Coliseum: Part 2

by Diane Benjamin

Several times, City Manager David Hales has proclaimed in open Council session that the Coliseum (CIAM) is not taking all the commissions they are entitled to under the contract.  The latest was at the June 9th meeting:

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Is he right?  This is the original contract for management of the Coliseum:  Management Agreement CIAM

The contract was badly written for the benefit of CIAM.  Terms are not defined, such as Revenue.  I know what an accountant would consider revenue, and probably everybody would agree.  Over time though, CIAM has redefined revenue.  Evidently David Hales is completely unaware of that fact or he is complicit.

Stay with me, I’m trying to make this as easy to understand as possible.

The un-audited Coliseum statement as of 4/30/2013 is posted here:  http://www.cityblm.org/Modules/ShowDocument.aspx?documentid=6569

If any changes were made to this statement after the Coliseum audit, they weren’t posted.

I have information for some of 2014, but the final report has not been posted.

ColRev4-302

For the year ending 4/30/13, total revenue was 3,674,695.50.  See the total above.

According to the contract, CIAM gets 4% of Revenue as a management fee.  Funny, if you multiply $3,674,695.50 by 4%,  you get the Management Fee CIAM reported: ( $146,997)colexp4-302

Did they calculate the Management Fee correctly?  Not under my version of revenue.  See if you agree.

Start with Merchandise.  Included in CIAM’s Revenue figure is Taxable Sales, Commissions, and Sales Tax.  CIAM is entitled to 4% of the commission they receive selling merchandise for performers. (The performers run the sales through the Coliseum so they don’t have to account for sales tax.)  CIAM should NOT be entitled to take 4% of taxable sales – it’s not their money.  They should also not be allowed to take 4% of Sales Tax collected.  It’s not their money either.

Here’s the funny part.  CIAM didn’t always do this.  In 2010 they started taking 4% of all money brought in, whether it is real revenue or not.  Obviously David Hales did nothing to stop them.  Does Hales even know?

Here are the numbers directly from the reports compiled by CIAM:

merchSteal2
CIAM paid themselves 4% on $1,289,792 that, in my opinion, they weren’t entitled to.  That totals $51,592 not including what happened as of April 30, 2014 since that number isn’t available.  Keep in mind that CIAM was not paying themselves on Taxable Sales and Sales Tax in 2007-2009, it started in 2010.  When questionable commissions are this obvious, shouldn’t somebody have noticed?

Look at Event Income – total reported was $695,114.  CIAM took a 4% Commission on this too – $27,805.  What is Event Income?  The Coliseum provides Labor, Advertising etc to performers.  Then, the Coliseum bills the performers for their services.  Event Income isn’t Revenue, it’s a reimbursement of expenses paid by the Coliseum.   Again, to me they are taking 4% of something they are not entitled to.

What about Reimbursed Expenses?   Doesn’t the title imply the Coliseum paid for something and was then reimbursed?  Should they get 4% of Reimbursed Expenses?

One more:  Concessions Revenue is the money owed to the City from BMI Concessions.  Why does CIAM get 4% of it?  Concessions has nothing to do with the Coliseum, it’s a separate company.  The contract is so badly written, it’s hard to tell what the intent was though.

Look again at the recap from 2007-2013:  CIAM Income Recap

According to the contract, CIAM is entitled to 10% of Club Seats, Naming Rights, Suites, and Sponsorship Revenue.  CIAM agreed to take only 5% of Club Seats and Suites when the Coliseum opened to make sure they got a good start.    This is where David Hales claims CIAM isn’t taking all they are entitled to.  The amount list under CIAM commissions on the statement does not appear to be 5% however,

Worse, CIAM is including these items in Total Revenue.  CIAM is paying themselves twice on the same revenue.  They are taking another 4% on top of what the contract entitles them to.  Are they REALLY entitled to 14%?  Where is that in the contract?

A couple more notes:

  • During busy times at the Pepsi Ice Center, Parks and Rec rents ice time from the Coliseum at a much higher rate than the Ice Center charges for renting their facility.  The City owns the Coliseum and therefore they own the ice.  Why is Parks and Rec not just paying CIAM their 4% commission instead of inflating the Coliseum’s bottom line with the full price rental while making Parks & Rec look worse?
  • The contracts says CIAM needs to provide $200,000 per year in Naming Rights.  US Cellular is paying $175,000.  Pepsi is paying $50,000.  Why do the financial statements report $270,947 for 2013?  What other Naming Rights did they sell.  This is just a guess, but the contract says CIAM and the City split any Naming Rights 50-50 over $200,000.  Are Sponsorships being reported as Naming Rights for an extra 40% commission?  Has anybody asked?
  • Has the Council been informed that US Cellular is planning on NOT renewing when the contract expires?
  • Below is the total per year that CIAM has paid itself in Management fees, commissions, etc (not including salaries)                                                                                                                                                                                                  2007 – 367,170    2008 – 363,499    2009 – 374,770    2010 – 315,568    2011 – 328,042    2012 – 326,893                               2013 – 334,001
  • Below is the actual Income – not including the questionable items like merchandise, events,etc                              2007 – 3,416,190    2008 – 3,184,304     2009 – 3,084,683     2010 – 2,666,204    2011 – 2,766,059                                              2012 – 2,698,015        2013 – 2,592,795
  • How does Income crater, but not what CIAM is paying itself?

Can I tell you the TOTAL amount BMI Concessions and CIAM have paid themselves that I consider unethical, illegal,or whatever you want to call it?  No.

The Coliseum is a nice piggy bank for Rogers and Butler, at taxpayers expense.  Is the City Manager David Hales doing his job?  Is the Council paying attention?

Here’s the summary:

BMI Concessions must be audited.  I guarantee the City is not getting 32% (or more) where they are entitled to it.  Catering must be audited.  The City is not receiving 15% when they are entitled to it under the contract.  The contract does not say back-stage catering is exempt.

Should the Coliseum have 2 highly paid managers?  No.  Why is John Butler not paying himself from BMI Concessions-his company?

Is CIAM entitled to 4% of every dollar coming into the Coliseum whether it is actual Revenue or something else?

Are they entitled to 14% on items named in the contract to be paid at 10%?

Ask your alderman if they know.  Then the bigger question is where was David Hales?

 

 

 

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