MOOSE JAW — City council has renewed a contract with the company that manages the Events Centre, with the new deal moving away from a fixed-fee structure toward an incentive-focused plan.
During its Dec. 2 regular meeting, council voted unanimously to approve a five-year management agreement with Global Spectrum Facility Management L.P., more commonly known as Oak View Group (OVG360). Furthermore, the mayor and city clerk will sign the agreement for the city.
The municipality signed the initial agreement with OVG360 for management services on Sept. 3, 2019, with the current term expiring on Dec. 31.
Several sections and clauses in the agreement have been updated, a council report said.
For example, the new agreement’s proposed fee structure shifts from a fixed amount to an incentivized one, although the basic venue management fee structure remains in place at $12,587 per month. In comparison, in 2019, that was $11,000 per month.
Incentive ideas
The four incentive fee ideas that administration promoted focus on food and beverage, meetings and conventions, concerts, and improvements in the subsidy, the report said.
With food and beverage, OVG360 would be entitled to an incentive fee of 8.5 per cent of net profits from sales, which would be paid out quarterly.
With meetings and conventions, the manager would be entitled to 10 per cent of the increase in gross revenue from such activities, based on the rolling average of gross revenues for the previous three operating years.
With concerts, OVG360 would be entitled to 10 per cent of net profits from those events, calculated on a per-concert basis. Concerts that lose money would lead to a reduction in this fee by 10 per cent per loss.
With subsidy improvements, the manager would be entitled to a 20-per-cent commission if the city subsidy is less than required, based on the annual audited financial statements.
Reducing the subsidy
City manager Maryse Carmichael told council that the first agreement focused on the transition to a new building manager, while this second agreement aims to increase revenues and decrease the subsidy the municipality provides OVG360 to operate the venue.
During contract negotiations, administration urged the management company to increase revenues through various methods to help decrease the subsidy received, the report said.
Officials pointed out that developing an entrepreneurial culture was important to an event venue’s success since relying solely on outside bookings — especially in a smaller market — does not maximize operating results.
“Increasing the number of self-promoted annual events could add to the base activity of the arena,” the report continued.
Administration noted that the first year would be a development year and would require significant effort and planning by staff to commence such initiatives, although the first few years may not be profitable and would require management to determine whether each project should continue, the document said.
Some outdoor summer events that OVG360 could host included concerts in a park, high school sports tournaments, auto and/or recreation vehicle shows, motorsport events and rodeos, women’s hockey or other female-focused sports, the MJBEX awards, a “Taste of Moose Jaw” or powwows.
“Recently, the facility has had some success in hosting catered gatherings,” the report added. “This business segment has growth potential and should be promoted.”
Council comments
Coun. Chris Warren was pleased that the new contract incentivized OVG360 to attract more people to the Events Centre since more events and more tenants meant the company and the city prospered. Meanwhile, he also thought it was great that capital contributions were built into the contract.
“It signifies that the company is interested in the long-term upkeep and maintenance of the building,” he added. “We know that in the past that may not always have been the case, and then years down the road, we (found) ourselves with issues.”
Coun. Patrick Boyle thought this new contract was a great approach for both parties because “everybody wins if everybody does well.” However, he thought that the city hadn’t done a good job of calculating the economic effect that the Events Centre’s activities have had on the community. So, he thought that was something they should do in the future.
Dean Clarke, general manager and regional vice-president of OVG360, told council by video that the initial contract involved plenty of “heavy lifting” to clean up the building, bring it to an acceptable administrative level, and re-acquire the trust of promoters.
“We’ve seen incredible trust come back in a hurry to the Events Centre. Obviously, there have been better tenant relations (and) great relations with the city and staff,” he said.
OVG360 was starting to manage the building when the coronavirus pandemic hit in early 2020, which caused a “big interruption” to business that made recovery difficult and long, Clarke continued.
However, he agreed that it was critical to have metrics to measure the economic impact of the venue’s activities. So, he encouraged council to conduct a study to help the venue hit its targets annually.
“I can see this incentive going up for us every year, which will mean … a win for both (parties because) it means the subsidy is going in the right direction … ,” Clarke added. “I’m excited for the future … .”
The next regular council meeting is Monday, Dec. 16.
