Two months after city council gave Spectra Venue Management Services the contract to supply food and beverages at Mosaic Place, the company has now asked council for up to $150,000 to start that service.
During the Aug. 23 regular meeting, council voted 5-1 to give that money to Spectra, with the company expected to pay back the funds by Dec. 31 using proceeds from events at the sports venue.
Acting Mayor Dawn Luhning was opposed.
Council awarded the contract to Spectra on June 23 for a term from July 1, 2021, to Sept. 1, 2024, with an option for a five-year renewal. An outside company had originally handled the contract.
“Mosaic Place has seen a reduction in revenue during the COVID-19 pandemic. Spectra Venue Management currently does not have an extra $150,000 in their Mosaic Place bank account to fund the start-up costs of food and beverage services,” city manager Jim Puffalt said.
Giving the contract to Spectra was important since there was a desire to bring back in-house food and beverage services and enhance customer service, he continued. However, based on the agreement, Spectra is not obligated to fund the venue itself.
Meanwhile, sales to Dec. 31 should be sufficient to cover the start-up costs and should not affect the 2021 subsidy, Puffalt added. Any profits generated go directly to the city.
A financial chart with Puffalt’s report showed that Spectra required $150,733.87 for its opening cash flow needs. An initial investment of $100,000 was necessary by Aug. 25, while a second investment of $50,733.87 was required by Sept. 15.
Spectra is expected to generate $112,800 in revenue by the start of the WHL Moose Jaw Warrior’s home opener in October, leaving a deficit of $37,933.87.
Council reaction
Luhning was displeased to have to provide more funding to Spectra and thought it should have had the money in the bank when it applied to take on this service. She wondered what would happen if the company failed to repay the money by the deadline.
“There’s no guarantee, of course, that by Dec. 31 (the money will be repaid). We’ll watch very closely and report back to council,” said Puffalt. “But based on projections, it should be recovered back.”
Coun. Jamey Logan agreed with Luhning, saying while he didn’t have a problem with all profits coming back to the city, he felt blindsided by how this situation played out.
“I’m not real happy,” he said, adding wondered what Spectra’s 'Plan B' was if council voted down this motion.
Ryan MacIvor, general manager of Mosaic Place, explained that there is currently no food or beverages in the building since there is no revenue to order products. Moreover, Spectra still needs to hire and train staff. Therefore, upfront funding is needed to prepare for hockey fans.
“Plan B is we wouldn’t have the ability to purchase those items,” he added.
This baffled Logan, who noted other businesses would have a backup plan. He thought council had a “gun held to our head” and should have been better informed. With this 11th hour motion, though, council had to support it since the hockey teams relied on this income via their fans.
A difficult decision
City council has already given Spectra a subsidy of almost $900,000 to operate Mosaic Place, said Coun. Crystal Froese. This problem is one reason she wanted the company to provide a complete budget ahead of time. The need for a loan should also have been included in the original bid.
“You’re stuck between a rock and a hard place,” she added. “We want to be sure we have really good service and food when we open to the public, but I’m not impressed with how this came about.”
Council is already funding Spectra with a subsidy, so now it is simply helping fund the start of this project, said Coun. Kim Robinson. He thought this would be a problem if Spectra was beginning as a business and needed support. However, since the city is receiving all the profits, it’s in council’s best interest to ensure this service starts properly.
“… We’re asking them to manage our food and beverage because we weren’t happy with it before,” he added. “So now they need some hot dogs and coke and stuff to get rolling. I’m a little disappointed with the way everyone’s going after the way it’s presented.”
Puffalt later apologized to council for this situation and thanked the members for their understanding.
The next regular council meeting is Monday, Sept. 13.
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