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Minutes Five Flags Civic C 3 15 Five Flags Commission Meeting Orpheum Room March 15, 2004 PRESENT: Rod Bakke, Cindy Fuller, Gary Dolphin, Mike Brannon, and Mark Nauman STAFF PRESENT: Gil Spence, Paula Wolfe, Peggy Degnan, John Richardson, Bob Richardson, Alvy Kennedy and Joe Baxter PUBLIC IN ATTENDANCE: Steve Peters from Compass Management, Marc Burnett from SMG, Brian Hutchins from Kinseth Hospitality, Dave Baker from Teamsters, Ted Scherr from the Thunderbirds, Fly-By-Night Productions - represented by Lenore Howard, Kevin Firnstahl and Mike Gibson. The Commission meeting convened at 1 :00 p.m. at the Orpheum Room at Five Flags Center. Chairperson Rod Bakke presided. Approval of Minutes: Mike Brannon moved to approve the February 16, 2004 Five Flags Commission Minutes, Mark Nauman seconded, motion carried. Manager's Report: Manager Wolfe said that the month of February provided Five Flags with a variety of events, along with high levels of ice usage. The month began with the comedian Carrot Top, which featured pyrotechnics and five trunks of props. The Illinois Special Olympics and the Iowa Winter Games brought many competitors to Dubuque. The theater held the school performance "I Have a Dream", McKesson's Company Road Show, Cigna's Annual Meeting and DSO's Classical Concert. The Annual Wendy's Men's Basketball Classic, and the Taste of Home Cooking Show was also held in the Arena. The Thunderbirds were crowned "League Champions," becoming the first out-of-state team to win the Minnesota Junior Hockey League. The trophy has been placed in our trophy case. In the first weekend in March the Five Flags held the NCAA Division \II National Wrestling Championship, with over 8000 attendees. In March the DSO will feature "Petrushka," performed by the Heartland Ballet Hempstead's Drama Department will be performing "Grease," and the Dubuque Kennel Club will have the AKC Dog Show along with MJHL Playoffs in the arena, later in March. Manager Wolfe reported that the month of February's billing was very similar to the year before - within a few hundred dollars - showing that the ice and theater usage is very strong. Concessions, far exceeded the prior year - up by $10,000 dollars. New Business: Gil Spence presented an overview of Five Flags Center's study on the privatization of management of the facility. He referenced the issues considered and the RFP, which was sent to private management firms. Mike Brannon said the Commission has reviewed a summary of the three proposals that were submitted. The Commission will be making a recommendation to the council, regarding the privatization of Five Flags. A Committee (made up of City Staff) will make 1 a recommendation to the City Council as well. The Committee's decision is totally independent of the Commission. The City Council will make the filial decision based on the recommendations. Rod Bakke said that with all the information the Commission gleaned from the three proposals, it is apparent that each of the firms has strengths and weaknesses. Then there is the cost of not considering this opportunity, and remain managing the facility as is - with its good and bad points. These are the points we must consider. Rod explained that there would be an opportunity for anyone present to address the Commission with comments about what the Commission was discussing. He then continued, describing the interviews of the three private management firms. He said that he wondered if Five Flags should be considering private management at all? He said he thought about the staff - change is difficult But after hearing the proposals and going through these packets, he felt there are a lot of positive points that one might look at. After hearing from these firms, there are a lot of things that should and could be done if private management was in charge. But he wondered if Five Flags could do these things while remaining publicly managed. He said he was more open-minded to privatization after the interviews with the firms, but his concern remained about the effect on the present staff. He said their future is on our mind. Mike Brannon elaborated on the concept of "opportunity cost" He said if Five Flags remains publicly managed, we could implement many of the business practices suggested, but there are things that we cannot do alone, for instance, some of the firms can bring in events to Dubuque because of their network... they have more booking opportunities. There is an issue with more bookings from September through March, as there could be less ice-time available for ice users. Gary Dolphin asked how privatization might affect ice availability, and if contracts would be negotiated with the Thunderbirds? Gil Spence said he believes there would still be a contract with the Thunderbirds on an annual basis, the Five Flags Commission would stay in place, and the Thunderbirds would negotiate a contract with the Manager at Five Flags. The contract would be approved by Commission, and by the City Council, just as it is now. Gil Spence explained that the RFP states that the City will still have final approval of all fees, and scheduling and booking policies. The Commission will continue to function as it does now. The difference is that the Five Flags employees will be employed by the private management firm. Gary Dolphin asked what the incentive is for private management? If the private management firm has a block- buster concert that wants to come in October, November or December and a Hockey game is scheduled that night, the firm would have to honor the hockey schedule? Gil Spence said