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2005_0620_Packet
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Roseville City Council
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Council Agenda/Packets
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ATTACHMENT 4 <br />Review of the Oval's Financial Performance <br />During its first two full years of operations, the Oval failed to meet revenue projections by a <br />substantial margin. Total revenues were short by 33% and 15% in 1994 and 1995 respectively. <br />Of particular note were the ice rental revenues which fell short by 38% in 1994 and 34% in 1995. <br />Based upon these results, one can tentatively conclude that either: 1) the level of participation <br />andlor participants' willingness to pay was substantially overstated, and/or 2) the Oval season <br />during these two years were dramatically impacted by poor weather conditions. <br />The first two years of operating expenditures, like actual revenues, were substantially different <br />than originally projected. From a cash-flow perspective (ignoring depreciation and interest), the <br />Oval expenditures in 1994 were $131,000 or 79% lii�fi�r than expected. In 1995 expenditures <br />were $152,000 or 87% higher. The primary reason for this result appears to be related to the <br />Oval's two highest operating costs; personnel and utilities. Both operating inputs were <br />approximately double the projected amounts. <br />— The net result of the actual operations (cash flow only), was that the Oval lost a combined <br />— $246,000 in its first two years of operations. Add in the customary accounting charges of <br />— depreciation and interest expense and the combined loss for 1994 and 1995 rises to $1,126,000. <br />— By 1996, it was (or should have been) transparently clear that the Oval was in poor financial <br />health. Not only was it failing to cover its own costs, but it was also failing to repay the internal <br />loan used to finance the construction of the Oval (the loan was eventually forgiven), and was <br />unable to generate any surplus monies to pay for the eventual repair andlor renovations needed in <br />the future. <br />In 1996, the City, for financial reporting purposes, combined the operations of the Oval with the <br />Ice Arena to form the Rosevifle Skating Center. However, internally, the City continued to track <br />costs separately for one additional year. In 1996, the Oval experienced an operating loss (cash- <br />flow only) of $96,000 for a combined 3-year total of $342,000. <br />Section 3- 2000-2003 Skating Center Financial Operations <br />Since 1997, the City has for financial tracking and reporting purposes combined the operations <br />of the Oval, Ice Area, and Banquet Center (added in 1998) into one comprehensive facility. <br />Despite various attempts to improve the Center's financial condition, it remains in the same <br />position as it was 10 years ago – unable to cover its own operating costs, and unable to generate <br />surplus monies for future repairs and renovations. <br />During 2000-2003 (the last year for which a full season of Oval operations was realized), the <br />Skating Center generated an average anr�tiaf operating loss (cash-flow only) of approximately <br />$175,000. This has necessitated the use of other parks & recreation revenues as well as property <br />taxes. During this time period, operating revenues have increased by approximately 9% annually <br />with expenditures increasing at 4% annually. While this is a positive trend reflecting changes in <br />management decisions, it has also been made possible in part due to delayed maintenance and <br />renovation on the Skating Center facility. <br />� <br />
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