Events Centre To Schedule Repayment Of $50,000 Of Interest Free $100,000 "Loan"

Events Centre Nets Profit Of $115,089 So Far in 2022 - Competitor would have paid out similar with no “Loan”

With food and beverage sales doing well at the Moose Jaw Events Centre there is likely to be some sort of repayment of a $150,000 loan guarantee - of which approximately $100,000 was utilized - to the City.

As part of the discussions surrounding the third quarter report for the Moose Jaw Events Centre city manager Jim Puffalt told Council there are plans for a scheduled repayment of $50,000 of the City funds utilized to get the Food and Beverages Service up and running.

During their 2023 budget request city manager Jim Puffalt said there would be “a $50,000 repayment schedule in their budget coming through Council.”

The money initially came as what was presented as a loan proposal to Council in August 2021, with repayment by December 31, 2021. The money was for starting up the Food and Beverage service the City decided to take “in house” after two parties responded to an Request For Proposal to provide the service.

In September 2022 after questions by MJ Independent it was revealed the “loan” Council had voted on was in fact part of the subsidy going to the facility and higher profits would mean a lower subsidy to the facility.

Following selecting the RFP from Spectra Management versus the then food and beverage provider Compass Group, Council was told that the service had in fact gone in-house and it was now the City’s Food and Beverage service.

All profits would remain in-house under one system while the Compass Group would was seeking an 18 percent commission structure based on total sales as well as paying property taxes.

Food quality and service were also reasons given for rejecting the Compass Group’s bid.

“I think the food and beverage component is already paying off obviously as it is in a profit position regardless of what happens with naming rights. Because I know that quote, air quotes ‘loan’ that we gave to get the food and beverage (service) started, so based on this net profit that is almost awash at this point so that is good to see,” Councillor Kim Robinson said.

Moose Jaw Events Centre Food and Beverage Statement from January 1, 2022 to September 30, 2022 - source quarterly report to Council

Councillor Robinson asked about the loan and if any payback to the City from the Events Centre is required.

“I don’t know about a payback but when is this loan being paid back but when in reality it was for our own concession, so,” he said.

At Monday afternoon’s regular Council meeting the Events Centre reported a profit of $115,089 on food and beverage sales based upon gross revenue of $754,122 - total for concession $517,917 and $236,205 for catering - for the year to date.

Expenses so far have been $588,600 for the food and beverage sales. Costs have been $254,116 for products, $302,984 in labour costs, $50,433 in variable expenses and a management fee of $31,500.

Finance director Brian Acker said the intent of the “loan” was there would be a lower subsidy.

“I think that was the intent, there would be a lower subsidy or a reduced subsidy request at sometime and as we go forward through budget you will probably see some of that and in future years. And you are right it is based on about $150,000 to the bottom line. If we had not made those investments those dollars we would not be seeing that we would have an increased deficit of $150,000,” Acker said.

It needs to be noted under the two proposals submitted through the RFP it appears - by using the bids publicly released - the bottom line for the Events Centre would have been better with the losing proposal submitted by Compass Group.

Under that proposal the City would have netted 18 percent of gross sales or $135,741.96 with no need to provide any start up funding. Additionally Compass Group paid property taxes to the City something the in-house service is exempt from.

“if we can secure naming rights I think then the food and beverage decision that was made, whenever we made that decision, will prove to have been the right one based on these numbers. At least hopefully that naming rights part can come through and we will see things turn around for the Moose Jaw Events Centre in a really strong way in 2023,” Councillor Heather Eby said.

As part of their quarterly report the Events Centre reported revenues $150,000 ahead of budget including the funds they earned from Food and Beverage Services.