Youngstown and JAC Management Group, which runs the day-to-day operations at the city-owned Covelli Centre, have signed a tentative five-year contract extension.
The tentative deal was reached Friday. City council on Wednesday and the board of control on Thursday are expected to vote in favor of the renewal, which would make it official.
Once the contract is finalized, Eric Ryan, head of JAC and the center’s executive director, said he’ll have a decision on whether the Youngstown Phantoms junior hockey team will play its fifth-season home games at the downtown facility.
That decision could come as early as Thursday, shortly after the board of control vote, Ryan said.
“I’m very pleased with the renewal,” he said. “We’ve come a long way in five years [of managing the center]. We have a lot of work to do. We can continue to improve. We’re very excited to continue to manage the facility and do the best we can.”
The tentative contract calls for JAC to receive $99,200 a year as a management fee. That’s what the company is receiving this year.
The deal eliminates an automatic consumer-price-index pay increase in JAC’s original five-year contract that expires at the end of this year. The CPI increase took JAC’s annual fee from $96,000 in 2009 to $99,200 this year.
Also, JAC was receiving 10 percent bonuses for any operating surplus generated at the center exceeding $100,000 annually.
The new deal increases that to 12 percent in 2014, 14 percent in 2015 and to 15 percent annually in the contract’s final three years.
The center finished 2012 with a record operating surplus of $320,787. JAC received a $32,079 bonus last year. That would be $38,494 if the bonus was 12 percent instead of 10 percent.
Ryan “wanted a pay increase, but what I told him is what I tell our unions, ‘We don’t have the money,’” said Mayor Charles Sammarone. “I didn’t like the consumer-price-index increase because he could have done nothing and received more money. I like incentives because it makes you produce.”
Sammarone, Ryan and Anthony Donofrio, the city’s deputy law director who was involved with the negotiations, agree the new tentative contract is fair to both sides.
“Eric has given his heart and soul to the facility,” Sammarone said.
After two years of heavy deficits with Global Entertainment Corp. managing the center, the city came to an agreement in October 2007 to end that deal. JAC took over on an interim basis in 2008, another bad year for the center.
The city signed five-year contracts, effective Jan. 1, 2009, with JAC and SMG. The facility’s operating surplus was $153,950 that year.
Between 2008 and 2012, the center went from a $310,435 operating deficit to a $320,787 operating surplus.
The proposed new contract language gives Ryan greater control over the entertainment and sports center.
Among the key changes are JAC will negotiate the hockey contract, naming rights — though the city must approve that contract — and a deal with a national management company.
Ryan declined to discuss the decision he’s made on the Phantoms.
But indications are the Phantoms will be given another year at the center.
The team has had poor attendance during its four years at the center, and there is a provision in its contract that allows the city to renew for a fifth year at no cost or ask the Phantoms to pay a $75,000 fee.
Sammarone said he doesn’t have a preference.
“Whatever is best for the center,” he said.
Also, the naming-rights contract with Covelli Enterprises expired May 1. Covelli paid $175,000 for the naming rights for a year. Before that, Covelli had a three-year deal for $120,000 annually.
Ryan also plans to meet shortly with SMG, the center’s national consultant, to discuss a new contract with the company. Its current deal expires at the end of the year.
“I’m looking forward to sitting down with SMG to discuss continuing to utilize some of their services,” Ryan said. “It’s been a good relationship.”
SMG helps JAC book some of the bigger concerts at the center.
“Their networking and booking has been helpful, and we want to continue it,” Ryan said.
But Sammarone and Donofrio said the current SMG deal will be reduced, and the company’s bonuses eliminated.
The company makes $86,000 annually. Like JAC, SMG receives bonuses when the center’s operating surplus reaches $100,000 annually.
SMG gets 10 percent between $100,000 and $200,000 like JAC. But it increases by another 5 percent with each $100,000 in operating surpluses.
SMG made close to $40,000 last year in bonuses.
“JAC will receive a higher percentage, but this contract will save the city money with the reduction to SMG,” Donofrio said.
Also, the city will add a 25-cent fee on every ticket sold, beginning next year, to create a fund for capital improvements to the center.
That fee should generate about $30,000 to $50,000 annually for the center, Donofrio said. The center, which opened in October 2005, has never had money for capital improvements.
The fee was recommended in a $50,000 study of the center in January by PA Sports & Entertainment of Downingtown, Pa.
The city also will follow two other recommendations in the report — having JAC file monthly reports rather than quarterly, and an annual audit done at the center.