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Council OKs 90-day deal with VenuWorks

Council OKs 90-day deal with VenuWorks

BLOOMINGTON — Iowa-based VenuWorks will take over management of U.S. Cellular Coliseum on Friday with a promise to provide more transparency and to improve the venue’s finances.

U.S. Cellular Coliseum

The City Council voted unanimously Monday to sign a 90-day transitional deal with the company to replace Central Illinois Arena Management, whose contract to run the city-owned, 7,000-seat arena expires at the end of March. CIAM, a private company that was created to manage the Coliseum when it opened a decade ago, did not seek to renew its contract.

Steve Peters, founder and president of the Ames-based VenuWorks, promised to provide financial transparency through monthly reports and to develop marketing and strategic plans to help improve the financial condition of the Coliseum.

“We believe that we should be accountable, and we are,” he told the council before the vote. “We owe the citizens and the city of Bloomington our fiduciary expertise and a fiduciary responsibility to provide the best quality entertainment and service and food and beverage. But to do that in a means that gives you the best financial outcome.”

The city staff will negotiate the terms of a formal, five-year agreement with VenuWorks to be brought back to the council for approval before June 30. The city will have the option of canceling the agreement after three years.

During the 90-day transition, VenuWorks will not charge a management fee. The city instead will pay the firm a token $1 per month plus all VenuWorks employees’ travel and lodging expenses and other supply costs.

During a work session preceding the council’s regular meeting Monday night, John Siehl, VenuWorks chief operating officer, and Russ Ferguson, vice president for food and beverage, outlined some of the operational practices used at many of the 52 facilities the company manages across the country.

The firm hopes to have an onsite business manager responsible for the oversight of all local financial activity at the Coliseum within two to three weeks, said Siehl.

“It takes a while to make sure we have the right person. That’s the absolute key,” said Siehl.

It will be somebody from VenuWorks’ staff because “we’ve got a lot of human resource procedures and policy to implement,” he said.

In the meantime, the company will have an interim business manager at the site by Friday.

CIAM reported net annual operating losses ranging from $636,655 in fiscal year 2009 to $84,303 the following year and nearly $500,000 last year. Those figures do not include additional costs borne by the city such as annual depreciation and debt service on the construction bonds used to build the facility.

VenuWorks would be paid an annual management fee of $114,000 while CIAM’s management fee was 4 percent of the facility’s gross revenues, which the city said has been approximately $155,000 a year.

Proposed terms in VenuWorks’ contract call for lower commissions and fees paid to the firm.

For example, it calls for paying VenuWorks 5 percent of the gross revenue from concession sales while the city would pay for operating expenses. VenuWorks guarantees the city’s net profit from concessions will be at least 40 percent.

Under the previous deal, the city received 32 percent of gross receipts but CIAM’s concessionaire, BMI, paid the operating expenses and collected any net profits.

While CIAM received a 10 percent commission on all other sales, VenuWorks will get 5 percent, including on a new naming rights contract. CIAM got 50 percent over $200,000 on the sale of the naming rights.

“There are some folks who do not like the Coliseum, but I think the vast majority is very supportive of it and want to see it succeed,” said Ward 7 Alderman Scott Black. “I think this is a major step told that direction.”

Story from The Pantagraph

March 29, 2016

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