they would have to honor the hockey schedule, and turn down the concert. Cindy Fuller asked if there was a possibility that certain departments could remain under public management, and others be managed privately, such as concessions. Gil Spence responded, saying that the Committee review of the current Five Flags operation suggests that concessions be considered for out-sourcing if management of the building stays with the City. ? Rod Bakke asked the Commissioners if they were able to take a good close look at the review of the three private management firms: SMG, Kenseth, Compass, and come up with weak or strong points? The Commissioners responded affirmatively. Mike Brannon said there is a representative from each private management firm at this meeting. He introduced Steve Peters with Compass, Marc Burnett with SMG, and Brian Hutchins with Kinseth. Rod Bakke suggested that the Commissioners asked questions of the private management firm representatives. Gary Dolphin asked the firms to give a two-minute pitch highlighting what their incentive is for managing Five Flags? Steve Peters from Compass Facility Management said he would like to address a couple of the Commission's questions. He said that usually a publicly owned/privately managed facility still has a City Commission approve the budget In the case with Five Flags, the governmental body controlling Five Flags will not change. The budget will be developed, taking into account what an increase in revenue will mean, and what activities would be affected. The Commission will approve the prices, but the private management firm would recommend prices. Business will increase and not conflict with the Thunderbirds. If ever there is a conflict, the firm would work with the team. In addition, the firm would help promote the Thunderbirds. As a result, more concessions will be sold from increased attendance. If a concert would come up, we would probably go to the Thunderbirds and say we will pay the cost of changing these times and dates, however, we usually keep things set in stolie. Compass' network in Eastern Iowa, will be a big support to Five Flags' current business, along with increased tourism in Dubuque. He felt the vital point is tourism. By using a private management firm, the City would be able to bring that together more effectively. Services that come with private management, like Ticket master fees, would be better for Five Flags if a private management firm was involved. From talent booking fees, to ticketing fees, Five Flags will be able to negotiate rates from a broader prospective. You will know what the prices should be according to what is being done in other buildings. To supplement Dubuque's summer tourism, Compass suggested following the model they have established in Mackinaw City. The facility they manage there presents a small musical twice a day in the summer months. This would be a tremendous thing to draw people to Five Flags. Summer theater like this would not have worked 20 years ago in Dubuque, but now it will. According to Steve Peters, Compass has been very successful since they took over the ice arena in Cedar Rapids, and they would like to do that here too. They understand the special needs of Five Flags and its user groups, and plans on working with them. Mark Burnett of SMG said they have individual contracts with indoor football teams, hockey game, and basketball teams. :< Right now, their facility is holding the Illinois High School Class A Basketball Tournament, right in the middle of all the other regular users of the facility. Next is the Double AA High School Basketball Tournaments. SMG balance's the arena usage with basketball and hockey overlapping. He continued saying that SMG has a great relationship with the Hockey team and helps them with marketing. He gave examples of Sesame Street characters dropping the starting puk, or a singer from the theater singing the National Anthem. We have a large e-mail database, which is up to about 6,000 names, which we share with the sporting groups. SMG took over the Peoria Civic Center several years ago, and has made a tremendous difference in our business. Mark Burnett said they have a very positive rapport with their Hockey teams. When there are changes in the schedule, they make efforts to balance schedules out. If there is a special date needed for another entertainment, they work it out. If there is a schedule change, they make the hockey team a part of the concert. At Peoria Civic Center, the theater holds symphony and choral concerts, ballet and opera. Some of which are local, smaller shows. They also do larger, touring shows. He said that SMG has helped the Peoria Civic Center tremendously - routing shows to their facility. Privatization has been a true benefit And SMG's system has given Peoria some true financial help, which has stepped up the professionalism of the faiclity. Marc Burnett continued... He said in the 80's Peoria was having some problems. SMG came in, and the facility has been profitable ever since. He also said that the Commissioners are the final word there. Rod Bakke said that nationwide, SMG has 168 facilities. 