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BiCentennial Study Task Force 1989 " , ., ,.. DATE: November 21, 1989 TO: The Bicentennial Center study Task Force FROM: Bill Harris, Assisted by the Three Division Managers ~ SUBJECT: Comments, Observations, Opinions, and Recommendations t> Concerning Several Subjects Related to the Operation of the Bicentennial Center. '-- Those subjects include: Entertainment, Sports, Conventions and Trade Shows, Local and Non-Local Events, Transient Guest Tax and Marketing, Food and Beverage, Alcoholic Beverage, Contracting, and Capital Needs. Each of those topics could warrant pages if we were to address them in detail. Our objective at this time is to share our views and stimulate discussion. We will not be surprised if we generate more questions than we answer. We hope you will find the information to be of interest and helpful. Other information will be provided as we are able to assemble it. A reminder: Your next meeting is scheduled for Saturday morning, December 2, to begin at 9:00 am. ., '" -1- ENTERTAINMENT While we may have concert "Holds" on our calendar for several months it's a rarity for us to have a contract signed more than four to eight weeks in advance of the event date. Family shows and certain other events usually are contracted a few months out. This is in contrast to conventions, tradeshows and sports where we frequently have commitments a year or more in advance. At times, when we have an opportunity for an entertainment event, we're unable to book it because of scheduling conflicts. Recently a promoter was interested in bringing The Oak Ridge Boys in on a particular date in November. However, we agreed it would be too close to the Twitty, Jones and Haggard concert scheduled for November 16. Later he inquired about February 10, 1990. That is the weekend of the Salina Home Show. We do not promote (contract with the performer.) We function as the landlord. We rent the facility to the promoter and provide or arrange for various services as a part of the contract. Most of the additional services are billed to the promoter. This includes security, stage hands, ushers, and ticket takers. If we were to promote on our own, it would involve a considerable amount of financial risk. In our opinion it would not be practical to propose the use of public funds for such a risky venture. It would involve the forfeiture of our tax exempt status. We would also be in a competitive situation with our clients, the promoters. " ~ -2- Co-promotion should probably be explored; however, the possible effect on our tax exempt status must be carefully considered. One promoter recently stated, "If the show is a good risk, the promoter doesn't want a partner." We may find differing opinions among promoters as we discuss this option with them. Over the years we have tried a variety of arrangements with promoters relative to the rent in an effort to encourage them to bring events into the Center. Mr. Bob Boggess with Boz, Inc. recently suggested we might consider hOlding our rent and Box Office fee in abeyance until the promoter haS cleared his other expenses. It is our opinion that Salina is in a very limited competitive position for entertainment business. We will continue to be able to attract and accommodate an occasional concert, but we are not optimistic about our chances to greatly expand this type of business. As an example, we try to avoid having tickets for similar concerts on sale at the same time. Markets such as Wichita and Topeka are also experiencing difficulties in getting concerts into their buildings. When we compare their population base to ours, it seems obvious that it is going to continue to be a tough pull for us. Salina 44,000 30 mile Radius 105,300 60 mile Radius 238,700 90 mile Radius 915,100 Wichita 300,000 Topeka 120,000 Saline County 49,000 Sedgwick County 380,000 Shawnee County 155,000 " -3- There is really a very limited number of popular performers or groups touring. There are many coliseums, arenas, clubs and theatres in larger markets where they are in demand. Most big names or hot acts are going into facilities having 10,000 + seats. There are many of those scattered around the U.S. and Canada in metropolitan areas. Our decision not to permit festival seating (no chairs on the floor) has cost us rock concert business. This decision was based on what we believe to be a serious liability risk. Young people shoving and crowding against stage barricades to the point where some of them cannot breathe, panic, and have to be pulled over the barricade by security does not seem to qualify as responsible risk management. ' There are many buildings around the country which permit festival seating. In fact some refuse to place chairs on the floor for rock concerts. Some promoters prefer open floors because of potential damage to chairs from kids standing on them. Without chairs on our floor, instead of 7500 capacity they have a potential of several hundred more. They also claim it is safer not to have chairs. Unfortunat~ly these were amoung our most lucrative events. We do not believe we're likely to attract more than 15 to 20 entertainment events of various types in the course of a year. Most likely several of them will prove to be very marginal from the standpoint of profit potential for the promoter. When we compare our population base to the vast array of entertainment and recreational