Five Flags Civic Ctr FY 06 Budget by SMG
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MEMORANDUM
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March 30, 2005
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TO:
Honorable Mayor and City Council Members
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FROM:
Michael C. Van Milligen, City Manager
SUBJECT: FY 2006 Budget Submission for Five Flags Civic Center by SMG
The City of Dubuque contracted with SMG to privately manage Five Flags Civic Center
beginning July 1, 2004. As stated in their agreement with the City, SMG has prepared
and submitted an annual operating budget for Fiscal Year 2006 for Five Flags Civic
Center, an annual cash flow budget for the succeeding Fiscal Year and their
recommendations for fees, rates and rate schedules for users of the Facility who are
booked in the upcoming Fiscal Year by the April 1st due date.
The attached budget outlines their highlights after completing their first full year of
managing the Five Flags Center. SMG is proposing only one rate increase and further
implementation of a second one for the upcoming Fiscal Year to help meet the
projected deficit, with only nine months to generate revenue (due to the renovation of
the Five Flags facility). The rate increases included a change in the hourly ice rental
from $127 to $175 per hour and adding a $1.00 facility fee to all facility users selling
admission tickets.
SMG has indicated that the benchmark deficit of $699,143, which includes their $75,000
management fee, will be met for the FY 2006 budget. The management fee was
previously thought to be over and above the benchmark, but it has been determined
that the Agreement considers this fee an operating expense included in the annual
benchmark. This positively impacts the Fiscal Year 2006 budget by the $75,000
amount.
The budget information submitted meets the terms of their agreement and the Five
Flags Center Commissioners have reviewed the FY 2006 budget. Since this is their first
year of submitting their annual budget, additional information can be provided if desired.
I respectfully request Mayor and City Council approval of the FY 2006 operating budget
for Five Flags Civic Center submitted by SMG.
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Michael C. Van Milligen
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Attachment
cc: Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
Dawn Lang, Budget Director
Ken TeKippe, Finance Director
Gil Spence, Leisure Services Manager
Les Crooks, SMG Interim General Manager
Dubuque
Five Flags
Center
March 21,2005
To:
Five Flags Center Commissioners
From:
Les Crooks ~
Interim General Manager
Re:
Fiscal Year 2006 Budget Submission Memo
SMG is closing in on completing its first full year managing the Five Flags Center.
Highlights of this first year include:
· New programming brought to the facility, including three concerts
· Implementation of a new computerized booking system
· Appointment of an SMG Regional Booking Manager designed to facilitate
routings and keep up-to-date on the latest tours and events available to Dubuque
· Transition of all full-time employees, except two, to SMG
· Ongoing part-time staff training implemented
. Hiring of a new Concessions Manager
Pursuant to Section 5.3(b) in the Management Agreement between the City of Dubuque
and SMG, dated June 21, 2004, "SMG shall prepare and submit to the Civic Center
Commission, the City Manager and the City Council by April 1 of each year during the
term hereof (beginning April 1, 2005) an annual cash flow budget for the succeeding
Fiscal Year. Additionally, SMG shall submit with such annual budgets its
recommendations for fees, rates and rate schedules for users of the Facility who are
booked in the upcoming Fiscal Year." Attached are the budget and cash flow projections
for the upcoming year.
Weare pleased to submit this budget for your consideration. With only nine months to
generate revenue, this will be a challenging year. Projected expenses are expected to
remain at FY 2005 levels and revenue is projected to increase slightly. SMG is proposing
only one rate increase and further implementation of a second one for the upcoming
Fiscal Year to help meet the projected deficit.
405 Main Street - Dubuque, Iowa 52001 · 563/589-4254. Fax: 563/589-4351 · TDD: 563/589-4193
They are:
. HourlyIce Rental to $175/hour (current rate $127/hour)
Center currently loses over $30 per hour for each ice rental, assuming a 24 hour
rental period. Actual loss is much higher since ice cannot be rented around the
clock. This rate places us closer to the actual cost. A discount will be offered to
Dubuque Youth Hockey based on the volume of ice they currently book.
. All facility users selling admission tickets are subject to a $1.00 facility fee.
This is consistent with the policy implemented in FY 2005 and consistent with
other facilities as well. It requires transitioning long-term and resident clients, as
all new clients have been subject to this fee.
