By Kevin Werner • METROLAND WEST MEDIA GROUP
Hamilton councillors will provide a financial safety net for The Carmen’s Group if it loses money during the transition year after taking over the Hamilton Convention Centre.
But that safety net could be removed if Carmen’s doesn’t incur its expected financial problems.
Carmen’s revised its potential losses for 2013, the first of a five-year agreement with the city, saying it could need a more than $350,000 boost to help cover potential losses. In January, Carmen’s said it was looking at about a $660,000 financial safety net.
Tony Tollis, the city’s treasurer, said the city will give the money to Carmen’s only if it provides audited financial records that documents any losses. However, if the city discovers Carmen’s didn’t actually suffer the losses and received money from the city, the municipality will have the right to claw back the funds from the business.
“It provides clarity to the public,” said Stoney Creek councillor Brad Clark, who suggested the claw back amendment.
The city now projects it will save about $448,000 by allowing Carmen’s to operate the Hamilton Convention Centre. Carmen’s is expected to take over the Hamilton Convention Centre operations March 1.
Late last year, The Carmen’s Group won a bid to operate the facility based on a $3.7-million revenue stream. City officials first projected a revenue stream of $3.4 million for the centre, with a potential savings for the city of $1 million in the first year of the agreement.
Carmen’s previously approached the city asking it for financial support in the first year after discovering the new operator wasn’t seeing the number of bookings for 2013 needed to boost its revenue.
John Hertel, Hamilton Entertainment and Convention Facilities Inc. (HECFI) chief executive officer, acknowledged the first month of 2013 has seen about $1.7 million in sales, compared to $1.86 million during that same period last year, which could mean a $300,000 drop by the end of the year.
Still, Hertel said, there are about $500,000 in potential sales for 2013 at the convention centre, with about $212,000 in sales generated by Carmen’s.
He said the convention centre has seen a continuing decline in business over the last few years because of the lack of area hotels, the slow economy and the perception within the marketplace of the facility’s poor reputation.
Councillors, who a week ago were at best confused by Carmen’s request, and at worst, were ready to reject the idea of subsidizing Carmen’s, now applauded the city’s position.
“I was very critical of the issue,” said Ward 4 councillor Sam Merulla, characterizing the situation as a “deal is a deal.”
But he pointed out the city will still see guaranteed savings in 2013 of a little less than $450,000 in the first year.
In addition, the city will see $5.8 million savings over the five-year agreement. Plus, Carmen’s has increased its capital investment for the facility to about $750,000, which includes projects such as fixing the aging entrance.
Hertel said Global Spectrum/Live Nation and Carmen’s will be reviewing the number of employees they may retain after Feb. 19.
Carmen’s was expected to further integrate its operations into the Convention Centre facilities starting the first week of February.