opportunities, it appears clear there is a great amount of competition for the time and money of the 'public. There is a L .' -4- real smorgasboard for people of all ages to select from: cable television, rental movies, movie theatres, travelogues, community theatre, bowling, bingo, recreation programs, high school and college sports, private and public social functions, fraternal clubs, country clubs, YMCA and YWCA programs, fitness clubs, senior citizen center activities, festivals, fairs, church functions, and artists' series. Throw in fishing, boating, golf, hunting, etc., and it is amazing how many options people have available for use of leisure time. In addition there are many more opportunities within easy driving distance to Wichita, Manhattan, Topeka, Lawrence and Kansas City. Also we dare not forget the favorite past time for many people is dining out and shopping. So we caution against placing too much emphasis or hope on the entertainment business. We believe we should continue to encourage promoters to bring in whatever we honestly feel the market will support, but we question that entertainment should be the number one priority for use of the Bicentennial Center. We need for the public to keep in mind that our track record has a great deal to do with our ability to bring in entertainment. If the industry sees that we have good attendance at our concerts, they will continue to be interested in us. "Success breeds success." The opposite is equally true. Low attendance reports in industry publications do not encourage promoters to take a chance on us. Another item to bear in mind is while concerts can be Eood revenue producers for the Center, and it is good to be able to make such activities available to the people of Salina and the"surrounding area, -5- they do take a considerable amount of money out of the area economy. Of course some people counter this by saying "If they don't have the chance to attend these events in Salina they're goin~.to take their money to Wichita or K.C. to see them. SPORTS We have. a pretty good lineup of non-professional sports, but we would welcome additional events. Salina should seriously consider going after the National Men's Juco Basketball Tournament being held in Hutchinson when the present contract expires in four or five years. It is well established in Hutchinson, so Salina would really have to campaign and pay a premium to capture it. Work on the project should begin well in advance of the expiration of the present contract. As a first step in that direction, the Region 6 (Kansas) Junior College Basketball Tournament scheduled here for the first time March 11-13, 1990 should receive strong community support. Working the national into our schedule could be a major problem, but we should take a really hard look at it. CONVENTIONS & TRADESHOWS In our opinion a much more aggressive marketing effort should be directed towards these types of events. While they lack glamour and fail to generate publicity or public enthusiasm, they greatly benefit the local economy. They also help focus attention on Salina by attracting people from across the state and, in fact, from across the nation. -6- These events usually require considerable more staff and building time than entertainment activities. For the most part they are not likely to generate any public controversy and do not cause significant wear or abuse to the structure and equipment. All things considered, it is a clean, attractive busines. Local businesses and organizations can be very influential in persuading decision-makers to bring state, district and regional meetings, conventions and tradeshows to a particular community. This is evidenced by several of the events we are presently hosting; i.e., Kansas Bankers Association, Kansas Funeral Directors and the Wheatland Cluster Dog Show, just to name a few. OUr central location at the intersection of the two interstate highways is a major plus for us. The. lack of good air transportation is a minus; as is the fact that we do not have lodging facilities within easy walking distance of the Bicentennial Center. . But our building and community are very adequate for certain events. We need to do much more to encourage Salinans to be constantly using their contacts, affiliations and influence to help bring these events to our community. Salina businesses should show much more interest in them once they are here. As a community we need to be looking for ways to acknowledge their presence and make them feel welcome and appreciated. -7- LOCAL EVENTS Many of the local events are marginal revenue generators for the Center and do not bring outside people into the community. Nevertheless, we submit these are very important and logical uses of these facilities. The fraternal, social, civic and service clubs, which conduct many of these events, are vital entities of the community.. The services they provide and.the projects they accomplish are priceless. Local businesses utilize the building as a forum for their services and products, as well as to show appreciation to their customers and employees. We should be concerned about the operating deficit and need to work to reduce it; however, that effort should not discourage local businesses and organizations from utilizing the Center to the maximum. TRANSIENT GUEST TAX & MARKETING As a part of this study we recommend the present use of these public funds be