcast-Spectacor, said this year won’t end with another abysmal showing. [What word is worse than "abysmal?"]

    “I don’t think people should worry,” said Trent Merritt, general manager of events at the WFCU. [He may not think so but I do.]

    “We’ve already got some great events lined up, some top-notch events the likes of which haven’t played in Windsor before,” said Merritt, part of a new management team Global Spectrum recently put in place in Windsor. [Don't you find it surprising that we aren't told what these events are. I hope they do better than the old management team.]

    Mayor Eddie Francis said the WFCU Centre’s anemic performance thus far doesn’t mean the facility is a money-loser but that it’s simply bringing in “less gravy.” [Errr, Edgar. We did so poorly in spite of the Spits doing so well and in a new, modern arena. What happens when the Spits don't do so well?]

    By consolidating operations at three former single-pad arenas and a community centre into a single facility, Francis said ratepayers are already saving more than a half-million dollars annually. The “business case” for the WFCU Centre, with its main spectator bowl and three additional community rinks that opened in December 2008, was “not dependent on event nights,” he said. [Clearly not because we could NOT attract events. Global Spectrum is part of the arena MegaProject game. Low construction costs, high revenues to justify marching forward in the wrong spot that turn into high costs and overstated revenues resulting in taxpayers losing. What has happened to the sale of those other 3 properties by the way? When will we be told that they cannot be sold or, to save face, that they wil be used for other purposes]

    City treasurer Onorio Colucci said the centre is “breaking even, give or take about $50,000.” He added that administration struggled over whether to recommend another draw on reserves but concluded the profitability problem is short-term. [Income taxes were short-term too and we still have them. This tells me that profits have dropped from $750K last year to virtually nothing this year]

    The WFCU Centre is simply not making as much operating profit as originally envisioned, said Colucci. [DUH, thanks for telling us the obvious.]

    Colucci said the recreation department’s budget was reduced — from $6.33 million in 2009 to $6.19 million this year — “to reflect the reduced profit” anticipated at the WFCU Centre. He said the $676,551 draw from reserves is based on an assumption of 41 non-OHL events in 2010. [So the draw from reserves will be much higher if 41 events don't take place. How will it jump from 18 to 41 pray tell?]

    A long playoff run by the defending OHL champion Windsor Spitfires would help the bottom line. The city gets a dollar for every Spitfire ticket sold, while the city surcharge on all non-OHL events is $2 per ticket. [I wonder if the Spits winning the Memorial Cup again was factored into the revenues already. If they weren't, revenues will take a huge hit]

    Global Spectrum, which manages dozens of similar facilities across North America, gets a $90,000 annual management fee from the city and shares in any profits above the first $300,000 from events at the WFCU Centre. [The Spits do OK on their lucrative licensing arrangement with the City. They make most of it while we financed the arena. I bet they aren't suffering as much as we are.]

    Marra said he hopes Global Spectrum has got it right this time.

    “I’d rather see them underestimate than have them go through this again. The next council is going to be very reluctant to accept the same answers next year,” he said. [Three times unlucky!]