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Another mayor, another arena gamble



Published: Sun, April 29, 2012 @ 12:00 a.m.

By Todd Franko (Contact)


Among the many themes in the short history of the Covelli Centre, one theme is constant:

Mayors and their gambles.

That the Covelli Centre exists at all is, in part, due to a gambling mayor.

George McKelvey gambled in the early 2000s with many of the arena decisions, including sticking with a sports facility in the first place that others opposed.

Jay Williams inherited making the Covelli gamble work. Armed with mounting baggage from some of McKelvey’s bad gambles after just two years of operations, Williams, too, gambled. He dumped the original arena operator to find another. A short-term patch while Williams searched was local small-timer Eric Ryan — a Struthers club owner. The period of Williams’ search yielded this reality: Ryan was making the right things happen for the facility. Williams gambled on a structure that bought a national group’s expertise while keeping Ryan in charge.

The results have exceeded expectations. In 2008, Ryan turned in a $242,340 operating surplus; 2011 was an $89,529 surplus; this year’s first quarter had a $59,144 operating surplus for January to March — the third-strongest first quarter since the center opened in 2005.

(Reminder that the above success was amid a national economic travesty).

Now comes the newest mayor and the newest arena gamble.

On Thursday, Mayor Chuck Sammarone was “thinking out loud” about the Covelli Centre and offered this idea: Is it time to sell it?

It’s yet another chapter on mayors gambling with this facility.

I’m a Covelli cheerleader and not opposed to the mayor’s idea. I just think he failed in his delivery.

There’s no better time to sell than when the market’s hot — for the Covelli and the community. I think that should have been the message. Instead, the Covelli was presented as a burden, a place of false promise, and probably better if it were a gambling facility.

That’s not what should be heard by Sam Covelli as he eyes another naming-rights contract, or suite-holders eying $20,000 contracts, or Ryan, whose success crushed his small-timer title in his industry, or potential buyers.

In selling, I also think that the entire picture of the Covelli Centre needs to be examined and told. I wonder then, that if examined and told properly, is the Covelli future best in the hands of private owners or government ownership?

The city’s relationship with private interests in the Covelli — Ryan aside — has been bad. The original private group that ran the facility for the city was a bad marriage and expensive to dump. The city had a private group also running the food and beverage operations, and that, too, was not the best marriage. The profits, the $9 beers and other unfriendly policies were all in the hands of a national company.

The city worked hard to separate from the operations group, and better times arrived. It worked to separate from the private food group, and better fiscal times will come from that.

In private hands, is the Covelli better for the city?

Many of these facilities are owned by cities, counties, colleges and public consortia. Columbus has a major arena owned by Ohio State and one privately owned by Nationwide Insurance. Ironically, Nationwide is trying to sell its to Franklin County.

But the Staples Center in Los Angeles and Madison Square Garden in New York are examples where private arena ownership works. And it exists on smaller levels similar to the Covelli’s.

It’s a numbers game, ultimately, and that’s where I think the city needs to be cautious of the arena’s future.

To be sure, the center’s looming debt payment weighs on the city. And Sammarone is correct that it has to be dealt with.

But here’s what the center means to the city:

It’s $125,000 annually in surplus funds.

It will be an additional $100,000 now that the city controls food and beverage.

It is $250,000 in admission taxes per year.

It is more than $1 million in payroll taxes.

That’s just off the arena.

Those payroll taxes also are realized from the downtown businesses that benefit on the 100 days per year that Covelli is busy, as well as the acts that take the stage at the facility.

Stepping away from the city and into the county, the Covelli is:

Sales taxes for the county on the food and beverage sales at the center.

Sales and bed taxes from the restaurants and hotels that fill up when those 100 events happen.

In theory, under private ownership, all of those above revenues would continue to arrive to governments, except for the center’s annual surplus and food and beverage profits. So not much is lost in the way of revenue.

But a lot is at stake with all that revenue, and does the city — and the county for that matter — feel safe trusting it away to private ownership, if they don’t have to?

Do they have to?

I always wondered why a clever definition and structure was not created when Washington was handing out billions in relief funds. We bailed out Wall Street and General Motors, kept police and teachers working, and built new offices for WRTA. Amid all that crazy spending, no one could figure a way to relieve the city of the Covelli debt?

