BLOOMINGTON — City administrators and the management firm for the city-owned arena have agreed to limit city subsidies for the entertainment venue's operating losses to $350,000 a year.
The change is subject to approval by the City Council, which will vote on amending VenuWorks' contract when it meets at 6 p.m. Monday at City Hall.
"The new agreement continues the relationship with VenuWorks for the remainder of the current agreement with a new requirement that any proposed (VenuWorks) budget deficit cannot exceed $350,000," said Deputy City Manager Billy Tyus.
He noted that the cap is $150,000 lower than the $500,000 average annual operating loss that Lynn Cannon, VenuWorks' executive director for Grossinger Motors Arena, said in September was projected for the facility going forward.
If the operating deficit exceeds $350,000 VenuWorks will cover that amount by cutting up to 50 percent of its base management fee and other variable fees, added Mayor Tari Renner.
"We are risking giving up to 50 percent of those dollars back to the city," said Cannon.
The city currently pays VenuWorks an annual management fee of $114,000, plus 5 percent commission on food, beverage and other sales at the arena, including naming rights.
"Some exceptions would be made for certain utility, maintenance and building costs which would not count towards the deficit totals," said Tyus.
Renner said he interpreted those exceptions to mean "unusual costs associated with the building or utility maintenance ... or some things that might be out of the control of VenuWorks."
The new agreement, if approved, would allow the arena to charge a "market rate" parking fee for events where more than 500 people are expected. The city would receive $1.50, instead of 50 cents for each parked car.
"It seems to me that this is a reasonable compromise to protect taxpayers and to create more of an incentive for VenuWorks to have more events in the arena," said Renner. "That produces benefits for our economy and lowers, frankly, our red ink. It's something the city will need to monitor very carefully."
When CIAM, whose officials are now embroiled in criminal charges alleging embezzlement and fraud, opted not to renew its 10-year contract, the city hired VenuWorks, which took over management on April 1, 2016. VenuWorks also had a former employee charged with financial misconduct. That case is pending.
"Our first two years here we were very much behind," said Cannon said. "We came in late the first year. We didn't have a lot of events booked. We had difficulties getting off the ground with a lot of maintenance and cleanup issues that we had to do."
But VenuWorks thinks it can limit its operating loss to $350,000 annually based on the success it has experienced this fiscal year, which ends April 30, said Cannon.
"Right around $500,000 — that was what we were budgeted to lose in this current fiscal year. (The deficit) will be under the $350,000, so we did far better than our expected year," she said."We had very successful events ... and no really deficit events, which is unusual."
Country musician Kane Brown and hip-hop rapper Juice WRLD were among recent sold-out concerts. The Hot Wheels Monster Truck Show and others also were well-attended, said Cannon.
"We always try to come in with at least 12 to 15 events (annually)," said Cannon. "I am pretty sure we're at least that number if not more.
"You try to bring the entertainment to town that people want to see, and that's what we're here to do," said Cannon. "It's all a matter of luck sometimes. You hope to get all the great shows you can and make sure you're making the money you need to make."
Unlike past years, Cannon also noted that Illinois Flying Aces hockey and the Bloomington Edge football teams played all their games during the fiscal year.
Later this summer, Cannon said VenuWorks will issue a year-end report with the financials for this fiscal year. The operating costs reflected in the final report do not include the arena's construction bonds, capital improvement projects or depreciation, for which the city is responsible.