Big name concerts cost big money for Alerus Center Comments
In this blog post and the herald article, when reporting on the concert fund, you state the reason for the subsidy is so "artists" can make a certain profit. The reality is that it is so the promoters can make a certain profit. Artists are paid a guarantee and a back end bonuses if the date does well. Promoters are the investors that take the risk on the date.
Posted by: Anon on 2/04/2009 8:53 AM
Seriously, the comparison to the old civic argument has returned? Nice. Which "official" dropped that? Pretty please?
Posted by: Anon on 2/04/2009 9:11 AM
I covered this two weeks ago (tomorrow). Nice you can catch up.
http://sayanythingblog.com/entry/the_alerus_centers_double_secret_subsidy/
I assume that these losses won't be counted and the event center management company will get paid for their mismanagement of the center.
Posted by: The Whistler on 2/04/2009 10:14 AM
Anon1: You're right. I meant the promoters.
Anon2: Steve Hyman mentioned it this last time but it's not an uncommon argument from city officials.
Whistler: Congrats. I should've ran with the numbers when I had them in December. I don't always like to jump ahead with the news because it only means I'll have to write follow ups with context and background and arguments and counter arguments. Better to do it all at once. Guess this is a lesson learned.
Posted by: Tu-Uyen on 2/04/2009 12:55 PM
So is Hyman is saying we should have kept the old civic center, renamed it with a spiffy name like Elarus and saved 80+++million dollars?
Posted by: The Whistler on 2/04/2009 5:16 PM
Someone smell a rat in this whole mess? Why is it so hard to get the truth from these guys? Won't return phone calls? Embezzelment of funds? $872,000 missing. Curt K knows everything, maybe he will spill the beans when he gets back in town from Bismarck. We referred it to the Att Gen Office. Maybe the State will investigate! greenglass4
Posted by: greenglass4 on 2/04/2009 6:16 PM
Whistler, what are _you_ saying? We should have as our convention center the beat up Civic Auditorium?
Take the $80m spent on the center out of context and it looks like supreme idiocy. But there are also these facts:
* About 10 percent of sales taxes come from outsiders, not locals. That was from a study in 2003. With more visitors since then, that percentage is probably higher. So at least 10 percent of the $80m is coming from outsiders.
* The center's presence on 42nd Street has encouraged new investments. The CanadInns complex is $50m (cost of construction; there's no full assessment yet because of tax incentives). The Country Inn & Suites is $2.6m (or more; that's just the assessment). There's no reason not to expect more businesses, which would expand the commercial property tax base and reduce pressure on homeowners. This is a benefit to taxpayers.
* I'm a little skeptical of economic impact estimates but I won't argue with trained economists. The center's impact was $20.3m last year, including $770k in sales taxes paid to the city.
I need to add up the subsidies to see if we're even yet but there's a lot that you leave out.
Posted by: Tu-Uyen on 2/05/2009 3:37 AM
Economists, like appraisers, arrive at the answer the person paying them wants. You can't trust either. Further, neither profession attracts the most talented people.
Posted by: Ecommunist on 2/05/2009 9:24 AM
To start I was being facetious on that comment. But your response is interesting.
"So at least 10 percent of the $80m is coming from outsiders"
So it's ok to rip off our neighbors.
"The center's presence on 42nd Street has encouraged new investments."
Well I might grant a bit of the credit for the CandadInn but no way, no how is the Alerus center which is sitting empty filling all of the new hotel rooms.
"but I won't argue with trained economists. The center's impact was $20.3m last year, "
I think the revenue of the Alerus Center is about two million dollars. Your economist says that resulted in ten times the economic impact.
Now I think that's mostly BS. After all, they're treating UND football games like they are new to the city. They aren't and most of the people who go to games would spend their money in GF anyway if they didn't go to the game.
Same thing with weddings.
But what your economist DOESN'T take into effect is the 7 million dollars plus that's sucked out of the local economy. You have to apply the same standards to that but in this case every dollar that leaves the city means it isn't spent here.
So that's something like a 70 million dollar negative economic drain, or combined with your figure we're losing 50 million dollars.
"including $770k in sales taxes paid to the city."
So we're losing 7 million dollars a year to attract 770 thousand dollars back.
Yep that pretty much sums up the Alerus.
I'm pretty sure you should be hiring a financial manager to watch your money Tu Uyen.
Posted by: The Whistler on 2/05/2009 3:05 PM
Correction the Alerus Revenue seems to be closer to 4 million a year, half of which is payroll.
Posted by: The Whistler on 2/05/2009 4:11 PM
What is this $7m you're talking about? The 3/4% sales tax and the 1/4% hospitality tax?
Oh yeah, I love this I know better than the trained professionals. You do, after all, know everything and is the must successful man in town.
