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Why mess with Covelli success?



Published: Sun, June 5, 2011 @ 12:00 a.m.

By Todd Franko (Contact)


LeBron James may be the focal point of the NBA finals for Northeast Ohio sports fans, but there’s another person capturing sports fans’ imaginations.

Three wins away from an NBA title is Erik Spoelstra — video-highlight-guy turned head-coach. He’s from as unlikely a coaching lineage as one could be. Wisdom and tradition would say he should not be coaching this team.

There’s one difference: The right people above him recognized the right things he was doing, and kept giving him more. He earned it; he didn’t blow it.

That reward system works in many places in America.

It creates companies; it changes populations; it moves the needle.

Some people struggle with that, including here in the Valley. Perhaps it’s our sticky trail of indicted leaders; perhaps it’s the chip on our shoulders; perhaps it’s simply in the water.

Here, we long for people with courage, leadership and accomplishment to make and to create so that we all elevate. Then, when those people do, we work quickly to keep them in check, question their intentions and undermine their feats.

The operations within the city of Youngstown have few bright spots as they slug through some of the most economically depressed conditions an American city can muster.

One is the economic turnaround at the Covelli Centre.

Sure, there is $11 million in undeniable debt to fix, and many choose to bang on that endlessly.

But you would think that the flawed way we longed for big steel’s return would have taught us one thing: Holding on too long to the past is rarely healthy.

As true as the Covelli debt is, so too is that the Covelli direction now is much more successful than it was three years ago. Profitable even — if you consider just the operations and discount that debt incurred by another leadership philosophy.

It took a bold decision by Mayor Jay Williams to recognize that the management marriage he inherited was not working and needed a divorce. A bolder move followed by putting the center in the hands of a kid who owned a Struthers bar and booked a few concerts — Eric Ryan.

Given his trial chance, like Spoelstra, he didn’t screw it up. When a longer-term deal was crafted with the national group SMG, Ryan’s JAC Management Co. was secured as a local partner to SMG. The pairing has given the city numbers it could not imagine.

In 2006, the old marriage had a $541,298 operations shortfall. In 2009 with the new marriage, it had a $153,950 operations surplus. The 2010 surplus was $110,434. The first quarter for 2011 has earned a $89,529 operating surplus.

New JAC/SMG work flows have made this happen.

Faced with past failure and present desperation, the city would be wise to accept any new direction or innovation this pair suggests until it proves unworthy — the Spoelstra model, if you will. Hell, their turnaround is of such significance, give them the city’s two big toothaches of the moment — city parks and city planning — if they seek them.

So in the last month, the pair devised a way to further squeeze more city revenues from the place — end a deal with the third-party food-and-beverage contractor and run the service themselves.

They even got the company, Centerplate, to agree to leave so long as we paid them what we owed them.

The answer from the city would seem swift and obvious, and it was.

No.

Well not completely no. But the meeting between JAC, city staff and city council was an embarrassment. Imagine: In comes the city’s biggest success in the last three years, and the meeting turns into a donnybrook. All share blame in the spectacle.

One city councilman said they were advised the meeting was to be informational/exploratory on the deal. But the information they got was that the deal was essentially done, which sullied them and set off fireworks.

From that scuffle rose two points from council and the public that to me, were outrageous: 1) Should not the food go out to bid to another third party, and 2) Is JAC qualified to run food and beverage?

That a third-party currently runs food is due to the clouded mindset at the start of the center. Essentially every policy those originators started with has been undone — bookings, parking, staffing, etc — and new dollars have benefited the city.

Given that, why would you even consider keeping any policy from then? Every energy should be spent legally proving that food does not need to be third-party and can be forced upon the existing JAC/SMG management team.

As to JAC’s ability to operate food ... really? Asking this ignores the available food expertise of SMG and building sponsor Covelli Enterprises. More humiliating and ignorant — it also ignores simple understanding of JAC’s facility operations and the skill it needs to manage bookings, ice, heating and air, structure, staging, parking lots, etc.

The current team, in the last 18 months, lands Elton John, Tim McGraw, a middleweight title bout and Barry Manilow ... and people wonder about their ability to push chicken fingers, nachos and beer?

Though projected as dead after that start, alas, logic has engulfed the process, and we seem headed toward the original goal.

Centerplate gets the $450,000ish owed to them (not a gift or golden parachute, but what it’s owed).

The city further secures every chance at income it can from the facility.

And it’s all placed in the hands of the team that turned the place into what it was originally intended to be.

Todd Franko is editor of The Vindicator. He likes emails about stories and our newspaper. E-mail him at tfranko@vindy.com. He blogs, too, on vindy.com.


Comments

1opddad(61 comments)posted 3 years, 3 months ago

"and people wonder about their ability to push chicken fingers, nachos and beer?"

Hell...How hard can that be? Anybody could do that? Just ask any of the food industry experts if they think the "dream team" can pull it off... Here's a for instance; any knucklehead knows if you're halfway successful say, selling cars, you'd be be a perfect fit in the restaurant business...not necessarily true.
No, Mr. Franko, we can't and shouldn't, put all our eggs in one basket, based on that logic.
Let JAC/SMG grow by doing what they do best..bringing in the talent and the big bucks.
It seems to me, messing around with hot dogs, nachos, and beer, would be a distraction and take away energy needed to up the Center's revenue through good bookings.

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2Tigerlily(488 comments)posted 3 years, 3 months ago

Maybe if people came to counsel meetings with the deals not already done and respected the elected representatives as people who need to hear and understand these things and who have a voice in these issues, there wouldn't be so much drama. Mayor Williams and local business leaders, and local media folks as well, should recognize that there is a process that needs to be followed here, and aired publicly in those council meetings. Otherwise, it just breaks faith with the people the city govn't represents, who deserve to have these dealings presented to them in open air, and that their elected council members have a voice in these proceedings.

