04 December 2007

It must be a good idea.

Andy Wells opposes it.

Councilor Frank Galgay suggested selling the Mile One money pit at a council meeting last night. he was attacked immediately by Mayor Andy Wells. The boorish mayor demanded that Galgay tell him how much someone in the private sector might pay for the facility. Then His Boorishness proceeded to lament the sorry state of the province's educational system.

The start of the conversation was tabling of the financial reports for the Money Pit.

A loss of $640,000 in the last fiscal year.

Bear in mind that council deliberately increased the subsidy to the Pit last year claiming that somehow a financially successful money pit actually needed more free cash.

But here's the thing.

If one considers the $500,000 added subsidy as part of the shortfall, then the Money Pit's operating shortfall in Fiscal Year 2006 is...

wait for it...$1.14 million.

The deficit from the previous year? Why one tenth of that figure.

It's not reported in the story linked above but other reports have the shortfall from the previous year at around $130,000.


The $640,000 shortfall is bad enough, but the real shortfall is staggering. It becomes stupefying when one considers that the annual subsidy before the boost was about $1.0 million.

In other words, the stadium lost as much money in 2006 as the taxpayers of St. John's pumped into it in subsidy.

But really that subsidy is an operating loss as well.

The taxpayers of St. John's don't make any money on this venture. They get the privilege of paying - this number will shock you - $1.5 million in subsidy plus the $640,000 shortfall for a total loss of $2.14 million.

Holy crap.

And what does the mayor think?

"It's well in the mix, so this is not — contrary to what some people are saying — this is not a major drain on the taxpayers of St. John's. It's working pretty well."

Working pretty well, huh.

At least no one will need to ask the mayor the same question he posed to Galgay at last night's meeting.

Suggesting that Mile One is working pretty well makes the answer plain.

Sell the Money Pit.

No matter what cash we'd get for it, the taxpayers will be better off in the long run.


Update: Andy Wells is proud of Mile One, so proud he claims the stadium has a per-user subsidy like the Mews Centre or the Wedgewood Park Centre.

Apples? Meet Oranges.

For those who don't know, the latter are community recreation centres operated by the city for the benefit of residents. It's fair to talk about a per-user subsidy for those facilities which are, by definition, used by citizens individually for their own personal fitness. If my family goes to the place, we get the direct benefit of it in the way of improving our fitness and health. We should expect the place to break even but, in the event there is a shortfall in operating expenses, it's reasonable for council to provide a small subsidy of some kind.

Mile One is completely different.

It's a facility built as a commercial venue for concerts, ice hockey and a variety of similar large events. Using some kind of "per-user" comparison for subsidies is more than a bit misleading.

For the purposes of determining cost and benefit, it would be more useful to look at Mile One as a commercial venture and look at how much money it loses. It should be making a profit. Breaking even, the goal we should set for all taxpayer-owned facilities, would be acceptable but profit would be nicer.

$1.5 million in operating subsidy, plus covering the $640,000 shortfall on the last fiscal year.

More than $2.0 million.


Not good.

Then we look at the general trend.

Definitely bad, since the loss to the taxpayers resulting from operating the facility seems to be going up. It's pretty bad when losses go up in an otherwise good year economically in the region. To see losses climb by 10 times (the inflated subsidy is really a mask for the deeper operating problem) and you've got a pretty - obviously - significant problem on your hands.

To make matters worse, the mayor expects that expenses for the stadium will always exceed revenue. In that environment, the residents of the city can only expect things to get worse. The mayor not only tries to find excuses for the loses, he actually thinks they will go on and on as some sort of natural occurence. City officials have no incentive to make things better and officials at the stadium/conference centre have no incentive to improve. The mayor has the excuses already written out.

Where else but St. John's would this sorry excuse for municipal government be allowed to continue?