I recently read the agreement between VENUEWORKS several times over the last three weeks after I stumbled across this Agreement posted in the City-County Observer publication as a “LETTER TO THE EDiTOR” After reading and analyzing this, agreement I was shocked as to its contents.Â
There are numerous provisions in this legal agreement that I think will stun the Evansville taxpayers as to how this agreement handles your taxes paid over the years. I have not been able to find out whether the Agreement was ever approved by the Evansville City Council.
I am going to share with you a couple of the most offensive provisions and see what you think about these, but as I mentioned there are numerous other offensive provisions.
OFFENSIVE PROVISION #1
Per page 12 of the Agreement and 2.3(0) reads as follows:
“Venuworks shall utilize facility staff and resources to manage and operate the SPHL (Southern Professional Hockey League) until the City determines that it wants to cease operations of the SPHL Franchise or transfer ownership to a third party. During such periods in which Venuworks operates the SPHL Franchise, all expenses of the SPHL Franchise shall be deemed as Operating Expense of the Facility and all revenues of the SPHL Franchise shall be deemed Operating Revenue of the Facility.â€
All expenses for the Thunderbolts would for most Minor League Hockey Teams include such things as player salaries and housing, equipment such as hockey sticks and pucks, travel expenses to 28 away games, which also would include hotels, insurance, and many other types of expenses. My experience indicates that annual expenses for an SPHL Team are between $1,200,000 and $1,400,000 per calendar year. So, the Ford Center/Evansville taxpayers are paying all the expenses of the SPHL Team named the Thunderbolts and they report this to the public as an “operating expense of the facilityâ€. But all income that is received from ticket sales for games and advertisements on the walls around the hockey ice is considered “operating revenue of the facility.â€Â So, a major problem is that the Thunderbolts (an SPHL Team) attendance has been poor, and I suspect the advertising income is not robust. So, the Thunderbolts have been operating in the Ford Center since October 2016, starting their season the weekend of October 20, 2023. We need to see what the losses were for the 7 years ended in June 2023. It does not seem right that the Venuworks 100% owned subsidiary – VW Sports of Evansville, LLC owns the Thunderbolts is not paying any of their expenses, and assuming these are large cumulative losses from the Team staying in business then the Ford Center/Taxpayer dollars are covering all these losses. Has this arrangement with the Thunderbolts been previously disclosed to the public and what is the risk of loss to the taxpayers?
The main reason the Evansville Icemen lease was not extended by the Winnecke Administration and the Evansville Icemen were forced to leave the Ford Center is that the five-year lease that the Evansville Icemen played under was excessive and would not allow the Evansville Icemen to have any positive return on investment. Many times, the Evansville Icemen sat down with the Mayor and the Executive Director of the Ford Center, Scott Schoenike asking to modify the original five-year lease. The response from Schoenike was that we were not performing well, and that we had to do better and that they thought they could do better. Hence, Schoenike thought the answer was to buy an SPHL Franchise which they ended up doing. Schoenike was Big-Time Wrong. The Evansville Icemen’s average over the first four years of the lease was an annual average attendance of 5,172 per game which caused us to be ranked 3rd out of 27 teams in the ECHL, also as for season ticket sales, we also were ranked 3rd out of 27 teams, and finally each year of our lease, the Evansville Icemen ranked 1st out of 27 teams as far as group sales were concerned. The bottom line is that the Winnecke Administration thought we were not doing good and that they would do better with an SPHL Team. We were forced out and after a year of going dark, the Evansville Icemen lost all their players because they became “Free Agents†and we started afresh in October, 2017 in an arena in Jacksonville with new players and a new coach. We had a great season with an average attendance per game of just over 6,000, which ranked us 3rd out of 27 teams in the ECHL, plus we made the playoffs and had a reasonable positive return on investment. Our second year was even better. I sold the Team in July 2019 to an excellent group of Jacksonville businesspeople.
