- BC Games
Bottom line continues to improve at SOEC
The bottom line for the South Okanagan Events Centre continues to improve.
In 2014, the SOEC complex is expected to have an operating deficit of $1.25 million, as compared to $1.37 million projected for 2013.
An even smaller deficit may have been possible, but several factors came into play.
Global Spectrum’s general manager Dean Clarke said that’s due to a variety of factors, particularly the new SOEC operations contract between Global Spectrum and the city, as well as the new contract with the building’s major tenant, the Penticton Vees.
The Vees contract alone, he said, reduced revenues by $100,000.
“The Vees negotiated for 2013-14 a deal that was more lucrative to them and less lucrative to the building,” said Clarke, adding that part of the deal puts more pressure on the Vees to increase attendance, which has happened.
“They are probably the only hockey team in all of Canada, semi-pro or pro, that their attendance is up,” said Clarke.
“The most important thing for a venue is to have a healthy tenant, and we need to listen to them.”
In terms of Global Spectrum’s own contract, Clarke said savings from the incorporation of Front Row Marketing and Ovation Food and Beverage will become more apparent in 2015.
Elimination of Ovations management and incentive fees should have resulted in a drop of $160,000.
But in the 2014 budget, Clark said they are still dealing with what he calls “trailing commissions,” tied to previously negotiated multi-year sponsorships, amounting to $103,034.
“Those commissions for next year and the year after have to be paid out,” said Clarke, noting the deals had been renegotiated in light of the new contract.
“But there still is a commission there for 2014 so we don’t see the effect of the new deal.”
Another factor is the drop in events booked for the Trade and Convention Centre in 2014.
Last year was a banner year for the facility, Clarke said, and the 2014 numbers are unlikely to equal 2013.
“I also think you have to consider we also run some facilities that are not necessarily meant to generate a bunch of revenue,” said Clarke, explaining that the community rink and Memorial Arena are operated as services to our community, while the convention centre is intended to drive the economy, not generate a profit.
The annual subsidy required to operate the SOEC complex has dropped from a high of $2.2 million in 2009 and though Clarke said it was unlikely to be eliminated, there are opportunities to reduce it further.
One is the expansion of parking fees, which were introduced this year for special events, like concerts, and resulted in $28,820 in revenue.
Other facilities in the region charge for parking at all times, Clarke said. If the SOEC were allowed to do that, it could result in up to $150,000 added to the bottom line. And in 2018, when the SOEC debt is paid off, they will be able to sell naming rights for the centre.
“Depending how well we are doing over these next three or four years, that will be a significant price,” said Clarke. “I know companies are getting more than $150,000 for naming rights.
“Over time there is easily a quarter million dollars we could drop to the bottom line.”
The retirement of the SOEC debt in 2018 puts the city in an even better competitive position with similar facilities, Clarke said.
“That will put the city of Penticton in an incredible position, they then have an asset that is paid off,” he said. “That needs to be celebrated a lot more. It was a bold decision to build this place, and it has paid off. It generates $2 million for the city every year in taxes.”