Mosaic Place saw a deficit of nearly $1 million last year, during a time when the management of the building changed to Spectra Venue Management from the City of Moose Jaw.
The Moose Jaw Downtown and Soccer/Field-House Facilities Inc. (DFFH) managed Mosaic Place and Yara Centre for several years before city council dissolved the body in 2018 due to scandal. The municipality then managed Mosaic Place from Jan. 1, 2019 to Sept. 2, 2019, before Spectra took over starting Sept. 3, 2019. This change created problems for city administration in producing timely financial statements for city council.
However, council finally gained a better idea of the venue’s financial picture during its Oct. 5 regular meeting, after city administration presented a combined DFFH audit, a DFFH 2019 audited statement, and a 2019 Mosaic Place audited financial statement.
One audited financial statement for DFFH/Mosaic Place was for Jan. 1, 2019 to Sept. 2, 2019, while a second financial statement for Mosaic Place was from Sept. 3, 2019 to Dec. 31, 2019.
According to the numbers, the total deficit for Mosaic Place was $938,021. This includes an actual deficit of $694,233 under DFFH/Mosaic Place and an actual deficit of $243,788 under Spectra.
In comparison, the DFFH/Mosaic Place saw a combined surplus of $503,651 at the end of 2018.
Council later voted — but not unanimously — to receive and file the documents.
Financial variances
It was difficult to create the documents since it was a complicated transition year, city manager Jim Puffalt explained. There were also significant financial “variances” of $643,537 that weren’t in the financial statements.
Some variances included $160,500 in deferred revenue from Ticket Rocket that wasn’t allocated even though it was budgeted, which Puffalt — who oversaw Mosaic Place’s operations in early 2019 — admitted was a miscommunication between himself and the auditors.
Other “variances” included a subsidy for Mosaic Place of $230,647 that management didn’t request from the municipality; hiring an HR professional for $52,000 to support a harassment-free workplace; $52,135 in legal fees for the DFFH board investigation and dealing with Ticket Rocket; pre-paid expenses for the 2020 Scotties of $15,254; pre-paid expenses for the 2020 ZZ Top concert of $51,000; and repairing a cooling tower for $51,800.
Council discussion
Residents will have to pay $250,000 in transition costs that likely occurred due to the lack of concerts and events, said Coun. Scott McMann, who noted that the DFFH board — of which he was a member — was criticized regularly about the number of concerts it held. He acknowledged that it’s difficult to project how many people will attend such activities, but he still wondered why that cost occurred.
That line item includes every expense related to any event held — whether sports or music — including security, labour, manpower, forklift rentals, other rentals, or catering, Ryan MacIvor, Mosaic Place general manager, explained.
Coun. Brian Swanson pointed out that whether the city managed Mosaic Place or Spectra did, there was a combined loss of more than $800,000 last year, which included a loss of $148,000 in curling revenue. A municipal subsidy of $500,000 — which wasn’t given last year — would have offset that deficit a little.
When the building was constructed, it was open for four months of the year and received a municipal subsidy of $1.3 million, which was more than necessary to operate the venue, he continued. This is why in 2011 it showed a surplus of $837,000.
Big surplus, no surplus
That surplus declined to $793,000 in 2012, $592,000 in 2013, $674,000 in 2014, negative-$142,000 in 2015, and $25,000 in 2016. City council then created the DFFH board, which helped generate a surplus of $209,000 by 2017 and a surplus of $781,000 a year later.
“At the end of this year, 18 months later, that $781,000 surplus is negative $191,000,” said Swanson, adding city administration provided a subsidy of $300,000 this past summer, which means the building is back to losing $1 million a year.
“Nobody could have anticipated COVID would come and shut us down in early March … . We had to close down all our facilities,” said city manager Jim Puffalt, pointing out there was no opportunity to generate revenue, while expenses were cut as much as possible.
“There is still reluctance to book meetings,” echoed MacIvor. Furthermore, the Western Hockey League has pushed back its start date from September to December, while Spectra is waiting to hear from the AAA Warriors. “So obviously there have been a lot of extenuating circumstances.”
It will be interesting to see the audited statements for 2020, said Swanson, especially since the loss of over $800,000 at Mosaic Place happened prior to the pandemic.
Two sides to the story
Coun. Dawn Luhning criticized Swanson’s comments about the management of Mosaic Place, saying from July 2018 to September 2019, Puffalt and his staff faced difficulties managing the building until Spectra arrived. Furthermore, she, Mayor Fraser Tolmie and Coun. Chris Warren took the necessary action to resolve the personnel issues at the venue once they learned what was happening.
“There are two sides to this story and that facility went through some difficulties and we are trying our best to get it through,” she added.
Warren also attacked Swanson, pointing out Swanson “forgot” to mention that as board chair, he breached a code of ethics and dealt poorly with a personnel matter. Council and city administration wouldn’t have faced these challenges in 2019 if there hadn’t been disruption at Mosaic Place.
“This council took action. We should have done something we should have done a long time ago: we brought in Spectra … to run Mosaic Place,” he said, adding “the sky’s the limit” for economic generation under Spectra’s guidance.
Swanson rejected Warren’s comments that he had “failed” as board chair, saying the three councillors involved — himself, McMann and Crystal Froese — acted as a board should. Furthermore, they dealt with the toxic work environment issue when they became aware of it.
“The idea that we failed to do something is not true. I recall the words … ‘miscarriage of justice.’ I totally believe that,” Swanson said. “I’m talking about the financial numbers. They were never better than when the board was in place.”
The next regular council meeting is Monday, Oct. 15.