Political powers muscled up recently to urge the county to increase the bed tax for the port authority. Did anyone speak up for relieving the city of the Covelli debt? The facility’s impact on downtown in five years is unquestioned. A close second is Covelli’s impact on the Mahoning citizens who flock there and the Mahoning sales and bed-tax dollars created. It is as much of an economic engine as the airport.

There is a ticket tax on Covelli but not on similar events at city destinations such as Stambaugh, Powers and Youngstown State University. Those patrons need police and roads and emergency personnel just as Covelli patrons do. If the ticket tax was applied to other venues, would that create a pool of funds to aid Covelli and all of them?

But I hate fees and taxes like anyone, and I think another consideration is just to sit, wait and watch.

The city of Arlington, Texas, is sitting on a $200 million trust fund for city needs. Trumbull County residents are cashing in more than $300 million. Columbiana County residents are banking more than that.

We are in the midst of a gas boom. And Youngstown is sitting on a lot of property that will net it millions.

There are lots of needs in the city, and I would put a safe future for the Covelli among them.

Downtown is back, and the Covelli deserves much of the credit.

YSU has been here for decades. And in the decade before the Covelli, new courthouses opened, as did a new government center. All of that, and downtown still languished.

But in the six years of Covelli operations, downtown has ignited. The business incubator and the call-center jobs get some credit. But my theory is that Covelli dared regular people to return to downtown. I moved here in 2007 and heard suburbanites express concern about coming downtown at night.

But concert after concert and circus after circus and puck after puck — and you have a new comfort in downtown, and that is owned by the arena.

We’re at an up time for downtown and for Covelli. Now is a good time to market it.

Each mayor has gambled with the place in some way.

It’s not always worked. But in the bigger picture, we are better for the gambles.

This could work, too.

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


Comments

1author50(1121 comments)posted 2 years, 7 months ago

Earth to Todd: The downtown is back because the taxpayers are footing the bill. Without the taxpayer, downtown would be as bad off as its neighborhoods are.

The oasis of downtown comes at the expense of the school system and criminal justice system.

The bigger question is it worth it?

Ask all the victims.

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2DwightK(1300 comments)posted 2 years, 7 months ago

The Covelli centre is a draw and good for downtown. It gives people a place to go, we always have a good venue for acts and downtown is much, much better than it used to be. The city should be commended for risking so much.

Unfortunately the financing is just too much. It needs to be reorganized or paid off by someone who can afford it and who wants to help the city. Maybe the lenders could help by forgiving some of the interest.

Turning Youngstown around must be a group effort. The city under Jay Williams and now Charles Sammarone has shown effective leadership. They need some help.

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3UticaShale(854 comments)posted 2 years, 7 months ago

Mr. Frank needs to do his homework a little better or seek legal advise when making statements such as:" the City is sitting on a lot of property which will net it millions". Most of the City owned property dispersed thoughout the City is under the Land reutilization code and has been stockpiled generating ZERO property taxes to the county for schools , etc.

These lands are required to be sold under a formula to entities interesting in developing the property resulting in jobs and tax revenue. As one in the energy business specifically in relation to land, our experience with the City is to put it bluntly stonewalling. It is our opinion that the City is currently trying to figure out a way to tap into the mineral revenue. It is our belief that this would be a direct violation of the City Charter to be in the Oil and Gas business, especially with the City's advantage of not being required to service property taxes for many decades.

The City needs to "Man" up and get a meeting of the minds on what to do with the tremendous amount of raw land in its Landbank. Currently the County has a new Landmank supposedly to absorb Youngstown, Struthers, and Campbells landbanks into one. Obviously since it is Government, nothing is moving fast enough or lets say at the speed of oil business.
It is the opinion of this professional that Yemma get all the actors together and get this landbank up to speed, the land must go to the public, but a percentage should be and can be placed into an escrow ala Texas.

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4penguinnick(28 comments)posted 2 years, 7 months ago

Nice job Todd. The Covelli Centre is a much needed facility. It's an anchor for the downtown and I support it 100%.

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