By Kevin Werner, News Staff
Hamilton councillors will provide a financial safety net for The Carmen’s Group if it loses money during the transition year in taking over the Hamilton Convention Centre.
But that safety net could be removed if Carmen’s doesn’t incur its expected financial problems.
Carmen’s revised its potential losses 2013, the first year of a five-year agreement with the city, saying it could need over $350,000 in help to cover potential losses. Earlier in January, Carmen’s said it was looking at about $660,000 as a financial safety net.
Tony Tollis, the city’s treasure, said the city will give the money to Carmen’s only if it provides the city with audited financial records in 2014 to document any losses.
But if the city discovers Carmen’s didn’t actually suffer the losses, and received money from the city, the municipality will have the right to claw back the funds from the business.
“It provides clarity to the public,” said Stoney Creek councillor Brad Clark, who suggested the claw back amendment in the motion.
The city is projecting it will now save about $448,000 this year in savings from allowing Carmen’s to operate the Hamilton Convention Centre. Carmen’s is expected to take over operating the Hamilton Convention Centre March 1.
The Carmen’s Group won the bid late last year to operate the facility based on a $3.7 million revenue stream. City officials first projected a revenue stream of $3.4 million for the centre, with a potential savings for the city in the first year of the agreement of $1 million.
Carmen’s approached the city earlier in January asking for some financial help in the first year after discovering it wasn’t seeing the number of bookings for 2013 needed to boost its revenue.
John Hertel, Hamilton Entertainment and Convention Facilities Inc. chief executive officer, acknowledged the first month of 2013 has seen about $1.7 million in sales, compared to $1.86 million in January 2012, which could mean by the end of the year a $300,000 drop.
Still, Hertel said there are about $500,000 in potential sales for 2013 at the convention centre, with about $212,000 in sales generated by Carmen’s.
He said the convention centre has seen over the last few years a continuing decline in business because of the lack of area hotels, the slow economy, and the perception within the marketplace of the facility’s poor reputation.
Councillors who a week ago were at best confused by Carmen’s request and at worst, set to reject the idea of subsidizing Carmen’s, now applauded the city’s position.
“I was very critical of the issue,” said Ward 4 councillor Sam Merulla, characterizing the situation as a “deal is a deal.”
But he pointed out the city will still see guaranteed savings in 2013 of just under $450,000 in the first year.
In addition, the city will see $5.8 million in savings over the five-year agreement, plus Carmen’s will increase its capital investment for the facility to about $750,000, through upgrades such as fixing the aging entrance.
Hertel said Global Spectrum/Live Nation, and Carmen’s will be reviewing the number of employees they may retain after Feb. 19. In addition, Carmen’s is expected to further integrate its operations into the Convention Centre facilities starting the first week of February.