Events Centre deficit deepens

JOHN MOORHOUSE Thursday, May 21, 2009 Penticton Herald

The South Okanagan Events Centre and two other city facilities operated by Global Spectrum have chalked up a $670,000 deficit for the first three months of this year. That represents roughly two-thirds of the budgeted $970,000 shortfall for all of 2009, including the Penticton Trade and Convention Centre and Memorial Arena, which are also operated by the private sector management firm. However, Curtis Webb, manager of Global Spectrum‘s Penticton operations, said Wednesday higher concerts and other revenues are expected for the remainder of the year. The deficit figures were revealed by Coun. Mike Pearce during discussions with Penticton Minor Hockey Association president Bruce Judd at Tuesday night‘s city council meeting. PMHA is objecting to a proposed five per cent increase in ice costs for 2009-10. Council, city staff and Global Spectrum management are scheduled to meet on May 27 to further discuss the deficit issue. Two vice-presidents from Global Spectrum‘s parent U.S. company will also be attending. Mayor Dan Ashton said council wants to discuss Global‘s plans and whether the company is bringing the right forms of entertainment into the area. “It‘s a sober second check on the direction that we‘re going. That‘s what we‘re asking for,” he said. “We‘re being very proactive in this.”

Ashton acknowledged that council has concerns regarding the shortfall, but he warned against thinking similar deficits will continue throughout the year. “Business isn‘t just conducted on a day-to-day basis, it‘s conducted on a daily basis and you have peaks and hollows,” he said. “Traditionally January, February and March are slow months in any business in this community.” Ashton said the city budgeted what it feels is a realistic subsidy for 2009. “New businesses aren‘t that profitable right off the start. It does need some track time and usually it‘s up to two years before businesses start seeing black instead of red,” he said. “We want to continue to reduce that and make the Events Centre a very profitable entity for this community.” Pearce noted the city had previously budgeted a $750,000 deficit for the convention centre and Memorial Arena prior to their operations being taken over by Global Spectrum. Webb declined Wednesday to explain the reasons behind the shortfall, noting he doesn‘t want to make excuses. “It‘s obviously my job to drive revenues here at the Events Centre,” he said. “It was a very difficult first quarter from a lot of standpoints.”

But Webb said the operations are expected to improve substantially as the year progresses.“Our rolling forecast shows us doing a lot better than that (first quarter deficit)” he said. “We‘re not showing a $650,000 loss at the end of 2009.” He said the convention centre, Memorial Arena and SOEC community rink are all doing better than budgeted. Webb said although convention bookings are down in 2009, the outlook is brighter for the next four years. The last few concerts at the Events Centre have wound up in the black, Webb added. “We‘re making money on the shows. We‘re just not making as much money as we thought we‘d be making,” he said. Global Spectrum has several other shows lined up for the Events Centre this year and hopes marketing efforts will convince people to attend, Webb said. A concert featuring country music stars Brooks and Dunn, scheduled for October sold out in one weekend. An August concert by the Tragically Hip is also expected to sell out. Announcements of other concerts and events are pending. However, Webb agreed there is a limit to how many entertainment events can be booked before the Penticton area market becomes saturated. “There certainly has to be a cap somewhere on how much people have in their disposable income,” he said. “It might not necessarily be a number. It might be quality of events versus quantity of events.” The net deficit for the three months SOEC operated in 2008 was about $63,000 more than budgeted. The city assumed this shortfall by reallocating funds from other budget areas.