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?