EDITORIAL: Who Pays for the Financial Losses of the Evansville Thunderbolts?

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Who Pays for the Financial Losses of the Evansville Thunderbolts?

Scott Schoenike of VenuWorks of Evansville LLC stood before Evansville City Council on Monday April 24, 2017 and made some statements that raised many eyebrows about whether VenueWorks is a non-profit alter ego of the Winnecke Administration or a subsidiary of a for profit business from Ames, Iowa. The Indiana business registry would lead to the conclusion that VenueWorks of Evansville LLC is a wholly owned subsidiary of a parent organization from Ames, Iowa. Mr. Schoenike’s statements most certainly seemed more like the words of a patronage worker seeking the favor of the Winnecke Administration than the General Manager of a subsidiary of a for profit company.

Mr. Schoenike clearly stated before the City Council that “the organization 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. All of this discussion of organizational goals and the 4 line spreadsheet that Mr.Schoenike presented 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. Nothing that he said addressed that question.

To understand what risk if any that VenueWorks of Evansville LLC may have with respect to the Thunderbolts, one must first examine the latest addendum to the agreement between VenueWorks and the City of Evansville through its Evansville Redevelopment Commission. This agreement deals with the operation of Thunderbolts in addendum #6 where it is clearly stated: “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 translates as the 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 is a heads they win, and tails the taxpayers lose scenario.

The question then arises as to just what that spreadsheet was and what entity was it about? One thing for sure is that someone lost at least $1,365,506 during the last three calendar years and is planning to lose a projected $689,949 in 2017. So the first question is just who lost that money and who paid for the losses. Nothing in Mr. Schoenike’s presentation answers that question. It is also clear that these numbers are aggregated with other Ford Center activities and obscures one’s ability to understand what is doing well and what is not performing well. We will assume by the rapid and visible exit of former 10% shareholder Mike Hall that the Evansville Thunderbolts did not perform well financially.

To his credit,  Evansville City Councilman Justin Elpers tried to get to the bottom of that question and was frustrated by either ignorance or intentional obscuring the reality of the Thunderbolts by Mr. Schoenike. It is not known whether or not Mr. Schoenike understands how to present a profit and loss statement or a pro forma, but it is obvious to anyone who has ever been familiar with such things that the spreadsheet presented to the City Council is neither. It is interesting that Councilwoman Anna Hargis who is a CPA and most certainly should know a P/L from an aggregated spreadsheet sat there in silence. It is disappointing that the Evansville City Council is either lacking the expertise or the fortitude to do the 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, who is covering any losses, and whether or not there is any hope of ever having a financially successful hockey team of any kind.

Mr. Schoenike stated that utilities for the Ford Center are not included in his spreadsheet. Upon hearing this the CCO did a nationwide search of public hockey rinks and found one in Pembroke Pines, Florida that only seats 2,000 people (similar to Swonder Ice Rink). That facility spent $420,000 in 2016 on utilities with $390,000 for electricity and another $30,000 on water. Given that Vectren has higher electric rates and that the air volume in the 11,000 seat Ford Center is many times greater than the Florida facility, it is not a stretch to estimate that the Ford Center’s total utility costs per year are on the order of a million dollars.
We call upon the Evansville City Council and encourage Councilman Elpers to ask specifically what the utility bills for the Ford Center are and who pays them. Until someone advises us differently, we will assume that the utility bills of the Ford Center are aggregated into the City of Evansville’s bill and that they exceed a million bucks. Councilwoman Hargis on the other hand needs to utilize her CPA for the people of Evansville and force a decoupled analysis of exactly what each activity at the Ford Center costs. The time for hiding loses by aggregating them with winnings is over and if Ms. Hargis is really a CPA worthy of her license she will take this upon herself to do.

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 $8 Million per year payments on the debt.

Ford Center was sold to the people of Evansville by the Weinzapfel Administration as “going to have positive cash flow including paying the note on the debt”. At this point if one examines Mr. Schoenike’s spreadsheet the only logical conclusion is that the Ford Center is slated to lose at least $689,946 this year from operations, plus another million or so in utility bills just from day to day operations. That excludes the free labor provided to VenuWorks under Addendum #6. Adding that to the $8 Million non payments it is not unreasonable to conclude that the Ford Center is a $10 Million per year albatross around the neck of the taxpayers of Evansville.

Who is accountable for this debilitating miscalculation of performance? Nobody is accountable until the voters decide to dispense some accountability by tossing the rascals out. The reality is however that the rascals that did this were dispensed with by the late great Rick Davis in the Democrat primary of 2011. The rest of the taxpayers of Evansville are holding the bag for a $10 Million per year mistake that keeps taking on additional losers (on and off the ice) like the Evansville Thunderbolts.