thoroughly reviewed. We enjoy an excellent working relationship with the Chamber of Commerce and its Convention and Visitors Bureau, but we don't know and question that anyone outside the Chamber staff knows to what extent the Transient Guest Tax is being utilized to market the Bicentennial Center. -8- We realize these funds are to be used to promote tourism and conventions for the benefit of Salina as a whole. We also realize the Center is very dependent on the efforts of the Convention and Visitors Bureau. We believe we need a professionally developed, comprehensive marketing plan; first to identify the types of events we should target, and secondly, how to go after them. Then we need adequate funding to do the job right. The Kansas Expocentre, we understand, has an advertising/marketing budget of $200,000, most or all of which comes from their Transient Guest Tax. We recommend the Transient Guest Tax be increased from 3% to 4% and steps be taken to guarantee the Center is aggressively marketed by the Chamber and/or'the Bicentennial Center staff. In either case, Transient Guest Tax funds should finance the program. (See Attachment A which includes additional information on the Transient Guest Tax as well as the agreement between the City and Chamber for administering those funds.) A City Ordinance is now before the ~ity Commission to require lodging facilities to provide the City Clerk with a copy of the reports they submit to the State Department of Revenue. This will enable the,City to see what is submitted and compare it to the amounts returned to us by the state. In recent months we have become aware the state had sent a portion of our money to another city. This has also happened to other communities. We also learned the Sunmark Inn had not submitted a report for a year. -9~ FOOD & BEVERAGE This is one of the most important aspects of the hospitality industry. At the present time ~t is our major source of revenue and has shown a steady increase since the first of the year. We cannot over-emphasize the fact that we have to please our clients in every aspect df our relationship with them. The quality of the food service is extremely critical. People expect to enjoy good food and good service at reasonable rates when they hold a function here. If it is not to their expectations and satisfaction, it may very well convince them uot to return. Providing an event with top quality service goes way beyond the individual event. The best and most effective advertising comes from clients who are favorably impressed. Those leaving after a bad experience are certainly not going to be rooting for us. Some concern and criticism has been directed toward us for competing with local food vendors; more particularly, for competing unfairly in our pricing. We submit the Center is here for the benefit of the entire community not certain businesses. The Center also competes with the motels for conventions and meetings; at the same time we compliment each other. The motels benefit from the visitors attending events held at the center. Those events could not be held here if it were not for Salina's lodging accommodations. Salina restaurants, as well as the motels, are at the head of the line when it comes to benefiting from events held at the Center. -10- Our Food and Beverage staff have been handling most of the Center's meal service since the first of the year. The positive comments and overall praise have far exceeded anything we have heard in prior years. The tontinuing increase in the food business and revenue speaks for itself. Probably from a pOlitical standpoint, the most practical approach is to continue allowing approved caterers to operate in the Center. Our first prefe~ence would be for our staff to handle the food and beverage service exclusively. Two crews in one kitchen preparing for separate functions is not an ideal working arrangement. That situation is not at all uncommon. Perhaps there is some merit in our clients having more than.one option; however, we are convinced it makes sense for one organization to have total responsibility for all aspects of servicing an event in the building. For this reason, it seems to us that rather than contracting out any segment of the operation, it should be kept totally intact. Contracting out the total operation may prove to be a viable option. We strongly doubt that to be the case with the Food and Beverage service by itself. Until recently caterers have only shown an interest in meal service. The Center staff has operated the concession stands and provided refreshments for clients during their breaks. We haven't seen any indication of interest on the part of the private sector in taking on the whole responsibility and providing quality service. More specifical~y we have not heard an utterance that they want to improve upon the service and benefit the general public. -11- ALCOHOLIC BEVERAGE Following all the controversy over our attempt to license the Center for the sale of liquor by the drink, We are presently servicing our events by Temporary Permits issued by the Alcoholic Beverage Commission. An individual or organization can obtain four permits per year. Each is good for up to.four days. The city itself, or the Center, can obtain four such permits during the calendar year. We can also act as the agent for our client. As the agent we can purchase the liquor, deliver it to the premises, and dispense it. We