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Hey, Mr. ‘Million $$$ Man,’ buy it



Published: Sun, March 7, 2010 @ 12:00 a.m.

By Bertram de Souza (Contact)


By Bertram de Souza

On Valentine’s Day, The Vindicator’s news desk gave Eric Ryan, director of the Covelli Centre, the ultimate heart-shaped gift: It called him “The Million Dollar Man.”

The front page story — a keepsake if ever there was one — complete with a prominent picture of Ryan, was based on a financial analysis of the center for 2009 and a comparison of the bottom line with those of the previous three years.

The gift to the director was tied with this ribbon: “Eric Ryan is credited for the $1 million financial swing — to the better — for the arena.”

At first glance, it was quite an endorsement.

The sports and entertainment facility in downtown Youngstown opened its doors in 2006 and since then has been struggling to make ends meet.

But according to the front page story, last year, the city-owned Covelli posted its first operating surplus — $153,950. And if the $307,000 from a 5.5 percent admission tax on events is added to the surplus (the money goes into city government’s general fund), the financial picture looks even rosier.

Miraculous turnaround

Any investor would jump at the opportunity to be part of such a miraculous turnaround. Right?

Well ... but for this nagging problem: An $11.9 million debt.

That’s the amount city government owes on a loan taken out during former Mayor George McKelvey’s tenure for its share of the $45 million construction cost. McKelvey has been gone for four years and the principle amount has not been reduced one dollar.

Thus far, the city is only able to pay the annual interest on the loan — the interest went from $747,386 in 2006 to $802,060 in 2009.

And here’s the reality of the $11 million-plus confronting the city of Youngstown: The loan will never be repaid in our lifetimes.

Thus, when the annual interest rate is figured into the operating budget of the Covelli Centre, which is where it belongs, the 2009 rosy picture suddenly isn’t so attractive. Indeed, the center cost city government $340,410 last year. This, in a community that is losing population, has a shrinking tax base, has the worst academic performing school district in the state and is dealing with a general fund budget that’s dripping red ink.

But we do have the Cadillac of sports/entertainment arenas, don’t we? Come to Youngstown, where government doesn’t have two pennies to rub together, but it does boast a $45 million showcase.

How long can the city continue shelling out money for a top-notch, high-priced complex that does not show any sign of becoming profitable? It’s a serious question that demands serious contemplation.

The answer: Not long.

So what is to be done?

Enter “The Million Dollar Man.” Ryan, who is being credited, along with SMG of Philadelphia, with turning things around. He has hands-on experience and, therefore, would be in the strongest position to take over the facility.

Ryan — in partnership with SMG — could have it for $12 million.

Think about it: Ryan and SMG are being touted as turnaround specialists, but so long as city government has the $11.9 million millstone around its neck, the naysayers will continue to nay say.

In the news story detailing Ryan’s success as the director of the Covelli Centre, there was an observation about sports and entertainment facilities from John Siehl, executive director of the Nutter Center. It’s on the campus of Wright State University in Dayton.

“If you’re proactive and have a decent year, you can break even. On the surface, it looks like Youngstown is doing well. Those sound like good numbers.”

But Siehl also had this to say about the $11.9 million debt: The center will never make enough money to pay off the principal and interest.

“Anybody who thinks they’ll build a building, make a profit and pay off the loan is out in left field.”

Two options

So, what’s the answer? A special tax dedicated to the $45 million facility, or a sale.

Given the demographic challenges confronting Youngstown, a city-only tax is a non-starter. So, what about a county-wide tax? The mere mention of such a proposition has suburbanites who simply love the Covelli Centre suddenly tempering that love.

“FOR SALE: A $45 MILLION ARENA. CHEAP.”


Comments

11970mach1(1005 comments)posted 4 years, 7 months ago

Why not just use the so called Stimulus Funds to pay it off? Those funds will either bankrupt the country or never be paid back either, just like Covelli Centre and the city, so it is a perfect match.

All the city has to do is properly fill out an application and....uh, never mind. Well wait. Maybe the city can get jobs retraining money from the Stimulus Funds to teach someone to properly fill out an application!

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2Silence_Dogood(1353 comments)posted 4 years, 7 months ago

Below is what my response several weeks ago was to the story you mention above.

"FOOLS
At the rate we are going do you know when the City of Youngstown will be able to pay off the $12,000,000 loan that it took out to build this boondogle.

NEVER!

And yet this rag of a paper tries to spin it as if great things are going on with this Center.

At the rate we are going, in thirty five years the City will be faced with the cost to tear this structure down due to structural failures and we wont even have made a dent in the principal of this loan, so we will be burdened with the cost to tear it down and still have to pay $12,000,000 with no benifit."

This week you stated the following

" so long as city government has the $11.9 million millstone around its neck, the naysayers will continue to nay say."

What else should we be saying when you look into the LONG TERM COST of maintaining this "White Elephant".

King George is no longer the Mayor but I would like to hear from his Royal Highness as to how we are to get out of this mess that HE got US into. If you can recall his shrill voice stating time after time that he would not build this if it was to put a burden on the taxpayers and compare that to where we are today, I think you will see that what he said then is diametrically opposite of where we are today.

Nay , nay , nay, I say. Have a good day !

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3Silence_Dogood(1353 comments)posted 4 years, 7 months ago

The colloquial deffinition of insanity is " to do the same thing over , and over again and expect to get a different result". Well Letstryagain I think this is something that you might be able to relate to. I am not sure who you were directing this comment to,
"If we are going to be a better place, we have to believe we can be a better place, and if you choose you may contribute to the effort. Your comments today do not contribute to that effort.",
but if it was directed to Bert I think you are missing his point. The " status quo" is not working and something needs to be done about it. He is doing everyone a service by bringing this to our attention.

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4HaydenThomas(208 comments)posted 4 years, 7 months ago

Letstryagain says: If we are going to be a better place, we have to believe we can be a better place, and if you choose you may contribute to the effort. Your comments today do not contribute to that effort.

If I believe hard and long enough that I look like Brad Pitt and have the money of Bill Gates, will that come true too?

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51970mach1(1005 comments)posted 4 years, 7 months ago

I think the problem that many people have with it is that just like almost everything else govt promises, it was untrue.

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6Jay(6 comments)posted 4 years, 6 months ago

Here's a quick solution to this problem. Divide the $12 M by the number of people who went to the Trafficant dinner to kiss the ring on his finger. He's the one who came up with the sports center idea and what it would do for the valley. Oh, and Jimbo should pay his share double. His wig might also fetch about $..99 at a local auction.

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7Stan(9923 comments)posted 4 years, 6 months ago

The Covelli Centre is here but prosperity isn't . A lot of work needs to be done to restore prosperity to Youngstown . Attracting new business should be a top priority . Manufacturing products for export will roll in the wealth .

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