You're also good at deluding yourself. How can we be ripping off our neighbors if they willingly go to town? You think all those Manitobans at the CanadInns are whining about their sales tax like you are?
Posted by: Tu-Uyen on 2/05/2009 4:37 PM
Canadians get a rebate for the sales taxes that they pay (for items not consumed here (like meals).
Too Funny!
Yes I believe the 3/4% general sales tax raises about a million dollars which then is a loss to our local economy. Add in the 380,000 or so from the hospitality tax....
Experts: I think these experts consider everything as new business. They don't account that that wedding dance would have been held in town anyway. If someone from Langdon comes here for a football game they don't consider that they would have come a different weekend to do their shopping.
And they sure as hell don't consider the ramifications of $7 million dollars leaving the local economy.
It comes down to paying for the answer you want.
Posted by: The Whistler on 2/05/2009 5:42 PM
http://www.areavoices.com/gfhcitybeat/?blog=15464
How does this fit in?
"If the Alerus Center doesn't make money, VenuWorks doesn't make money. It's hard not to be a little impressed that the company is willing to put its management fees at risk in this way. Bear in mind that this won't mean VenuWorks would stop paying its local employees. It just means the management fee that goes back to corporate headquarters to pay for support services and provide profits would drop to zero."
Posted by: C. Y. on 2/05/2009 7:53 PM
The performance part of the management fee is based on operations. That's all the stuff that includes wages, utilities, supplies, etc.
Part of the $872,000 appears to be from losses in other years, which would have already been accounted for.
About $272,000 was from last year. Some of that is from the concert fund, which is not a part of regular operations. I know that probably sounds like quibbling, but it's the difference between paying for physically runing the facility versus guaranteeing promoters a certain revenue, which is a business deal. At least that's how I understand the VenuWorks contract to work.
Some of the $272,000 may well be operational losses. We won't know until the Alerus Center explains it in February.
Posted by: Tu-Uyen on 2/05/2009 8:04 PM
Tu-Yen,
In your article
City seeks more oversight of Alerus funds
you stated that "city finance staff had transferred $872,000 in subsidies to the city-owned events center between 2006 and 2008."
Curt Kreun was on the radio Wednesday and said he believed the money transfers had taken place starting with the first year of operation to present.
In the above post you state "Part of the $872,000 appears to be from losses in other years, which would have already been accounted for.".
Do you think we will ever get the straight story on this? A year by year tally would be nice.
Posted by: pb on 2/05/2009 9:40 PM
So if they make money on a concert it's revenue, but if they lose money it's NOT a loss.
Right.
And according to the city, if I go out to eat today 1/4 of a percent of what I pay is operating revenue for the Alerus.
This is Enron accounting. A sales tax subsidy is not operating income. A loss on a concert is a loss.
Why can't they do their books honestly?
Speaking of that we're getting two different stories about the double secret subsidy. One time the city council knew all about it and one time they didn't.
Posted by: The Whistler on 2/06/2009 7:34 AM
Tu-Yen,
In your 8:04 post above you said, "About $272,000 was from last year". What is your source for this? So, you know how much secret subsidy was transferred each year, right?
Mr. Kreun went on the radio and stated that the secret funds were transferred from year one. Let's get the facts out there. My gut says he said that to minimize the impact of their secret scam to the public. He knows how much was transferred each year. The fact that he thinks he can throw out a flippant statement like that and the discussion will go away, probably exemplifies the backroom culture that these guys have been operating under.
It's a new era Mr. Kreun, that's not working anymore. The facts will come out and you'll be held accountable for your statement. This issue is not going away. All the facts of this story will come out soon and we'll all know if you were playing fast and loose with the true facts to cover the butt of the alerus commission.
Posted by: Anon on 2/06/2009 8:45 AM
Can the supporters please just cut the spin and get to the facts? You folks are just going to make this ugly story larger the more you play this game.
Also, can we be honest about the VenueWorks contract? Now it's been spun into some sort of agreement that was negotiated on the up and up. It was not.
It was a kneejerk decision made because the facts of the alerus' massive failure were coming down. In an attempt to cut more expenses, VenuWorks was fired. Then, the commission realized they couldn't get a liquor license without a management service operating the venue.
Posted by: Anon on 2/06/2009 8:54 AM
I would think that more than 10 percent of the sales taxes is paid by non-Grand Forks residents. I thought there was approximately 54,000 people in GF, while EGF has 7,000 to 8,000. It seems EGF residents probably pay at least 10 percent of GF sales taxes due to the lack of certain stores on the MN side. If you include other outsiders, I'm sure it would be much higher than 10 percent.
Posted by: EGF Mike on 2/08/2009 11:09 AM