are prohibited from realizing a profit on the liquor itself, so the entire profit must be tied to the service and mixes. Time will tell whether this is a workable situation. It certainly complicates a service which should be handled by one annual license. We maintain that we should be licensed as a Drinking Establishment the same as our competitors, Century II, the Kansas Coliseum and the Kansas Expocentre. The only difference is that we operate our Food & Beverage department whereas they utilize contract concessionaires. In their case the contractor is the licensee. Attorney General Opinion No. 89-36 dated March 28, 1989 rendered at the request of the ABC supports our position. Unfortunately that opinion did not sway the ABC. , -12- As you will probably recall, there was a certain amount of public opposition to beer or liquor being sold or served in the Center. There seemed to be stronger exception to the City having its name on a liquor license. There appears to be much less opposition to the City deriving revenue from the sale or serving of alcoholic beverage. A survey we conducted revealed there are many publicly owned buildings where the owner is the licensee. This is a rather involved issue. While attempting to give you a brief synopsis of it, we probably have left several questions unanswered. If you so request, we will be pleased to provide you copies of relative correspondence and reports or answer specific questions. -13- CAPITAL IMPROVEMENT NEEDS REPLACEMENT OF HERITAGE HALL ROOF The 1990 Capital Improvement Budget provides $75,000 to complete re-roofing of Herftage Hall and the storeroom/kitchen area with single- ply rubber material. A 10' strip was completed along the north side of the building at .the time the lobby/meeting room area was done a couple of years ago. We are experiencing some leakage problems, and the built-up roof material is badly blistered. The proposed re-roofing will include extra heavy walkways around the air conditioning equipment to handle foot traffic involved in servicing that equipment. MOVEABLE WALL FOR HERITAGE HALL Purchase of sufficient wall to completely divide two quarter sections, leaving one-half on the opposite side, is scheduled in the 1991 CIP at $34,000. While tentatively scheduled for 1991, the funds will not be approved until the City Commission acts on the 1991 CIP budget during the summer of 1990. The additioual wall is needed to properly accommodate events; both from the standpoint of multiple events occurring simultaneously, and concurrent activities within one event such as a meal function in one area and a meeting in the other. -14- The ducting for the two heating/cooling systems'runs north and south. If we had adequate wall, we could enclose the west two quarters (nearest the lobby). This would permit us to heat or cool with the one west unit except in extremely cold weather. At present, for the second quarter, we use 8' divider curtain just for boundary definition. In actuality we',re heating or cooling the entire hall. This request will provide us 50% more moveable wall. LOBBY DOORS AND OFFICE ADDITION We are recommending this project for a number of reasons. The lobby is frequently used for event registration and exhibits, as well as an area for people to congregate during breaks. The single bank of doors is very inadequate so far as protection from the elements is concerned. Wind, rain, and snow have a direct shot, particularly from the north. People working registration desks in coats, gloves and scarves is not an uncommon sight. Keeping papers corralled is also a good challenge. If not a total solution to the problem, at least a significant improvement would be provided by creating an air-lock with the installation of a second set of doors situated several feet in front of the existing doors. Box Office lines conflict with other lobby traffic and uses. For this reason we recommend the Box Office be relocated to the north of the existing administrative offices with an enclosed queue area. At times the Box Office traffic so conjests the lobby that the staff and security have a great deal of difficulty in moving between the arena and the office. ;. -15- We recommend the present Box Office be converted to an office for use primarily by clients. The person or committee in charge of an event often needs a central office. or headquarters; command post, if you will. The administrative offices lack a combination work area/conference room. Realignment of the office area would permit us to use the present storage closet and restroom for a small janitorial closet to serve the north half of Heritage Hall. When Heritage Hall is divided, the north half is isolated from the storage room adjacent,to the kitchen. Estimated cost for this addition and rearrangement of offices is approximately $225,000 including architectural/engineering fees. This project is presently included in the City's Capital Improvement list for futher consideration. .' -16- COMPUTERIZED REGISTER SYSTEM FOR CONCESSION STANDS" This equipment, similar to that used by fast food restaurants, will accomplish several things for us, including: 1. Expedite the service. 2. Lessen errors. 3. Provide continual inventory update and control. 4., Permit us to adjust prices in 5~ increments as opposed to 25~ which we now use for easier figuring. 