The new Jacksonville Icemen Team under new ownership has done well as I thought they would, and I just learned that they averaged 7749 per game for the season covering 2022-2023 and this ranked them 1 out of 28 teams in the ECHL. I am very happy for them. The arena in Jacksonville only holds about 8,000 people (compared to 9,000 people for the Ford Center) and the Mayor of Jacksonville and the management company of their arena were cooperative, positive, and helpful in assisting us in a great launch in Jacksonville, Florida (incidentally, about 200 of our Evansville Icemen fans drove down to the Jacksonville Arena for our first game in October 2017!! As I look back to the media coverage of the “negotiations†between the Evansville Icemen and the Winnecke Administration, it is very disappointing to me that all the television stations and the Courier and Press newspaper only reported the positions of the Winnecke statements and all our positions were ignored. Only the City-County Observer covered the growing dispute in a balanced way.
OFFENSIVE PROVISION #2
Per Page 16 and 17 of the Agreement and 4.4(i) (ii) (iii) and (iv)
“Venueworks†Capital Investment
Venuworks will make a capital investment for not less than five hundred thousand dollars ($500,000), for the purchase of a new production camera system for the Facility. Specific items to be purchased with funds from Venuworks will be determined to the mutual satisfaction of both parties.
- City will repay Venuworks for the actual investment amount over the course of the five-year term, in the form of sixty equal monthly payments.
- The amortized repayment shall be an operating expense to the facility.
- The parties recognize the equipment procured through the interest-free loan will serve as collateral for the loan; the parties will execute a separate promissory note for the loan which will become part of this Agreement.
- Venuworks may, in its sole discretion, assign the City’s obligation to repay the Capital Investment Loan to the financial institution selected by Venuworks to finance the investment.
Ron Geary thinks that borrowing from the management company as of May 1, 2021 is an indicator that the Ford Center must be short of cash and possibly and indication that additional bond financing may not be available – plus on September 17, 2023, the City Council voted to “Lease Rental Revenue Bonds†for the Ford Center to raise approximately $9,000,000 for needed capital repairs and equipment – The Ford Center is approximately 12 to 13 years old and should have been accumulating reserves over the years to pay for such needed capital repairs and maintenance rather than renaming streets as part of the Revenue Bond – What does the Ford Center Balance Sheet look like as well as Operating Profit or Loss for said last 8 years?
Contradictory to the provision on Pages 16 and 17 referred to above via 4.4(I) (ii) (iii) and (iv), please see 5.8 page 20 states that 5.8 Capital Improvements; Capital Equipment
“The obligation to pay for capital equipment purchases shall remain with the City and will not be considered operating expense.†Â
Obviously 4.4(i) (ii) (iii) and (iv) violate 5.8.
In conclusion
In light of the two items I previously discussed and the many various items in the other 38 pages of the Management Agreement, plus the fact that the City of Evansville has incurred almost 1 billion dollars worth of debt the last 12 years and needs another $300 to $400 million of additional debt to finish up the sewer and water needs of the City. Furthermore, I attended the debate on the evening of October 18, 2023, at Southern Indiana University and listened to the three Candidates for Mayor. Based upon my personal experiences with the Winnecke Administration and their use of “shifting sands†bait and switch techniques and daily “heavy-handed†management style of Mr. Scott Schoenike of Venuworks and overall dealings by the City in bad faith, it is critical that the taxpayers of Evansville must elect Michael Daugherty as Mayor for sure on November 7, 2023, AND that on his day of being inaugurated as Mayor of Evansville which I believe is January 2, 2024, he must engage a nationally based forensic audit firm to do a complete audit ASAP not only on the Management Agreement discussed in this letter but probably many other areas of the City of Evansville financial dealings.
We need an entrepreneur who has learned how to fight the problems and solve them ASAP like Michael learned how to develop a business and after 14 years of hard work, how to retire early after the sale of his business, and to help his hometown of Evansville.
Also, after discussing all this information with my wife, my entrepreneurial son, and daughter, our 9 grandchildren, and my fondness for Evansville taxpayers that if Michael Daugherty is elected Mayor, I will immediately come out of retirement and seek to have another ECHL Hockey Team ready to play in the Ford Center as soon as October 2024. This will be difficult, but I am prepared to fight through all the obstacles, challenges, and attacks that may come my way. Evansville Taxpayers deserve better than what they have dealt with over the last 12 years!
RON GEARY
RGeary@rggky.com
