City reviews Global operations
The City of Penticton has initiated a core services review looking at Global Spectrum’s management of the four city-owned facilities under its charge.
The $10,000 consultant’s report will be executed by Helios Group, the same company that drafted a similar review of operations at the city which eventually led to the elimination of 30 municipal positions. It will focus on the South Okanagan Events Centre, the Penticton Trade and Convention Centre, Memorial Arena and the Okanagan Hockey School facilities.
According to council’s point-man with Global, the process is simply the city doing its due diligence checking up on one of its major contractors.
“What we are looking to see is if this is an effective form of management or not. And if we do uncover something that is overstaffed then I am sure that Global will fully co-operate with us to deal with the situation,” said Coun. Mike Pearce, who chairs the city’s advisory committee to Global.
“It is no different than what we just finished doing with the city operations.”
According to city financial statements, Global Spectrum met its 2010 subsidized $1.7 million budget, although the company had to waive its $207,500 management fee and cut a cheque for over $170,000 to do so.
For the record, Pearce said the $1.7 million figure is misleading because it does not include $159,000 rent money the city receives from leasing the SOEC’s wellness centre to the OHS and to the Interior Health Authority. Plus, the city also received a payment of $77,160 as part of the Global budget which is allocated to a reserve fund for future capital improvements.
Pearce also pointed out that the 2010 combined operating deficit for the convention centre and Memorial Arena was only $358,428, a more than $300,000 drop in the operating costs for the two facilities prior to Global taking over.
“The figures are getting better as the economy is getting better,” said Pearce.
Indeed, in 2009 operations at the campus were subsidized by the taxpayers to the tune of $2.2 million. But this year, the budget has been set at $1.6 million.
Pearce said a new contract with the Penticton Vees will likely also bring costs down. Expired with the BCHL hockey team’s elimination from the playoffs Monday evening, a three-year contract with the Vees has seen the city pay the team up to $675,000 a season regardless of attendance or revenues generated.
Pearce said the campus’s management team will also be conducting a more detailed analysis of each potential event to better determine the likelihood of it turning a profit.
“The first two we have held this year have been profitable and we have got Cirque du Soleil coming up which we hope is going to make money also,” said Pearce. “But for the most part we are not going to be holding as many concerts this year because the market isn’t there right now and the artists are demanding too high of a guarantee.
“The bottom line is that this is a good economic driver, we just have to fine tune it, harness it and move it forward.”