Speaking of City Council rascals, at Mondays meeting President Missy Mosby (D),  Jonathon Weaver, (D), Finance Chairman Dan McGinn (R) and Michelle Melcher (R) all publicly expressed their strong support of VenuWorks overall performance at the Ford Center.

For now, we call upon the Evansville City Council to sharpen their skills in VETTING. Vetting as you recall is the process that failed the citizens of Evansville when Earthcare Energy LLC shook down a star struck but ignorant new administration for $200,000 and delivered nothing. A ten minute Google search of the United States Patent Office Registry at USPTO.gov by a competent novice would have avoided that debacle. It will take more than ten minutes to shake the necessary information about the Thunderbolts from VenuWork’s records. If this council fails to get to the bottom of this so a competent informed decision about hockey in River City can be made, the all need to be replaced.

FOOTNOTES:  If you would like to express your views on this subject please feel free to contact your elected City officials at the e-mails and or phone numbers listed below. 

WARD 1
Dan McGinn (R)-Finance Chairman
812-479-6336  or dmcginn@evansville.in.gov

WARD 2
Missy Mosby  (D)-President

812-453-6479 or mmosby@evansville.in.gov

WARD 3
Anna Hargis-CPA (R)
(C) 812-463-2551 or ahargis@evansville.in.gov

WARD 4
Constance Robinson (D)
(H) 812-425-2372 or connie@hmrdistribution.com

WARD 5
Justin Elpers (R)-Vice President
(C) 812-454-3479 or jelpers@evansville.in.gov

WARD 6
Jim Brinkmeyer (D)
(C) 812-480-6909 or jbrinkmeyer@evansville.in.gov 

AT-LARGE
Dr. H. Dan Adams (D)
(H) 812-425-4220
(C) 812-459-4221
drhda501@aol.com

AT-LARGE
Michelle Mercer (R)
(C) 812-568-5393 or  mmercer@evansville.in.gov

AT-LARGE
Jonathan Weaver  (D)
812-568-0562 or jweaver@evansville.in.gov

TODAYS “READERS POLL” question is: Are you disappointed in the Evansville City Council for not being more concerned with the contract between Thunderbolts/VenuWorks and the City?

 

 

 

 

 

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22 COMMENTS

  1. The taxpayers of Evansville have been cheated and lied to again , however we have grown accustomed to it I suppose we are suckers ,cause we keep electing the same asswipes

  3. Long story short: The taxpayers will pay the “operating expenses” and VenuWorks will “pocket any profits” on the venture. That is something that any newspaper reporters worthy of calling themselves REPORTERS would have gotten to the bottom of long ago. That is unless the reporters already knew that the editor did not want to see such a report on his desk, and that even if one was submitted, it would never see print. BTW, did Tim Ethridge take over Jack Pate’s membership in the Evansville Regional Business Committee? Just asking.

    • As I have heard, the local media is too scared to appear on the Mayor’s Media Blackout list.

    • I thought you loved the republican method of Privatizing profits and Socializing losses.

  5. There was an article the other day in the C&P about the lights being out on a well used pedestrian walkway on the river front. And surprise surprise the parks director says there is no money to replace them. Here we go again, money for all the fun and games things but nothing for maintenance and upkeep. But the voters spoke at the last election, so you reap what you sow.

    • Although I doubt that a proper estimate has been compiled yet, what was more surprising was the amount of money cited in the article as needed to remedy the problem! Also if you read the article it sounds more like they had a vandalization problem, as opposed to a functionality problem.

    • LED lighting pays for itself in as little as 6 months when replacing incandescent lighting. One would think that the city could use the same rationale that allowed them to spend $50 Million on space age water meters without a vote to replace the light bulbs. Isn’t the only requirement for such spending a net zero cash flow with the ability to service the debt? LED bulbs will do that.

      • The Levee walkway bollard lighting fixtures utilize HID lamps (metal halide or HPS), longer lamp life and way much better lumen output than incandescent lamps. Not as good as LED, but when this bollard lighting system was designed LED lighting was unaffordable. The bollard design was a good design but the Jimtown scum that have no since of ownership or public pride have vandalized these fixtures to the point of no return. And these fixtures are made of cast iron! That said, now that LED prices have dropped significantly, the bollards along the levee walkway should be replaced with overhead LED source lighting fixtures (either utility electrical system powered or solar powered – solar powered lighting system do still have a battery issue).
        And while they’re at it, those ridiculous “period” lighting fixture in the median of Riverside Drive should be replaced with LED source lighting fixtures.

