Sunday, May 29, 2011
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Covelli Centre Executive Director Eric Ryan
YOUNGSTOWN
Centerplate, the Covelli Centre’s food-and-beverage vendor, is willing to reconsider giving up that position if the facility’s management firm takes over the responsibility.
But the company is holding steady on its refusal to leave if Youngstown city officials plan to sign a deal with a competitor.
At stake in this debate is at least an additional $100,000 to the city from the facility at a time when the city has bigger Covelli bills coming due.
The city received $194,563 from the sale of food and drinks last year. Eric Ryan, the head of JAC Management, the firm that runs the center’s day-to-day operations, contends his company could increase that amount by at least $100,000 annually by better cost controls and offering food and drinks at all events, no matter the size.
Plus Ryan has suggested adding food-and-drink service for tailgating or outdoor events — something Centerplate doesn’t do.
For the city-owned center, every dollar counts.
The facility ended 2010 with a $110,434 operating surplus, plus the city received an additional $218,429 from a 5.5 percent admission tax on tickets sold for events at the center.
The tax and the operating surplus help offset the $670,000 the city owes annually in interest on $11.9 million it borrowed in 2005 to help build the center. This year, not only does the city have to make another interest payment, but it has to make a $300,000 principal payment by Sept. 2.
So an additional $100,000 annually would be helpful.
It was only a few days ago that Ryan said having JAC replace Centerplate is “a dead issue to me unless someone tells me otherwise.”
That came after Gregory Fender, a Centerplate senior vice president, wrote Ryan that the company wasn’t going to leave the Covelli Centre because of talk by members of council about accepting proposals from other businesses to possibly run the facility’s food-and-beverage operations.
But when asked Friday by The Vindicator if the company would reconsider if the city hired JAC, Bob Pascal, Centerplate’s corporate vice president of marking and sales, said: “Centerplate would love to sit down with the city and JAC and have a true discussion about the center” and Centerplate’s role as the food-and-beverage vendor.
He declined to comment further, saying it wasn’t appropriate to have that discussion in the newspaper.
When told about what Pascal said, Ryan said Centerplate’s “contract is with the city, and if the city decides it wants to reopen negotiations, I’d be willing to do so.”
On April 6, Ryan proposed to city council that his company take over the food-and-beverage vending at the center. The proposal is supported by the city administration.
Under the deal, the city would pay Centerplate $460,000, which is the balance of the $1.2 million the company spent for equipment and materials when the center was built in 2005. The payment would replace the $9,026 per month the city now pays toward the $1.2 million. The payments would run through September 2015 if Centerplate stayed. The city would keep all equipment and materials.
Council members have, for years, complained about the food-and-beverage contract — particularly the prices, the lack of local vendors and flexibility.
At the April 6 meeting, council members said they wanted more details on the proposal before deciding.
They also said they were hesitant to give JAC the contract because the company has never handled food-and-beverage operations at a facility the size of Covelli, and they wanted to give other businesses a chance to submit proposals.
A few days after Ryan met with city council, an executive with Sodexo, a food-and-beverage management company with 6,000 national accounts, contacted the city expressing interest in taking over for Centerplate.
Because council wanted other proposals before making a decision, Fender wrote Ryan that “we have no desire to see one of our competitors take over this contract nor do we intend to further negotiate the buyout of our investment.”
Councilman DeMaine Kitchen, D-2nd, said council isn’t “shutting the door” on JAC’s taking over that aspect of the center.
Council still needs to talk with JAC officials to determine whether they will be as good at running the center’s food-and-beverage operations as they are at booking shows for the facility, he said.
“We’re looking for the administration to make the case that, one, there is no need to bid it out because Centerplate will not give it up unless it’s run in-house; and two, JAC has the ability to handle it,” Kitchen said.
“If [JAC is] capable of doing it, then by all means do it,” he added. “If not, keep Centerplate there.”
Mayor Jay Williams said he hopes a deal to replace Centerplate with JAC can occur.
“It’s been talked about for years,” he said. “This is an opportunity to better the position of the center in terms of profitability and community use.”
Also, Covelli Enterprises — a restaurant owner and franchisee for Panera Bread and O’Charley’s and has the city-owned center’s naming rights — has “offered to assist in any way to make the food-and-beverage operations successful and efficient,” Ryan said.
Attempts by The Vindicator to seek comment from Allen Ryan, director of corporate affairs for Covelli Enterprises, were unsuccessful.
The administration and JAC wanted the change to occur earlier this month to take advantage of outdoor events at the facility. Centerplate doesn’t sell food or drinks at outdoor events.
“The high degree of profitability for the summer has probably passed, but in the long run, [going with JAC] is good for the facility,” Williams said.
The Erie County Convention Center Authority, which oversees the Louis J. Tulio Arena in Erie, Pa., ended a 20-year agreement with Centerplate and its predecessor companies in April 2010.
The authority opted to run the food-and-beverage operations itself, a move that’s proved to be financially successful, said Casey Wells, its executive director.
“It allowed us to control pricing, product and service,” he said. “Centerplate is a good company, but it isn’t there to break even. They’re there to make a profit.”
Wells added: “The feedback we’re received is that the service, offerings and menus are better.”