So I've really been thinking about this whole JB Wells thing. As a business owner I have a hard time understanding why JB Wells isn't making money. We have a wonderful arena that other cities come to, looking at what we have.
I have friends in Llano that tell me that Gonzales is 'it' right now and that's why they are looking to us to see how they can do something similar. That kind of attention doesn't come because your facility sucks.
I also believe, that even though these visitors are not your 'convention crowd' they are still good for Gonzales. Any time someone wants to spend time in our town it's a good thing. When we treat them hospitable and they want to come back, that's even a better thing.
The problem, and it's very root of everything lies in the management of our facilities. Now please hear me out on this one.
It's not often that our government, at any level, works so well in private sectors. After discussing this with many people around town, and looking back on my days working at the Freeman Coliseum in San Antonio, I may have an idea. Not saying it's perfect, not saying it would fly, but saying it's something we should discuss and consider.
Did you know that the Freeman Coliseum is not run by the city of San Antonio? It's concessions are not run by the city of San Antonio? Nope, not done that way.
Both are run by management groups that specialize in their industry. Let me start with the food, because that's what I was involved in.
Now admittedly there are more food booths and food to be sold at an event at Freeman than JB Wells, but what they use to do is hire a group to manage out there. I personally went through 2 groups in the time I worked out there. They in turn would hire non-profits to come out and work the food booths. Before we would start a session we would be inventoried. At the end of the night we would again be inventoried. How many cups had we sold, how many hot dogs and buns were missing. We threw nothing away, as it all had to be counted.
They would tally up the money, subtract for any shortages, and then pay us 10% of the gross for our charity. There were dozens of charities that made good money for events like the SA Rodeo.
But bottom line is the city of San Antonio was making money on the gross sales. It didn't matter to them if the company involved made money or not, the city walked away a winner.
Now last year we purchased over $80,000 worth of goods for the commissary. We sold (or what was turned in) was just over $65,000. I can tell you from food management, that $65,000 worth of goods should of brought in over $195,000. So where did the other $130,000 go?
I can also tell you that there was (if there was any) only one official inventory done last year at the commissary. Highly unprofessional of any business. Especially a cash business like that.
So let's look at the booking of the facilities themselves. What incentive does the city have to make any money on the arena? None! There is no accountability for anyone to run it like you would any other business. There is no incentive to run it profitably.
If there was, we wouldn't have pools being filled up on a $20 hook-up. We wouldn't have someone discounting 10 day stays down to $125 instead of the posted $200 rate. We wouldn't be running the place at a $230,000 loss last year.
A management company that had to pay the city based on gross receipts would have incentive to make a profit. They would be careful not to allow the pennies add up to dimes up to dollars up to tens of thousands of dollars in loss, as it would be their bottom line effected, and in private sector a loss would not be tolerated.
So here's what I'm asking you as those affected by all this in tax dollars, what is the plan that will work? I can think of probably 2 or 3 different business men here in town that could manage the concessions. I can not think of anyone off the top of my head that would necessarily be able to handle the management of the arena itself, but I know there are companies that do just that.
What is the down side to leasing these 2 functions out? Year 1 the city would be making a profit on the arena. Let's see, your and my taxes would not increase to cover the $200,000 loss.
And as long as I am going on about the similarities on us and San Antonio, I want to put out that while the city of San Antonio built the original coliseum, Peter Holt and businessmen of San Antonio built the expansion that stands there today. We've built the arena, why isn't the private businesses that will be effected by the proposed expansion not coming up with dollars to back up what is so good in Gonzales? I'm all for expanding the JB Wells park, but first we have to make money on what we have before we should even consider it, and second, I'm not for taxpayers putting up $5,000,000 for something they are not going to recoup. It's time private sector comes to the table reasonably with their checkbooks in hand to make this kind of expansion happen.
Let's hear from you Gonzales, tell us what you think!
God Bless
Dennis Nesser
Yep! Great idea! I think some in the city think that if a private mgmt co. comes in, some will lose their job. I'm not advocating any one losing their job but if they cant run the arena any better and at minimum break even, why do we need them in the first place? I was in retail food sales for a time in my life and most of my product had a 75% - 100% markup on it, and we made money! If I didnt make money, I was out of there and they would find someone that could make them money! Just business.
ReplyDeleteThe $200K loss can be attributed to capital improvements to the arena not an operating loss. Capital improvements are deprecitated and not expensed into one operating year as you and others are doing. The capital improvements totaled more than $200K which were additional RV hookups, Big Fans for showbarn, stall barn, and arena, and power washer to clean the facility. So in reality the arena is more than breaking even when you take out the capital improvements and that doesn't take into account the economic benefit that is gained by the city businesses.
ReplyDeleteWhoever wrote the capital improvements comment, Thank you very much because you know what you are talking about.....
ReplyDeleteSo I've done some checking to some of the comments here, and some of this will be in another blog later, but here's some facts:
ReplyDelete1) The $200,000+ loss does not include any depreciation. It does include less than $20,000 in capital improvements (not $200,000 but $20,000).
2) We pay back to the finals 40% of the hookup fees we collect. So out of the $20 we get $12, for unlimited electric and water. Of that there were deals cut for $120 / 10 days, of which we still owe the association 40% ($48), so we got $72 to unlimited utilities for those 10 days.
I'm thrilled we have this facility around, now if someone will just manage it like a facility of this quality deserves to be managed I'd be tickled pink.