Chevy Centre a hard nut for city to crack

Youngstown city officials face a big decision in the coming months as to what they’ll do with its Chevrolet Centre.

The center has failed to show a profit. Even if the center makes money in future years, it won’t be nearly enough to pay the $11.9 million the city borrowed to help finance the facility’s construction.

The city terminated its management contract with Global Entertainment Corp. on Oct. 31. Under that company’s watch, the center lost $278,041 in two years.

The city is reviewing three preliminary proposals from companies wanting to operate the center. The proposals came from well-established names with only one including financial projections. The one that did, Global Spectrum of Philadelphia, has the center making a modest profit of close to $300,000 in its first year. That’s just not enough.

Interest payment

If the center doesn’t earn about $800,000 in profit a year, the city can’t even cover the interest payment on the $11.9 million it borrowed for its share of the facility’s $45 million construction cost. Two-plus years after borrowing that money, the city has paid absolutely nothing toward the debt.

There is absolutely no indication that the center can come close to covering the annual interest payment. Forget about paying anything toward the principal right now.

Unrealistic projection

The city’s come a long way from the initial public financial projection by Global Entertainment that the center would make $1.15 million in its first year. That was either a pipe dream or Global’s way to sucker the city into hiring them.

Those who repeatedly questioned the accuracy of the projection received mocking looks and sarcasm from city officials.

These people were dismissed as detractors and naysayers when they were just being realistic.

Youngstown officials also initially told the public not to worry about the $11.9 million.

The state was going to come through with $2 million in its 2007 capital budget. When the budget was released in December 2006 in the final days of Gov. Bob Taft administration there was no money for the center. City officials have said with Ted Strickland, who represented a portion of Mahoning County for four years in Congress before becoming governor, running the state, it will get that money. Strickland’s ending his first year as governor and there’s no indication the state is going to give money to Youngstown for the Chevrolet Centre.

The city was also supposed to get $1 million from the state in the 2009 capital budget. The details of that budget are to be released in December 2008. We’ll have to see what happens there.

The city expects to select a company to manage the facility by the end of March 2008.

A number of city officials have repeatedly said they learned a lot — primarily not what to do — during Global Entertainment’s two years running the center. A great deal of evaluating the three proposals is needed before hiring a center manager. You don’t want to make the same mistake twice.

Another option is to keep Eric Ryan, the interim center director, at the helm and see if any of the companies interested in running the facility would be willing to serve as a consultant or adviser for a reduced cost.

Poor attendance

The Mahoning Valley is not a major entertainment stop. It’s also not a great place stop for classic rock concerts. The acts want a lot of money to come here forcing the ticket prices to be out of the price range of many people. That leads to poor attendance and financial failure for the center.

We’ll still get Disney on Ice and the Trans-Siberian Orchestra.

But instead of Kenny Loggins and the Doobie Brothers, we’re going to see a lot more trade shows and lower-tier cheaper entertainment acts. The center will probably get four or five “classic rock” concerts a year, and will need to closely evaluate each one to see if the shows can turn modest profits or make sure the losses are minimal.

The problems at the center are easy to identify. The challenge for the city and a management firm is to find the solutions.