The South Okanagan Events Centre is projected to be ahead of budget but still in deficit, in addition to the facility sitting vacant about 80 per cent of the time.
SOEC advisory board chair Coun. Mike Pearce said better financial tracking along with “aggressive” operating budget changes like a renegotiated contract with the Penticton Vees and limited artistic offerings yielded better financial results.
“We chose more selectively on the concerts this year, significantly. That was one of the main things we dealt with over and over again,” he said. “The year before we had a lot of concerts, but concerts didn’t really pay the big dollars. They most often broke even, if we were lucky.”
Pearce said the guarantee the artists want upfront is too high, and causes the profit margin on a ticket to be reduced dramatically. He pointed to Terri Clark, who is scheduled to take the stage on Oct. 28 but signed a contract to perform in 2010, when a higher guarantee would have been included than would be today.
“The artists, some of these guys want $250,000 to $350,000,” Pearce said. “Terri Clark … she was supposed to play last year. We’ll watch very closely, because likely her demands are too high, but we have no choice because contractually we would have taken her last year.”
The net effect has been a reduction in offerings, and a review of the SOEC calendar indicates the facility runs well under capacity. Bookings on the facility’s website from January until the end of August show only 40 days of sports and entertainment events transpired at SOEC.
Those 40 days included extra allowance because of double bookings, like Cirque du Soleil’s two shows per day. But out of a possible 243 days in eight months, that meant the SOEC’s calendar had events scheduled for only 16 per cent of eligible days. Of those, 12 (or 30 per cent) were Penticton Vees games.
Pearce said the strategy is not to close the place down while trying to avoid further losses.
“Part of the strategy is not to backstop it with taxpayer dollars for these concerts,” he said. “There’s a careful balance between closing the place and not having any concerts and carefully selecting the ones people might want and paying the right price for it. It’s a tricky friggin’ business.”
Pearce said the SOEC calendar doesn’t paint the whole picture. The Okanagan Hockey Academy often rents ice time, and the SOEC doesn’t include activities that transpired at the second sheet of ice and Penticton Trade and Convention Centre.
The advisory board has also teamed up with Global Spectrum Facility Management to conduct a full-court press to boost bookings at the Penticton Trade and Convention Centre. So far, numbers show a 10 per cent increase in delegate days over 2011.
“We’re rebuilding all of that, and in a bad economy again,” he said.
In 2010, the city had braced itself for a $2.2 million shortfall, but trimmed costs back to end up $1.85 million behind at all SOEC and convention centre facilities. This year, the advisory board projected a deficit of $1.5 million, and Pearce said they intend to come on target.
“Before we had the South Okanagan Events Centre, the old arena and the convention centre we were running at about minus $800,000,” Pearce said. “We can generate more revenue. For example, we can always levy parking. Well, how popular do you think that will be? So we’re not talking about that right now.
“People are demanding more and more recreational facilities from their municipalities.”
He added that Global’s contract comes due in two years, and the advisory board will be meeting with management representatives this week about recent core studies.