Who Pays for the Financial Losses of the Evansville Thunderbolts?
During a past budget hearing, Vice President of VenuWorks Scott Schoenike stood before Evansville City Council and made some statements that raised many eyebrows. Mr.Schoenike clearly stated before the City Council that “VenueWorks aims to break even” and went on to say that their primary interest is “to bring economic development to downtown Evansville”. First off, no for-profit company of any value “aims to break even” or exists to further the civic interest of a city.
Mr.Schoenike presentation to City Council obscured the reason he was asked to speak in the first place. Mr. Schoenike was before the City Council to discuss the financial performance of the Evansville Thunderbolts semi-pro hockey team that had just finished its first year in the Ford Center with less than impressive results. Nothing that he said addressed that question.
ADDENDUM #6 OF CONTRACT BETWEEN THE CITY AND VENUWORKS
To understand what risk if any that VenueWorks of Evansville LLC may have with respect to the Thunderbolts, one must first examine addendum # 6 to the legal agreement between VenueWorks and the City of Evansville that was funneled through the Evansville Redevelopment Commission. This agreement deals with the operation of Thunderbolts in addendum #6 where it is clearly stated that: “VenuWorks shall be entitled to utilize facility (Ford Center) staff and resources reasonably necessary in connection with its operation of the SPHL Franchise”. During any such periods in which VenuWorks operates the SPHL Franchise, ALL OPERATING EXPENSES OF THE SPHL FRANCHISE SHALL BE DEEMED AN EXPENSE OF THE FACILITY (Ford Center) AND ALL OPERATING REVENUES OF THE SPHL FRANCHISE SHALL BE DEEMED A REVENUE OF THE FACILITY (Ford Center)”.
THIS CONTRACTUAL AGREEMENT SEEMLY TRANSLATES THE FOLLOWING
This contractual agreement seemly translates that taxpayers of Evansville will provide free labor to support the hockey team and all operating expenses associated with the team will be borne by the Ford Center. As revenue also accrues to the Ford Center, the reality is that when it comes to the Thunderbolts, VenuWorks of Evansville LLC is not at risk for financial performance. Having a goal to break even under such an agreement is exactly what a for-profit entity that is paid $390,000 per year for management services would benefit from. Under the terms of the addendum #6 to the original agreement, the taxpayers of Evansville are saddled with the losses associated with the SPHL franchise and VenuWorks is paid a fee for management services. This seemly looks like heads they win, and tails the taxpayers lose scenario.
POINTS OF CONCERNS
One thing for sure is that someone lost at least $1,365,506 during the last three calendar years and is projected to lose a similar amount this year. So the first question is just who lost that money and who paid for the losses. Nothing in Mr. Schoenike’s last year’s presentation to Council answers that question.
The other item that is conveniently ignored is the $127 Million debt taken on by the City of Evansville to build the Ford Center. Who is paying that and what is the source of funds. It is widely suspected that the Riverboat Fund that was supposed to support capital asset purchases is absorbing most of the $9 Million per year payments on the debt.
It is disappointing that the Evansville City Council is either lacking the fortitude to do the financial diligence required to understand whether the Evansville Thunderbolts are a worthy investment of public money or another money pit like the facility they play in. The people of Evansville deserve to know how the Thunderbolts are performing economically and who is covering any losses, and whether or not there is any hope of ever having a financially successful hockey team.
Bottom line, it will take little time to get the necessary information about the Thunderbolts financial performance from either the VenuWork’s or the City Controllers records. If this council fails to get to the bottom of this issue so a competent informed decision about hockey in River City can be made, they all need to be replaced.