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SMG exec supports switching Covelli vendor
Arena would profit more through JAC, official says
YOUNGSTOWN
A top official with SMG, the Covelli Centre’s management consultant, said his company supports having the firm running the facility’s day-to-day operations take over as the facility’s food-and-beverage vendor.
Hank Abate, SMG’s senior vice president of arenas and stadiums, told The Vindicator that “for Youngstown, it makes more sense to do it in-house and get more money.”
The proposal, supported by the city’s administration, would replace Centerplate as the vendor with JAC Management, the Struthers firm that manages the center’s day-to-day operations. The firm is headed by Eric Ryan, the center’s executive director.
Ryan says his company can take over the food-and-beverage operations as soon as May 1.
“We’re of the opinion [that] to raise more revenue [at the Covelli Centre], the in-house option is always a good option,” Abate said.
With JAC in charge of food and beverages, the center would have more flexibility, Abate said.
Centerplate gives 27.5 percent of its profits to the arena. Ryan said he would increase that amount to 37.5 percent under the JAC deal.
Also, Centerplate doesn’t provide food and drinks at all center events while JAC would.
Facilities with annual food-and-beverage sales between $1 million and $4 million get more money when they have in-house vendors, Abate said.
Covelli’s food-and-beverage sales were slightly under $1 million last year.
City council members say they want more details before deciding. Members also are hesitant to hire JAC, which has no experience with selling food and drinks at a venue the size of the city-owned Covelli Centre.
Council members said Wednesday that they wanted input from SMG before making a decision.
“Council wants to talk to SMG [directly] to hear what they say,” Council President Charles Sammarone said Friday. “They’re the so-called experts on this. We have questions. One question I would ask them is it worth our while to go out and get additional proposals?”
Under the proposal, the city would pay $467,762.32 to Centerplate to buy out the remainder of its 10-year contract, which expires September 2015.
The center currently is giving $9,026 a month to Centerplate as a repayment of the $1.2 million investment the company made at the center for equipment and materials in September 2005.
The center received $194,563 from the sale of food and drinks last year, according to its income statements.
Ryan contends his company could increase that amount by $100,000 a year.