The City of Dubuque has set the building's budget deficit projection for the next fiscal
year at $699,143. Based upon past facility history and current bookings, the Center is
likely to meet this projection. Five Flags must generate $437,636 to meet the benchmark
in nine months as the facility will be shut down during the months of July and August
2005 and June 2006. New revenue streams need to be identified and current clients need
to be transitioned to market rates ifthe Center is to achieve its financial goals.
New Revenue Streams:
1) Facility Advertising/Sponsorships - Twelve new advertising positions have
been identified in the Arena. These locations will be on the north, west and east
walls, above the current seating. All twelve will be 3' x 5' backlit signs. In
addition, we are looking to add concourse signage as available, including an
indoor marquee to promote upcoming events. Additional revenue forecast is
$15,000 - $20,000 annually.
2) Concessions - All stands will be renovated this summer and a new Concessions
Manager has been hired. The Center will continue to improve the quality and
depth of the product line to increase per caps during events. This includes adding
new food items, hawking in the stands and offering specials designed to drive
ticket sales for our current clients. Additional revenue forecast $20,000.
3) Public Skating - Facility fee of $1.00 added to each ticket price, consistent with
other facility users. Develop theme days. Market birthday parties. Develop group
sales plan. Additional revenue forecast $4,000.
Current Clients:
1) Dubuque Youth Hockey - Average hourly cost to maintain the ice is $151.00.
DYH currently pays $122 per hour and utilizes approximately 500 hours of ice
time annually, generating revenues in excess of $60,000 to the facility. Proposing
three year contract with DYH that will increase its ice rental rates gradually over
the three years ($155 in year 1, $165 in year 2 and $175 in year 3) until it hits the
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market rate due to the volume of ice booked by this user. Additional revenue for
the next fiscal year is forecasted to be $16,000.
2) Other Recreational Ice Users - All clients, including DYH, have been receiving
a $5.00 per hour reduction off the published rental rate. Ice rental fees to be
increased to an hourly cost of$175. Additional revenue forecast is $2,000.
3) Dubuque Thunderbirds - Proposing three year contract. Facility fee of $1.00
added to ticket. Center proposes to place a cap on this with user and that after this
benchmark has been met, the team will receive 100% of this fee. Additionally,
staffing charges ($150 per game annually) and rental fees (10% annually with no
change in Year 1) to increase gradually as well during this agreement. Additional
revenue forecast is $14,000.
4) Dubuque Symphony Orchestra - Facility fee of$1.00 added to ticket.
Additional revenue forecast is $5,000.
Total forecasted new revenues from current clients: $41,000
SMG will continue to pursue and book other entertainment in the facility. However,
many of these shows may come in the form of co-promotional deals, where Five Flags
must incur some risk and there is no guarantee of earning additional revenue or covering
facility costs. These shows have been accounted for in the budget and this is where the
balance of the revenue projections will be generated. New shows on the books for next
year include Peking Acrobats, Barney and Ringling Brothers/Barnum & Bailey
Hometown Circus.
In summary, there are costs associated with maintaining our current programming base.
These costs are far outstripping the ability to raise fees on current users. This will require
new events that will impact current users. The Center will work with current clients to
inform them of these changes as they arise, but will continue to book programming
designed to lessen the operating deficit at the facility
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Five Flags Center FY 2006 Budget
Revenues FY06
Rental Income $ 285,000
Services Income -70,000
Food & Beverage 85,000
Catering 5,000
Novelty 15,000
Other Operating Income 117 636
Totals $ 437,636
Expenses FY06
FT Employee Wages & Benefits $ 616,139
PT Employee Wages 143,721
Contracted Services 20,000
Operations Expense 9,000
Repair & Maintenance 38,500
Supplies 45,000
Insurance 38,482
Utilities 173,637
General & Administrative 85,800
SMG Management Fee 76,500
Labor & Expenses Allocated -110000
Totals $ 1,136,779
Projected Deficit
$
699,143
Five Flags Center FY 2006 Estimated Cash Flow
M th
R
E
on evenues xpenses
July $ - $ 75,000
August - 75,000
September 26,000 80,000
October 50,000 110,000
November 45,000 115,779
December 20,636 100,000
January 65,000 115,000
February 75,000 115,000
March 68,000 116,000
April 50,000 80,000
Mav 38,000 80,000
June - 75 000
$ 437,636 $ 1,136,779
Projected Deficit
$
699,143