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