Chevy Centre loses $23K

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Chevy Centre loses $23K

The center incorrectly paid $140,850 to the SteelHounds' parent company.

By DAVID SKOLNICK
CITY HALL REPORTER

YOUNGSTOWN — The Chevrolet Centre's financial loss for its first year of operations isn't as bad as expected — at least on paper.

The center finally closed the financial books Friday on its first fiscal year, from October 2005 to this past September. The center typically had provided monthly income statements on the center about two to three weeks after that month ended.

The financial statement shows a loss of $23,653 for the center's first 12 months. City officials said in September the center expected to finish the fiscal year with a loss of $150,000 to $175,000.

Overpaid

That estimate would have been correct if Global Entertainment Corp., the company managing the center, didn't discover it overpaid Blue Line LLC, the parent company of the Youngstown SteelHounds minor league hockey team, by $140,850. Global sent a $140,850 invoice to Blue Line Thursday afternoon. The team plays its home games at the city-owned facility.

Global paid that six-figure amount to Blue Line for the sale of club seats, located in Sections 204 and 205 in the middle of the center. Blue Line's contract with Global calls for the company selling club seats for hockey games to receive all that revenue. Global sold all of the club seats that cost about $1,000 each.

Global has unsuccessfully attempted to reopen negotiations with Blue Line to include a $1.50 parking fee and a $1.50 facility fee on each SteelHounds ticket. Tickets purchased at the center's box office for the hockey games are the only one with the $1.50 facility fee, and no SteelHounds tickets include the parking fee.

Global, based in Phoenix, discovered the incorrect payment to Blue Line while conducting the final review of its year-end financial statements and its tenant contracts, said Thomas Sadler, president of Encore Facilities Management, Global's facility management subsidiary.

"Anytime you have a building in its first year, some things require adjustments," he said.

The $140,850 is "a fairly big adjustment," Sadler added.

Herb Washington, Blue Line's president, said he would never "give up our prime seats of hockey on the blue line and not get dollars in return.

"I have more sales people than the building. Why would I do that? It wouldn't be a good business practice. It was never the intent of the [contract] language regardless of how the city or Global interprets it," he added.

Problems

The center experienced a number of problems during its first year, including incorrectly estimating a six-figure surplus, the failure to collect parking and facility fees during the center's first few months of operations, the recent resignation of its general manager after $700 in on-site parking money went missing and the news this week that the city wasn't getting $2 million from the state capital budget as expected.

"Because of the various issues, we didn't see [the overpayment to Blue Line] until our final review," Sadler said.

It's "easy to draw the conclusion" that problems negotiating with Blue Line resulted in the $140,850 invoice, but Sadler said the issues are not related.

Washington said that the issues are directly related, however.

"I'm not going to let anybody make me be the bad guy in this situation because of a lack of revenue" at the center, he said. "This is about nothing more than parking and me not allowing the city and Global to put $3 additional on the hockey tickets. It's that simple. We need to be factual about what this is about."

When asked if the invoice could result in lawsuits, Sadler said he didn't know what would result from this.

Sadler also said "everything is on the table" regarding negotiations with Blue Line when questioned if the hockey team could keep the money if it agreed to the parking and facility fees on its tickets.

Global has not paid Blue Line for any club seat revenue this season. As part of a revised contract with the city, Global is responsible for any deficit at the center.

Blue Line's contract calls for the company to receive the full proceeds of any seats it sells for hockey games as well as all the money for SteelHounds merchandise, and it gets a portion of the sponsorship money at the facility.

Also, Blue Line received one of the five free vehicles leased to the facility as part of the Chevrolet Centre's naming rights' contract with General Motors.

Projection

Through August, the center reported a $106,165 deficit with the expectation from city officials that it would rise to $150,000 to $175,000 after September was included.

With the $140,850 listed on paper as profit for September, the center ended that month with an $82,512 profit. Without that club-seat income, September would have shown a $58,338 deficit.

Global expected the center to turn a $1.15 million profit in its first year, but significantly reduced that amount this past January to $652,264. Even if Blue Line pays the money Global says is owed to it, the center still finished its first year with a deficit.

skolnick@vindy.com