5. Allow us to add on sales tax which we now absorb. We are convinced this equipment would soon pay for itself and continue to increase our concession revenue significantly. As we have previously pointed out, we are very deficient in concession facilities, For this reason we need to do all we can to expedite the service and maximize the revenue potential. Purchase, delivery, installation and operating instructions for 10 units at each stand plus two portables will cost approximately $25,.000. We are not budgeted for the purchase of the system. However, we have $40,000 in the 1989 CIP for sound separation between the arena and the second floor meeting rooms. We do have a problem if we schedule events in the meeting rooms when there is amplified sound in the arena. We are now of the opinion we should delay the sound control modification to the meeting room walls and ceilings and use a portion of those funds for the purchase of the register system. ,., -17- SOUND CONTROL FOR SECOND FLOOR MEETING ROOMS This is a serious deficiency. Without an effective sound barrier between the arena and the meeting rooms, we are forced to see that amplified sound d~es not occur in the arena when events are being held in the meeting rooms. The law of averages recently caught up with us. The Assemblies of God Youth Convention had rented the arena. We had two meetings going on during the day on the second floor. The Youth COnvention fired up their sound system in the latter part of the morning to do a sound check and practically blasted the people out of the meeting rooms. They were also planning to do a rehearsal during the afternoon for an evening stage performance. We appealed to the Youth Convention to adjust their schedule and hold the sound down. We had three very unhappy clients on our hands. We did manage to appease them somewhat by granting a significant adjustment on their rent. So we do need to correct this situation. The problem is, the engineers tell us, it can be improved significantly; but they will not guarantee 100% results. REPLACE HEATING AND COOLING UNITS SERVING THE SECOND FLOOR MEETING ROOMS By far the most common complaint we receive is related to the heating and cooling of the meeting rooms. The four rooms on each side of the mezzanine are served by a common unit. When there are not equal .' -18- . occupancy loads in each room, we have difficulties. Originally there was one thermostat controlling the four rooms. We have improved the situation somewhat by connecting slave thermostats to the primary control, but this still is not efficient. The correct solution is to provide independent heat pumps for each of the small six rooms and use the existing units for the two large rooms which do not have moveable walls. This would permit heating or cooling each room without affecting the others. However, to do so is quite expensive. General Air Conditioning and Electric Co., Inc. gave us an estimate of $144,000 on December 5, 1988. Another option, but much less efficient, would be to install a Trol-A-Temp system at a cost of approximately $12,000. With the installation of this thermostat and damper system, there would be a thermostat located in each section to regulate heating or cooling with either intermittent or continuous air circulation. The disadvantage is that you either heat or cool the entire area, whereas the independent heat pumps would permit cooling in one room while heating in another. Depending on the number of people in a room, there are times when we need to switch from heating to cooling or vice versa in order to provide the desired comfort level. RESEAL ARENA AND CONCOURSE FLOORS Unfortunately the sealing job on the concrete at the time the building was built was done very poorly. It was applied too heavily in some 1-- ." ~19- areas and too thin in others. That, along with the ten years of use, has deteriorated the seal to the point where we have problems with the concrete creating dust. The entire floor needs to be acidized and a good uniform seal coat applied. We estimate it would cost approximately $20,000. REMODEL OLD DRESSING ROOMS SOUTH SIDE OF ARENA You will recall we remodeled the dressing rooms on the north side this year into a very useful size and condition. We hope to do the two on the south next year at a cost of about $8,200. Those on the south will be used for different purposes and will not require the plush furniture we placed in the other side. We would expect the ones on the south to receive rougher use so probably metal folding chairs and tables will be the type of furnishings. CONTRACT MANAGEMENT One option which should be thoroughly explored, in the course of the study, is to contract for the total management and operation of the Center. We are in the process of obtaining preliminary information from different firms. This will include backgroud information on the firm, sample requests for proposals (RFP), and sample contracts. No doubt we will find there are a number of advantages and disadvantages to contracting. The trick will be to determine which out weighs the other. We would anticipate the process to necessitate a L - ~ , , -20- policy decision on financing the operation of the Center VB. economic and social benefit to the community. Most likely the City will relinquish a significant amount of control in a contract relationship. We do know there are quite a few facilities, such as this, across the country being operated by contract. This includes large stadiums, convention centers and coliseums.