Federal grant bails out Covelli, amp
YOUNGSTOWN — Without a major federal financial grant, the city-owned Covelli Centre and Youngstown Foundation Amphitheatre — largely shut down because of statewide restrictions as a result of the COVID-19 pandemic –would have lost $442,002 in operating costs for the first six months of the year.
But with a Shuttered Venue Operators Grant, of which $419,878 was used in the first six months, the facilities had a $22,124 operating loss as of June 30.
SVOG was part of the $1.9 trillion federal American Rescue Plan.
As a company, JAC Management Group, which operates both facilities for the city, received about $1.6 million from SVOG, said Eric Ryan, its president.
The money is being used strictly to pay for the salary and benefits of employees, he said.
About $800,000 to $1 million of the $1.6 million will go toward paying those costs for workers at the center and amphitheater with the rest going toward those same expenses at other venues it manages and its corporate operations, he said.
“SVOG has been a lifesaver,” Ryan said. “It’s an absolute bailout.”
The delay in providing the financial information for the first and second quarters was directly tied to the lengthy time it took for JAC to get the SVOG money, Ryan said. JAC received word about three weeks ago it was getting the grant and actually received it two weeks ago, he said.
The first quarter, in which $193,072 of the SVOG money was allocated for employee salary and benefits, ended with a $4,047 operating surplus. The projection for the January-to-March quarter was for a $169,910 loss.
The second quarter, with $226,806 of SVOG money for salary and benefits, ended with a $26,177 loss. The projection for the April-to-June quarter was for a $298,111 loss.
“I couldn’t budget for this money because we weren’t sure we’d get it,” Ryan said.
UPS AND DOWNS
The first quarter has finished with operating surpluses every year since 2009 and is usually the Covelli Centre’s busiest period.
The second quarter has been inconsistent since 2006 with nine years having losses and seven with surpluses.
During this year’s first quarter, the center had 12 Youngstown Phantoms hockey games and two weekends of state wrestling tournaments with each athlete permitted to have only two relatives in attendance, Ryan said.
“The first quarter and the second quarter, because we had ice in and all those expenses, we lost a ton of money,” he said. “To have just Phantom games is an absolute loser for us.”
The Phantoms consistently have had one of the lowest attendance rates of any team in the United States Hockey League.
In the second quarter, the center and the amphitheater had 18 total events, including seven Phantoms hockey games.
“We couldn’t charge our luxury suite holders so we lost money there,” Ryan said. “We started that back up Aug. 1. We had to open back up to operate the Phantom games. Not having other events and no suite fees does not make for a good financial situation.”
Gov. Mike DeWine lifted attendance capacity restrictions June 2 at entertainment facilities.
The COVID-19 pandemic has hit the entertainment venue business exceptionally hard.
The third quarter was budgeted to make $62,000 and Ryan said: “I think we can reach it. The third quarter is going to be much better because we have a lot of events.”
The third quarter, between July and September, includes 12 national shows and 10 community events, he said.
“It came together so fast,” Ryan said. “It was a miracle, but my staff did a great job.”
The third quarter historically has been the worst with 12 of the 15 years having losses.
This year’s fourth quarter could be a challenge with most events moving inside to the center, Ryan said.
“The problem is this (COVID-19 delta) variant and masking,” he said. “We have to see how that affects our business. It will be a lighter fourth quarter than what we’re used to at the Covelli Centre because of the variant.”
The center and amphitheater had a $10,915 operating surplus in 2020 even though there were virtually no events at either location after mid-March of that year because of the pandemic.
The surplus was the result of JAC receiving $353,310.59 from the federal Paycheck Protection Program to cover payroll and benefits as well as utility costs.
It came a year after a $412,684 operating surplus.
The facilities have had annual operating profits since JAC took over management of the Covelli Centre in 2008. The center opened in October 2005, and the amphitheater opened in June 2019.
During the first six months of the year, the city collected $10,122 from a 5.5 percent admission tax on tickets, said city Finance Director Kyle Miasek. All of that money came from Phantoms hockey games, he said.
“With the entertainment industry going through difficult times, we’re pleased JAC has been able to come close to breaking even” during the first six months, Miasek said.
The city paid $1.46 million in principal last month toward the loan it took out in 2005 to pay its portion of the center. It is the largest amount ever paid by the city toward the principal with the previous largest amount being $900,000 in 2019 and 2020.
The city borrowed $11.9 million in 2005 to pay its portion of building the $45 million center. Most of the funding came from a federal allocation.
The city now owes $5.1 million.
The city could pay the rest of the money owed on the center in three to four years.
The city paid nothing in principal until 2011, paying only interest during those years.
The interest rate was high in those early years such as in 2007 when it was 6.88 percent. The city paid $818,720 in interest that year.
In comparison, the city paid 1 percent interest last month and last year, Miasek said.
Youngstown also borrowed $4 million in 2018 from the U.S. Department of Housing and Urban Development to pay for the $8 million amphitheater. The rest of the money came from naming-rights deals.
The city is repaying that loan over 20 years, starting last year. With interest, those annual payments are $205,180.