Event scarcity leads to bleak finances
By DAVID SKOLNICK
CITY HALL REPORTER
YOUNGSTOWN -- With only a charity outdoor motorcycle event on its schedule, it's no surprise June was among the worst financial months for the Chevrolet Centre, a city official said.
"No events translates into no money," said Kyle L. Miasek, deputy finance director and the city's point man on the center. "Next year we'll hopefully make money in June and exceed performance levels."
A financial projection compiled in January by Global Entertainment Corp., the Phoenix company managing the city-owned center, had projected a $17,616 profit for the facility for June. The outdoor motorcycle event was on that projected schedule as well as two concerts and a boxing event that never materialized.
With just the motorcycle event on the schedule, the center lost $130,104 in June, according to figures released Tuesday by the city.
The facility spent $134,046 in June for employee salaries and benefits, utility costs and operating overhead. The facility made $3,942 from the motorcycle event.
Besides January, when the center lost $183,074, June was the worst financial month since the facility opened in October 2005.
June is traditionally a slow month for indoor entertainment facilities as is July and August, Miasek said. The facility hosted two events this month and has two events scheduled for August.
During the first nine months of operating, beginning in October 2005, the center made $113,148. That is 16.9 percent of $669,880, the amount Global had estimated the center would make in its first nine months.
Global had expected to have a $645,221 profit for the 12-month period ending September. Global's projection calls for financial losses in July and August and a small profit in September.
A deal finalized last week restructures the original contract Global had with the city for the center.
Global will pay half of the city's estimated $767,000 debt -- about $383,500 -- at the end of the facility's fiscal year, ending in September, as part of the new contract. Global will also pay the city if the center loses money in this fiscal year.
Income guarantees
Beginning in October, Global will guarantee $600,000 annually to the city, will receive 40 percent of any profit over $600,000, and will get a $12,500 monthly management fee instead of receiving 4 percent of operating income.
Between its management fee and the 15 percent the company receives through the sale of luxury suites, club seats and sponsorship rights, the company is expected to receive about $300,000 this fiscal year. But paying half of the debt service would more than wipe out that money.
What isn't known is how much GetTix.Net, a Global subsidiary, will make from handling ticketing responsibilities for the Chevrolet Centre. The city signed a three-year contract last year to have GetTix.Net handle the center's tickets.
GetTix.Net charges a $3 processing fee for every ticket order, no matter how many tickets are purchased, online or on the telephone. The company also tacks on a "convenience charge" of $2.75 to $5.75 per ticket. That could add as much as $26 to the cost of purchasing tickets for a family of four. Global can add 25 cents to the convenience charge beginning in October, based on its contract with the city.
The city gets none of the processing fee or convenience charge proceeds.
The processing fee and the convenience charge are not included on tickets purchased at the Chevrolet Centre's box office.
Those fees are on top of parking and facility fees, typically $3 per ticket for most events, that goes into the center's budget.
The owners of the Mahoning Valley Thunder, an AF2 [Arena Football 2] team that will begin playing next year at the center, agreed to a $3.50 parking and facility fee for its events.
The city is in discussions with the Youngstown SteelHounds, a minor league hockey team that calls the center its home, about the fees. A contract signed last year between the team and Global doesn't include a parking fee on SteelHounds tickets or a facility fee on many hockey tickets.
The city and Global plan to meet in early August and have a second-year financial projection, from this October to September 2007 finished by Aug. 31, Miasek said.
skolnick@vindy.com