The city received no takers in its effort to sell or lease the Covelli Centre — and that’s just fine with the mayor.
“It doesn’t surprise me,” Mayor Charles Sammarone said. “When we put together [the minimum financial requirements], we did it to protect the city so somebody wouldn’t do well for two years and then take off. We went through a process, and now we’ve passed that.”
The city gave companies until Friday to submit proposals to buy or lease the downtown entertainment and sports arena.
Those seeking to lease the center were required to sign a five-year deal and pay at least $700,000 a year to the city with the first two years in advance payments. Also required was $75,000 annually to the city for capital improvement work to the center.
The center finished last year with a $320,787 operating surplus, surpassing its previous best year of $153,950 in 2009.
The city also received $163,398 last year from a 5.5 percent admission tax on the arena. The city planned to keep the admission-tax proceeds if it leased or sold the facility.
The center is expected to have an operating surplus of about $300,000 and about $175,000 to $200,000 in admission tax, said Eric Ryan, its executive director.
“With the change in management, debt restructuring and improved economics with added parking, we believe [the center] will do well this year,” said city Finance Director David Bozanich.
The asking price to buy the center was $15 million.
The facility was built in 2005 for $45 million, with about $26 million from a federal grant. The city’s share was $11.9 million with only $600,000 paid so far toward the principal.
None of city council’s seven members favored selling the center, and only a few had any interest in leasing.
With no proposals, Sammarone said it’s time to enter into a long-term management contract with Ryan’s company, JAC Management Group. The current contract expires at the end of the year.
Ryan “was doing a good job, and he’s doing a better job now,” Sammarone said. “We’ll determine the best way to come up with a long-term deal. I’ll talk with the law department and the finance department and figure out our game plan. Then we’ll talk to Eric.”
Ryan said, “We’re excited to look at a long-term deal and continue to do what we’ve been doing. We look forward to sitting down with the city in the near future and work out a long-term deal. We’ve done a good job and want to do even better.”
A $50,000 study, released in January, by PA Sports & Entertainment, a company hired by the city to evaluate the center, urged public officials not to sell or lease it.
But Sammarone said there was no harm in looking for a better deal.
The mayor initially had expressed interest in selling or leasing the center before the study.
Just because the city didn’t sell or lease the center now doesn’t mean those aren’t possibilities in the future, Bozanich said.
He specifically mentioned if gambling were legalized in Youngstown, the center would be an ideal location for someone to open a casino.
“If not, we’ll continue to operate it as we have,” he said.