Mayor mulls selling Covelli Centre

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By David Skolnick


Because the Covelli Centre has never made enough money to cover the debt owed by the city to build it, Mayor Charles Sammarone said he’s considering selling the facility.

But Sammarone said Thursday at a meeting of the city council finance committee that he isn’t sure the city could find a buyer.

And Eric Ryan, the center’s executive director, said, “I know of very few privately-owned arenas, and most of those are smaller than ours. Most [arenas] are owned by cities.”

The center produces an operating surplus — $126,314 last year and $59,024 for the first three months of this year — and the city receives money from a 5.5 percent admission tax on tickets sold at the facility — $215,578 in 2011 and $37,017 for the first three months of 2012. Before 2009, the first full year Ryan’s company managed the center, it had six-figure operating deficits.

The problem, Sammarone said, is those two revenue streams aren’t enough to offset the principal and interest owed on the $11.9 million the city borrowed in 2005 to help fund the center’s $45 million construction cost.

The city will pay $920,000 this year for the center, $335,000 toward the loan principal and about $585,000 in interest. The city started paying principal last year with $275,000.

“We still haven’t made enough money to make up the debt,” Sammarone said. “We’re lucky that the debt hasn’t cost us police and other basic services.”

But paying the debt could be a drain on the city’s finances in two to three years, he said.

“It will be a problem for the future,” Sammarone said. “I want to tackle it now. The debt is more than we can afford.”

When improvements that will need to be made to the center in the future are added to the equation, the city could find itself spending a lot more, he said.

More than 99 percent of entertainment-and-sports facilities throughout the country don’t make enough money to cover all expenses, the mayor said.

Sammarone said he plans to ask SMG, the center’s national consultant, if any company would be interested in buying the arena.

Another problem for a potential buyer, Sammarone said, is property taxes.


But the city received good news about its effort to overturn a recent Ohio Department of Taxation decision denying Youngstown’s long-standing request for tax-exempt status for the center. The department is asking for $4.75 million in delinquent taxes and penalties from Youngstown.

On Wednesday, the Ohio House approved a mid-budget review bill that includes a provision that forgives the delinquent taxes and penalties and gives tax-exempt status to the city-owned arena.

The House Ways and Means Committee approved including that provision into the budget bill by an 8-7 vote Tuesday, and the full House approved the budget bill, with the amendment, a day later.

“We’re very grateful to the Republican majority [in the state House] for helping Youngstown,” said state Rep. Ronald V. Gerberry of Austintown, D-59th. “This is a big deal for [Youngstown]. It’s really, really important.”

It goes to the state Senate with a vote expected in late May or early June.

Without the provision, the $4.75 million would put a “big, big, big strain on our finances,” Sammarone said. “Hopefully, it will end up in the governor’s budget.”

Throwing out another idea, Sammarone said getting a Las Vegas-style casino to locate near the center “might be a better idea.” Efforts by state legislators from the area to include a casino in the Mahoning Valley on a ballot issue and in gambling-related bills have failed.

The mayor said he was throwing out other ideas for the center, including turning it into “a big Internet [caf ] palace,” he said.

In addition to looking for a company to buy the arena, Sammarone said the city also wants to sell 20 Federal Place, a downtown office building, to a private business.

Information provided by Ryan on Thursday showed the Covelli Centre made a $59,144 operating surplus during the first three months of the year. It was projected to make $51,024.

The biggest success was a sold-out Miranda Lambert concert Feb. 18, attended by about 6,000 people.

Other successful events between January and March were two weekends of amateur wrestling and Ringling Bros. and Barnum & Bailey Circus had four of nine dates in late March, Ryan said. The five other circus dates were earlier this month.

The $59,144 operating surplus for January to March is the third strongest first quarter since the center opened in October 2005. The operating surplus last year was $89,529.

The best year was 2008 with a $242,340 operating surplus, largely because of a Kelly Pavlik middleweight boxing match.

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