You should know better than this, Todd. Stop criticizing council members from not letting backroom deals go full steam ahead. Even if they would be profitable and logical for the city. If they are so profitable and logical, then that can be proven through public discussions. No need to have done deals before coming to the meetings and surprising the council like that.

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3ytown1(392 comments)posted 3 years, 3 months ago

Ditto Tigerlilly, Todd you should be ashamed of yourself for going along with and advocating a backroom deal.

I also don't see the numbers making sense, they stated it would increase the revenues about $100K per year, that is probably due to the fact that they would not be paying the payment to Centerplate for the original equipment agreement, the $450K to buy them out minus the $500K increase in revenue only amounts to an additional $10K per year.

Is that really enough reason to make a change? Remember these numbers are only speculated, not fact, what if they are wrong?

I say it should be bid out to qualified vendors that can provide a better guarantee to make the maximum profits for the Covelli Centre.

Just maybe until their contracts ends with Centerplate, they could make an agreement to provide food service in a temporary situation during summer and outside events that Centerplate does not provide services to? That way maybe Eric Ryan and his staff can become more familiar with the process without all of the risk? Just a thought.

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4mcluvin(72 comments)posted 3 years, 3 months ago

How is this a backroom deal? The board of control is doing what they are supposed to do, negotiate contracts. Council needs to worry about one thing and one thing only, passing legislation. The problem is that some members of City Council need a high school civics lesson.

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5Tigerlily(488 comments)posted 3 years, 3 months ago

The article stated that they brought the deal to council not for approval, which they have a voice in, but because they'd already made the deal and were going through the process wrongly, expecting council to just be yes-men for others.

THAT, mcluvin, is a back room deal, and perhaps you need a high school civics lesson to understand that.

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6johnyoung(241 comments)posted 3 years, 3 months ago

The tenor of this whole column is just incredulous and makes me lose what little faith I had that the Vindicator cares even one iota about the citizens of Youngstown. This abomination is costing Youngstown dearly at a time when it can least be afforded.

The Covelli Centre is making $100k on the "operations" side (although the city's definition of "operations" is flawed), and is losing $500k when debt service is factored in. And of course there is the unpaid real estate tax liability that no one wants to talk about. This total idiot Franko labels this a success story? I just can't believe I'm actually reading this!!

What the Vindicator should be encouraging the City to do is to explore any available options to relieve the taxpayers of the economic burden of keeping the place open. How many vital services could the City provide to its residents for this same $500K per year in terms of safety forces and other needed improvements. Chalking the debt off to "another leadership philosophy" and pretending it doesn't exist is like chalking your bills up to your ex-husband or wife after a divorce and acting like you're not responsible for them. See how far that argument gets you. Franko's comments also make it painfully obvious that the college journalism curriculum does not include any courses on municipal law. The food service is subject to competitive bidding just like any other service contract the city enters into.

An irresponsibly written column with an obvious agenda attached: Make city council look incompetent and make the Mayor look like the "Knight in Shining Armour". I don't think you're fooling too many folks with this stuff!

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7Askmeificare(700 comments)posted 3 years, 3 months ago

It seems to me that you folks leaving comments on this article are most unknowledgable about how the world and government works.

Frankos' article, and mcluvins' comments, are right on. The only comment posted here I can fairly agree with is johnyoungs comment about how the vindicator may not care one iota about the citizens of Youngstown.

By the way comment posters, the current lineup of city council persons ALL NEED TO GO. They are worthless and make ego based decisions - not intelligent decisions based soley on facts and what is best for the citizens of Youngstown.

Why does city council stand in the way of city progress, especially the progress being made at the Covelli Center.

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8Tigerlily(488 comments)posted 3 years, 3 months ago

Oh, well now that you educated me, Askmeificare, let me just say:

ASK ME IF I CARE.

Such an authority figure you are.

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9Askmeificare(700 comments)posted 3 years, 3 months ago

@ Tigerlily:

Please, don't hold back.

Please, don't edit yourself.

Please, tell me how you really feel.

DO YOU CARE?

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10Tigerlily(488 comments)posted 3 years, 3 months ago

You should be answering your own questions.

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11johnyoung(241 comments)posted 3 years, 3 months ago

@ Erplane:

So if I understand your logic correctly, you're saying that the patient is now only losing 400,000 gallons of blood per year instead of 500,000 gallons, and is therefore much healthier? Doesn't sound like a very convincing argument to me. Do you really believe that the citizens of Youngstown should be subsidizing this non-governmental function to the tune of a half-million per year at a time when so many governmental functions, such as fully staffed safety forces and infrastructure improvements are not even close to being met?

And yes, I do believe that there is a problem with government "negotiating" deals. Ohio law requires municipal procurement of goods and services above a statutory limit to be accomplished through competitive bidding, not negotiation with a favored party, which opens the door to sooo many potential issues.

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12Tigerlily(488 comments)posted 3 years, 3 months ago

exactly, johnyoung. there are procedures that must be gone through in public. none of this "ironing things out" between two people, then bringing it to council as a "done deal" and expecting a seal of approval without and discussion about it, no search for even better possible solutions.

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13johnyoung(241 comments)posted 3 years, 3 months ago

@Erplane:

"Going around bureaucracy" as you put it, has landed several public officials I can think of in jail. The checks and balances for public procurement are there for a reason. It's when they are not used that trouble erupts.

At any rate, I am glad that you share my philosophy that the city should not be in the entertainment business. If SMG and Eric Ryan believe the Centre is such a great business opportunity, they should purchase it from the city. Under the current arrangement, everyone's making a profit, while the city is losing money.

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