122 of the facilities are owned by a municipality or governmental body. Cindy Fuller asked Mark Burnett if Peoria does a lot of tear- down and set-ups. Mark Burnett said there is a lot of coming and going of events. Brian Hutchins of Kinseth Hospitality spoke of their intentions to decrease losses to the City by reducing staff cost However, that would only be done if the City agreed that should be done. Ultimately, Kinseth has large sales staff already in the Midwest These efforts could build the level of business at Five Flags. The biggest benefit is that the Holiday Inn is right across the street Increased business at Five Flags, benefits their property across the street There would be a tremendous savings by reducing the current staff. Between wages and benefits, $300,000 could save right off the top. Rod Bakke said his concern was with the reduction of existing Five Flags staff. He said the thing that really troubled him with the Kinseth proposal, was that they would eliminate all but two of the current full-time employees, along with other cuts in part-time staff. Brian Hutchins said that ultimately, any employee cuts would be up to the Commission. But that is what Kinseth said they could do if the City of Dubuque wants to save $300,000 right off the bat Gary Dolphin asked if the Holiday Inn has the existing staff to cover all of these positions? Brian Hutchins said that Kinseth had laid out a structure that would cover the positions with Holiday Inn staff, retaining two of the nine full-time employees, however, if the City did not want to do this, they would not. 4 Cindy Fuller asked if Kinseth had any ice arena management experience? Brian Hutchins said they did not, however, he was confident that the Kinseth staff could learn it, and do a fine job. Gil explained that the City Council has a work session scheduled for April 19, when they will make a decision regarding private management of Five Flags. The Five Flags Commission will present their recommendation regarding private management of Five Flags at that work session. The Review Committee will also make a recommendation, however, this recommendation will only suggest which firm should be chosen, if the City Council decides to adopt private management instead of continuing to publicly manage Five Flags. If private management is chosen, then the firm will begin to take over so that every thing is in place by July 1, 2004. Considering that the Five Flags Comrnission would meet prior to the scheduled City Council Work Session on April 19, they decided to come to their final decision at the next Commission Meeting on April 12 at 9:00 a.m. Gary Dolphin moved that a decision regarding privatization would be made on April 12. Cindy Fuller seconded, motion carried. Mike Brannon said that two of the three private management firms discussed generating more revenue, rather than cutting costs. He said that this was a breath of fresh air- these companies were excited about the opportunity to generate more revenue, rather than cutting jobs. Gary Dolphin asked if there would be a way for any Five Flags employees to be absorbed by the City. Gil Spence described some of the ways they could remain employees of the City, if other positions were available in other departments in the City, and if the employee has the right qualifications. Mike Brannon said that two of the firms (Compass and SMG) would retain most of the employees. Rod Bakke said that over the years that Five Flags has cut six full-time positions, even with the number of events increasing. Public comments were welcomed by the Commission: Dave Baker the Union Representative for the two Utility Workers currently employed at Five Flags wanted to make sure that the commission heard from the employees. He said that he had been through privatization of the Dubuque Community Schools Food Service. He said that he heard similar arguments for private management in that case, too. He heard how the private management firm had more buying power and could save money. The District went through the bidding process. Mariott was awarded the contract. Eventually, the school district took back the operation again. The employees were protected in that case. It is important to the Union that the Five Flags Employees be protected. He hoped that it was important to the Commission that employees be retained also. He did not think that cost savings should happen on the backs of the employees. Dave Baker asked if the the private management firms could bring in a representative to run the facility and still keep the City Staff that are currently in place at !'i Five Flags. This would give access to the private management firm's networks, while protecting the employees. Cindy Fuller asked Dave Baker whom he was representing? There are two utility workers who are represented by the Union along with some part- time employees. Marc Burnett said that SMG has union employees in their buildings. Brian Hutchins said that Kinseth's proposal of cutting employees to save thousands of dollars, it is totally negotiable. He said there are other ways to cut costs such as utility audits. Any job cuts would be entirely up to the City. Steve Peters said it is the job of Compass to provide the shoulders for the local staff to stand on, so they can reach higher and increase revenues and programming in their facility. He said that they have absorbed existing union contracts in other facilities. Lenore Howard of Fly-By-Night Productions endorsed the current Five Flags Staff, with whom she has worked with the staff for some 20 years. FBN has no complaints and would like to see a marketing person added in an effort to increase revenues. Mark Burnett of SMG said privatization is a five-year contract. In five years the City of Dubuque will learn so much, and be so much better off, that all of the concerns of today, will no longer be issues. OLD BUSINESS: Rod Bakke said that the Five Flags Theater History Plaque would be discussed again at the next Commission Meeting. Gary Dolphin moved to adjourn, Mark Nauman seconded, motion carried. Respectfully submitted, Rod Bakke, Chairperson ß