Facility's figures frustrate city officials

The financial miscalculations leaves the city 'subject to ridicule,' the mayor says.
By DAVID SKOLNICK
CITY HALL REPORTER
YOUNGSTOWN -- Mayor Jay Williams and some city council members expressed concern and frustration about the difference between the predicted and actual profit made by the Chevrolet Centre during the first three months of the year.
Global Entertainment Corp., which manages the facility, had projected a 458,564 profit for the city-owned center for January through March. Figures released Tuesday show a profit of only 27,440, less than 6 percent of what was predicted.
"How can we miss our projection so bad[ly]?" Councilman Rufus D. Hudson, D-2nd, asked Tim McGrath, the arena's executive director, at Wednesday's council meeting. "We're nowhere close to those projections."
The center opened in October 2005.
A look at the numbers
Global projected a 652,264 profit for the center's first fiscal year from October 2005 to September 2006. That number was revised from an original projection of 1.15 million. The center finished its first fiscal year with a 23,653 deficit.
Global also projected a 356,446 profit for October to December 2006, the first quarter of its second fiscal year. But the profit was actually 144,323.
Global's initial projection for April to September was a 185,056 loss, but officials said Tuesday they expect a profit during those six months.
Youngstown is a new entertainment market, and Global is still working on a successful formula to make the center a success, McGrath said. But it's going to take time, he said.
Arenas the size of the Chevrolet Centre in markets similar to Youngstown have about nine concerts annually, McGrath said. The center has held or has booked 21 concerts for this fiscal year, he said.
Also, the facility has held or has booked 109 events this fiscal year so far, compared with 87 during its inaugural year, McGrath added.
"It's great to have these events, but we need events that are profitable," Hudson said.
Councilman Mark Memmer, D-7th, said 200 events could be held at the center, but it's meaningless if attendance is poor. "If no one comes to watch, the facility will fail," he added.
What's guaranteed
Regardless of a profit or a loss for the center, Global guarantees at least 600,000 to the city, McGrath said. If the center makes less than 600,000, Global will pay the difference out of its pocket to the city.
McGrath added that he knows of no other major arena management firm that provides such a guarantee.
"The reality is we're in the black, we're growing the market, and the city is guaranteed" 600,000, he said.
Williams agreed the guarantee is great, but it's also important for Global to have realistic financial projections and to meet those numbers.
By being so far off from its projections, Williams said the city is "subject to ridicule."
The city had to borrow 11.9 million in 2005 to fund its portion of the center. The city's annual debt on the loan is 755,650 so even with the 600,000 guarantee, Youngstown will have to pay 155,650 out of its pocket to make up the shortfall.
Councilman Artis Gillam Sr., D-1st, said he'd be happy if the center broke even this fiscal year because the facility is instrumental in the development of the city, particularly its downtown.
Meanwhile, Global is negotiating with Blue Line LLC, the parent company of the Youngstown SteelHounds minor league hockey team, the center's main tenant. The team won't include a 3 parking and facility fee, that would all go to the center, on its tickets.
When asked if he sees the fee dispute ending soon, McGrath said, "Yes, I do." But he didn't say what he expects to be the end result.
skolnick@vindy.com