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A 3-ring circus at the arena?
Here’s a reality check for Youngstown Finance Director David Bozanich and his underlings: Mediocre government is no match for corporate America.
Bozanich and other city officials responsible for keeping the doors of the city-owned Chevrolet Centre open tried to get the better of three major companies that had expressed an interest in managing and operating the sports/entertainment facility. They failed.
Indeed, their attempt at big-league gamesmanship could result in the city’s having to bear the entire financial burden of the arena. That’s what it was trying to avoid when it sought proposals from national companies that own and operate sports and entertainment facilities.
The three that have been in negotiations with the city are Global Spectrum of Philadelphia, a partnership of The Cavaliers Operating Company of Cleveland and International Facilities Group of Chicago, and SMG of Philadelphia.
The response from Mayor Jay Williams to the initial presentations by the nationally renowned companies was positive and encouraging. Last month, it appeared that one of the three would end up with a contract giving it exclusive operating and management rights.
Bozanich’s communication
But then on Feb. 26, the companies received the following communication from Bozanich:
“The City has carefully reviewed the proposals submitted by the three companies who are interested in providing management services for our Chevrolet Centre. There is a question whose answer is vital to determining how the City proceeds.
“Please provide a written response or e-mail to the following:
“If the City enters into an agreement with your company and any subsidiary companies you recommend, for management of the Chevrolet Centre, as proposed in your response to the City’s RFQ, will your enter into a long term management contract with the City which guarantees a net payment to the City in the amount of $900,000 on an annual basis?
“If possible please respond no later than February 27, 2008 at 4 p.m.”
It should come as no surprise that all three companies had a “you’ve got to be kidding” reaction.
What was the city offering in return for $900,000 a year? Nothing, nada, zilch.
On Feb. 3 in this space, Mayor Williams was urged to exact as good a deal as possible from the companies, seeing as how he found their initial proposals so attractive.
It was suggested that the city should put on the table the offer of an ownership stake in the arena in return for a $11.9 million investment — either in lump sum or in annual payments. The $11.9 million is the amount the city borrowed to fill the financing gap in the $45 million arena project.
It costs the public treasury $755,650 a year just to cover the interest on the loan.
But there was no quid pro quo to be found in Bozanich’s letter.
It seems the city knew Global Spectrum, Cavaliers Operating and SMG would not take the letter seriously, because the administration followed up with another proposal.
This one has already been turned down by the Cavaliers Operating Company and could well be rejected by a second company this week.
Why?
Because what the city wants is for the Chevrolet Centre’s current management structure, led by Eric Ryan, a concert promoter who had never run a major arena until he was hired on a temporary basis by the city, to be retained.
Consultant
The Williams administration only wants to hire a consultant.
In other words, nationally renowned, experienced sports and entertainment entities are being asked to offer their services to a team whose members have not been trained or hired by them.
So what happens if all three companies walk away? The city will be left holding the bag — and the future of the arena will be bleak, indeed.
The city does not have the financial wherewithal to bring in big-name entertainment that would draw huge crowds and enable the arena to turn a profit.