  6. Obviously we must lack financial skills concerning this Council not to mention Mosby’s need for real estate listings courtesy of Mrs. Mayor. In the 2013 & 2014 budgets, the Council had $100,000 included in their City Council’s budget for the purpose of acquiring consultants (Financial in Nature), but, the then Budget Chairman O’Daniel allowed the administration to reduce to $10,000 for the 2015 budget and in the 2016 budget cycle, again the then Budget Chairman O’Daniel allowed it to be gutted to $1,000. If anyone recalls, the last year that Friend was the Chairman, 2013, Winnecke tried to cut the Consulting Fees to $10,000, and Friend fought to increase back to the $100,000 and that is when Mosby and Weaver voted NO on the 2014 budget sighting the restoration back to $100,000.

    Indianapolis has two full time financial analysts employed by the Metro-Council. Of course, they should have at least two merely because of their size. Maybe it is time for the taxpayers to consider that the Council needs to have one full time financial analyst which can only be terminated by 2/3 vote on the council giving some form of independence in their analysis. If we do not consider this, the taxpayers will only see more and more of this nonsense.

    • Why would the Council need a financial analyst when Anna Hargis’ campaign slogan was “Elect me and you will get an effective CPA ..does the CPA stand for ” Can’t Pass Again” or Certified Public Accountant ..which is it???

  7. If the people in Evansville would turn up for hockey games the team would have no problem making a profit. But when you can’t even draw the league average for games then of course the team is going to be looked at as a loss for the city and or Venueworks. The sphl isn’t a hard league to turn a profit in when you compare it to the echl the league that the city was a part of before.. the city should’ve went with SMG to mangae and operate the Ford Center, they have experience when it comes to running a arena the size of the Ford center. Go look at Venueworks portfolio of places they run, none of them are really close to the size of the Ford center and maybe 1 or 2 of them even have a hockey team that plays in them. They really have no experience in how to run and operate a hockey team.

    • Hasn’t anyone noticed that Evansville for the more part engages with organizations, i.e. HCW and VenuWorks which apparently are not publicly traded entities and of course out of town. Generally, publicly traded entities have audit committees, oversight committees and the like. So, what begs the question is would it be less complicated for Mayors to work ( So-called backroom dealings) with organizations subject to the Sarbanes-Oxley laws or with organizations not subject to such oversight? Isn’t SMG publicly traded? Can’t find the call letters for HCW or VenuWorks? Please help me??

    • Historically, Evansville only supports winners. Look at the Aces, national champs and you could not find a ticket to the games. Now, hell the students don’t even attend. Remember the semi pro basketball and indoor football?

  8. Venu-DOESN’T-Works is using the age old “Privatize the profits, socialize the losses” line of thinking. At this rate why would any Evansville, or Vanderburgh County, Resident pay for tickets to events at the Fraud Center? Considering how much we are paying to prop up the Fraud Center and Blunderbolts, every resident should receive season tickets!

    Shame on Anna Hargis for staying silent through all this. If she were my CPA I would’ve begun finding a new one, weeks ago.

    Does anyone know how much Venuworks kicked back to the mayor during his last campaign? I did notice that they reluctantly gave SMG a renewal on the ONB Events Plaza, which was going to Venuworks until the Blunderbolts took the ice.

    Chicago might have shady politicians, but unlike Evansville, the Chicago media does their job and catches them. Shame on the Courier for choosing Government Posting Money over real journalism. Shame on the TV stations for being too scared of appearing on the Mayor’s Media Blackout List instead of doing their service to the citizens of Evansville.

    • The Courier is far too busy publishing idiotic articles like John Webb’s column today on the 1 year anniversary of the EV Trump Rally, than to look into something that requires basic math skills. There is reason that journalism is the easiest major at college.

  10. WOW…what a job the City County Observer has done getting to the bottom of gathering information on corruption in the Evansville City government. It is unbelievable what Evansville Government has done to the taxpayers of Evansville. It seems as though the local print newspapers are reporting fake news. I think Evansville taxpayers should give a huge “Thank You” to the City County Observer for reporting the real news.

  11. WOW!!! What a job the City-County Observer has done exposing corrupt information in the Evansville City government. It is unbelievable what Evansville Government has done to the local taxpayers. It seems as though the local print newspaper are reporting ‘fake news” and I think Evansville owes the City-County Observer a huge Thank You for reporting the real news.

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