The live events industry may slowly be returning to pre-pandemic levels, but the Events Centre still needs additional financial support to keep the lights on and pay its employees.
During its 2023 budget meeting on Dec. 5, city council voted 5-2 to provide the venue — formerly Mosaic Place — with a subsidy of $985,000 and use $50,000 from the food and beverage loan repayment to reduce the subsidy amount.
Furthermore, it agreed to establish a line of credit (LOC) of $500,000 from the municipality’s own funds so the Multiplex could address chronic cash flow issues — like payroll and paying vendors — and repay when no longer required, while the venue must pay interest on the outstanding monthly balance at Scotiabank prime interest rate less 1.60 per cent.
Councillors Dawn Luhning and Jamey Logan were opposed.
Budget projections
The Events Centre projects revenues to be $2.3 million and expenses over $3 million, leaving a net operating loss of $727,336, a council report said. Including the management incentive and fees for food and venue increases the deficit — and required subsidy — to $985,000.
In comparison, the subsidy this year was $918,294. Therefore, next year’s subsidy is increasing by seven per cent.
Council discussion
By providing a LOC, Luhning was concerned that that would embolden other organizations — like the Cultural Centre — to ask for something similar. She thought it was appropriate for the Events Centre to ask council for extra cash flow-related money so residents knew about it.
Coun. Crystal Froese understood the need for the LOC, while she noted that this wasn’t the first time council had financially supported an organization, pointing to the municipal airport with its runway project.
The Multiplex has regularly asked council at the 11th hour for extra cash flow-related funding, so the LOC ensures it doesn’t have to do that and can manage the financial ebbs and flows, she continued. Meanwhile, there is already transparency and accountability since council approves the venue’s budget.
“The Moose Jaw Events Centre is a completely different animal than any other organization we deal with,” Froese added.
Revenues and expenses
Management company OVG360 expects revenues to increase in four areas, explained general manager Ryan MacIvor, including:
- Ice rental rates by a minimum of three per cent
- Ticketing fees from changes to the ticketing model
- Food and beverage net revenues of $294,905
- More partners using the SaskTix.ca program and more ticketing system advertising
Meanwhile, the venue expects costs to increase in 14 areas, such as:
- Utility increases due to higher ice plant use from August to April
- Increases to CPP and EI employer contributions
- Wage increases by two per cent
- Inflation on materials and supplies
- Loss of $125,000 from no naming rights partner; if a partner is found, that money will reduce the subsidy to $860,000
- Overhaul of the ice plant compressors — which are from the former Crushed Can rink
- Training and meetings/conferences being re-added to department budgets after two pandemic years
- Staffing increases in several departments
- PST on event tickets
Since the Events Centre doesn’t have a capital replacement reserve fund, OVG360 recommends that council create a 20-year capital plan to replace items such as the roof, ice plant, chillers and HVAC units, MacIvor said.
Meanwhile, cash flow issues continue to challenge the venue, considering there is no naming rights partner who can provide $125,000 per year, while unfunded Ticket Rocket gift card redemptions are also affecting operations, he continued.
“The Moose Jaw Events Centre remains in a recovery phase, but (we) are encouraged that the business will grow in 2023 … ,” MacIvor added. “We are excited for the next several years for the MJEC, as we see a positive future ahead of us.”
Administration’s view
Finance director Brian Acker explained that since the city owns the building, the line of credit will not financially affect the municipality’s debt limit or operating budget. Instead, the municipality is simply extending money and charging interest based on what its bank accounts earn.
However, if the venue cannot repay the LOC, that money becomes an extra subsidy payment.
Meanwhile, once the Multiplex starts having surpluses, it can put that money into retained earnings to address cash flow problems. This ensures it won’t run out of money before its quarterly payments arrive.
It makes sense for the Events Centre to have a LOC because it won’t have to continually ask council — sometimes at the 11th hour — for additional money, Acker said. The LOC allows the venue to build retained earnings, so it won’t need the LOC later.
“My only caution is if that’s not the case and it runs into difficulties and further deficits, that could eat up the line of credit and be gone,” he continued. “The reality is the City of Moose Jaw would pay the subsidy anyway to keep the Events Centre operating.”
The next budget meeting is Wednesday, Dec. 7, while the next regular council meeting is Monday, Dec. 12.
