City weighs concession-stand contract

Officials estimate that concessions will be the arena's second-largest profit area.
By DAVID SKOLNICK
CITY HALL REPORTER
YOUNGSTOWN -- The city's board of control will consider signing a 10-year contract Wednesday with a Massachusetts company to handle the convocation center's food and beverage services.
The deal with Boston Culinary Group of Cambridge, Mass., has the recommendation of city Finance Director David Bozanich, one of the board's three members, and International Coliseums Co., the development arm of Global Entertainment Corp., the arena's manager.
Boston Culinary is expected to gross about $4 million to $4.5 million annually for handling the arena's food and beverage concessions. ICC estimates it and the city would receive about $2.22 million annually from Boston Culinary if the board approves the deal.
The facility is expected to net $1,153,802 in 2006 when all revenues and expenses are taken into account, according to ICC estimates. The food and beverage concession profits are projected to be the arena's second-largest profit area, with ticket sales at No. 1, Bozanich said.
"The company will provide everything from salt shakers to oven equipment," Bozanich said of Boston Culinary.
Equipment investment
The company is investing up $1.2 million in equipment and materials at the convocation center to provide food and beverage services for the facility, according to the proposed contract. The company also would be responsible for all its utility bills and garbage collection within a 10-foot radius of each of its areas inside the facility.
The proposed contract calls for the city and ICC to receive certain percentages of Boston Culinary's gross sales at the facility.
The city and ICC would receive 31 percent of annual gross sales on concession services on the first $750,000, and as much as 50 percent if concession gross sales reach $1.5 million.
The city and ICC would receive 15 percent of annual gross sales for suite services for the first $350,000, and 20 percent on those sales exceeding $350,000.
The city and ICC would get a flat 15 percent of the annual gross sales of suite services not including tips and service charges. The two also receive flat 50 percent fees for subcontracted food and beverage services and subcontracted vending machine purchase gross sales.
Debt service
The city's deal with ICC and other Global subsidiaries calls for profits from the center to first go toward Youngstown's debt service for the arena. After that, the city gets 70 percent of the arena's profits and the other 30 percent goes to the arena management.
The city's first year estimated debt is $852,353. The arena's cost could be as high as $45.38 million, and the city may have to borrow as much as $12.1 million to make up a funding gap to be paid back over 20 years, Bozanich has said.
Boston Culinary's financial reports, required to be given to the city on a monthly basis, as well as other center-related reports, will be examined for the city by Cohen and Co., hired by the board of control to serve as the facility's auditor.
Boston Culinary provides food and beverage services for numerous arenas, stadiums, convention and performing arts centers, theme parks, ski resorts and movie theaters. It employs about 12,000 people.
skolnick@vindy.com