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ICESR MEMO 04-02-2002 City of Elk River MEMORANDUM TO: Ice Arena Commission FROM: Rich Czech, Arena Manager DATE: April 2, 2002 SUBJECT: Agenda Memo 5. Review 2001 Operating Finances. Current Information on 2002 Financial Status Attached for your review are the financial summaries for the arena from 1997 —2002. With capital improvements and debt service it will be awhile before the arena cash flows. For 2001 you will see that the budget indicates a deficit of$52,460. Under contributions/rebates you will notice there is $7,540. The Veterans of Foreign Wars (VFW) donated $5,000 for the boulevard display sign scheduled for installation in a few days. If this money were taken out then the actual deficit would be $57,460. However, some of this deficit is from the bleachers. Elk River Youth Hockey's portion of$10,000 was not due until 2002 so it was not included in the 2001 budget. The surcharge of one dollar to all Elk River High School Hockey games collected for the 2001 —2002 season was $8,831. However, only $2,540 was collected during games played in the fall of 2001. The actual deficit, excluding capital improvements, is $28,619. This is up slightly from what was budgeted and up substantially from 2000. Most of the added deficit can be contributed to utility costs, which was budgeted at $94,500. The actual cost for utilities was closer to $111,000. Another reason for the added deficit is that as the building and its equipment get older, more money is being spent on maintaining the arena. From replacing light bulbs to maintaining the ice plant, along with everything in between, more money and time is being spent to keep the building operating effectively. As I noted above, the high school gate receipts only took in $8,831. At this pace we will fall short of the $30,000 we were hoping to collect over three years. We may need to extend the surcharge of one dollar per ticket for an extra season to collect the total $30,000. 6. Discuss the Status of South End of the Barn The bleachers on the south end of the Barn have been removed and the area is vacant. The next step is to determine what to do with this area, if anything. At this time renovating this area is not high on the list of the arena's priorities. I could see this area being used for office space, a meeting room, and a viewing area in the future. 7. Certification of Bleachers/Spectators Safety Attached you will find a copy of one of the certification forms 1 received from the State. Each set of bleachers received a certification and, as recommended in the State's memo, a certification sticker has been placed on them. The new bleachers were in place before the first high school game and very favorable comments regarding the look and comfort of the wood benches were received. Even with the lower attendance (see below attendance information) the bleachers have helped manage the crowds and should help in drawing more spectators to future games. Recently, at a NHL game, a young girl was killed when a puck was deflected off the rink. This is the first time in the NHL's history that a flying puck killed a spectator. The Olympic rink was installed with glass that is eight feet high and has protective netting at each end. The sides have six feet high glass that protects spectators from most of the errant pucks. The Barn has five feet high glass at each end along with protective netting at the south end to help keep pucks from going out of the rink surface. The side where the bleachers are has six and a half feet high glass that keeps most of the pucks from leaving the rink. At this point I feel we have sufficient protection from errant pucks. Having said that, the rinks are not one hundred percent protected from pucks. However, if past history is any indication, then we have adequate protection. I am planning on having signs made saying, " Watch for flying pucks." Below you will see the seasonal attendance for the boy's high school hockey games since the games have been played on the Olympic rink. Year/Regular Season Attendance/Sections 97—98 6,140 773 98 —99 8,058 726 Exhibition games (2) 99—00 10,403 1,253 00— 01 8,021 01 -02 7,111 8. Boulevard Display Sign In January of this year the VFW donated $5,000 for a display sign to be placed along School Street. The sign is scheduled to be placed by the end of March. The sign will assist in promoting events held at the arena. 9. Ice Usage Update/Rates/Customers In the packet I have included the usage summary reports for the 2001 —2002 season. The report is designed to give you an idea of the ice rentals. The financial information from the usage scheduling report will not reflect the information you will find in the financial report since the financial report is from January through December. The arena just finished its first year of a three-year agreement with Elk River Youth Hockey to freeze their rates at$135 an hour for prime time ice. In exchange Elk River Youth Hockey agreed to donate $10,000 a year for the next three years towards the new bleachers in the Olympic rink. Every two years we look at whether we should adjust our rates. Last season we increased the Barns rates to $135 an hour,which matched the rates of the Olympic rink. Our ice rates remain in the middle of other rinks surrounding Elk River; therefore, I would recommend that we hold off any rate increase for the 2002—2003 season. Rogers has a non-profit organization that has been looking at forming its own hockey association. It is my understanding that MAHA (Minnesota Amateur Hockey Association) will not allow them to form until Rogers High School is open. Officials from the Rogers group have contacted me regarding future ice availability. However, even with the Monticello Youth Hockey Association not purchasing ice from us next season, at this point we are booked. As many of you are aware, Rogers is looking at building a new rink. A third sheet of ice in the area will be needed within the next three to four years, and the Rogers area is probably the best place to build one. A feasibility study will be finished within two months to determine if any arena is feasible. If the feasibility study indicates that an arena is warranted then the arena could be completed as early as January of 2004. J O. Staff Updates A. Sign Sales Advertising in the arena has been constant over the last few years. The bleachers on the east side of the building have given us another avenue to get advertising in the building. However,with the economy being down most businesses are watching their advertising budget closer. After this season it looks like North Memorial will be pulling it's advertising from the Zamboni. We have been looking for another advertiser for the Zamboni but have not found one. B. Concessions When the Olympic rink was built part of the financial agreement with Elk River Youth Hockey was that they would lease the concession stand from the city. Even though there is not any written agreement, I believe this arrangement has been working out for both parties. Youth Hockey leases the area from the arena for $21,500 a year, an increase is not anticipated even though the rate has not been increased in several years. C. Summer Projects The matting in the players' hallway in the Barn will be replaced and three more sections of center grove will be installed in the Barn. The player's boxes in the Barn will be refurbished along with the scorer's table area. The Barn is in the third and final stage of receiving new light fixtures. In the Olympic rink we will be moving four sections of boards. The gate in the southwest corner will be switched with a northeast corner section. This gate is large enough to freely remove the nets from the ice and the area outside the rink has enough space to store the nets comfortably. Currently, nets are stored outside the Zamboni room where employees sometimes struggle to take them on and off. By having an area where the nets can be taken on and off freely we may avoid injury to arena staff. With the relocation of the gate, the players gate on the north end will be switched with a south end section, which will provide an area where skaters can enter and exit the rink from that part of the rink. We are planning on taking out the ice in the Olympic rink on Sunday, May 19, 2002, after the Skating Academy Ice Show. During this time we will be working on the ice plant's condenser and installing the city's new logo in the center of the ice when the ice is put back in June. The roof to the old Zamboni room and the ice plant room are in need of replacement. This year the roof to the Zamboni room will be replaced and next year the ice plant room will receive a new roof. Each roof is estimated to cost about $5,000. Other summer projects consist of painting, cleaning, refurbishing an exit in the Barn, and rebuilding some of the arena's equipment. D. Dryfloor Usage The arena will hold its usual events: fourth through sixth grade dances in April, May, and September, the Chamber's Business Expo in April,Jose Cole's Circus in May and a craft fair in May and September. We may be hosting a Christian concert on June 14,2002. The arena will be having a roller blade league over the summer and Community Education will be holding its dog-training classes Monday evenings throughout the summer. E. Rink Floor of the Barn We will again be pressure checking the rink floor. We know there is a leak because we lost refrigerant over the season. A plan should be figured out for determining how to pay for the replacement of the floor. Preliminary numbers indicate that the floor could cost as much as $400,000 and will only go up with the cost of construction.