July 23, 2007
On the block | Tired of mounting losses, Lewiston officials try to offload the Colisee
By Anna Fiorentino
On June 29, a private company placed a single bid on the Androscoggin Bank Colisee, the city-owned convention center in Lewiston with the tumultuous past.
Phil Nadeau, Lewiston's deputy city administrator, is not disclosing information about the offer ˆ whether the city is interested, or exactly what kind of buyer it's seeking. But with the offer, one thing is clear: The city of Lewiston could soon be out of the Colisee business.
Just three years ago, the city bought the building for $250,000 and carried the $4.7 million debt from its near-bankrupt former owner, Roger Theriault. Even at the end of that first year, the convention center exceeded operating costs by $350,000.
City officials changed the name from the Central Maine Civic Center to the Colisee in hopes of dropping the negative stigma of the rundown building the city bought into. And the company in 2004 agreed to host the Lewiston Maineiacs, the minor league hockey team that has been the Colisee's number-one revenue source.
But since then, the Colisee has been a financial drain. The city in 2005 hired a professional management company and spent $2 million on renovations, using taxpayer's capital budget funds. What's more, the city has faced increasing costs of utilities and the cyclical climate of operating a convention center.
Now, it's closing the 2007 fiscal year this month even further in the red, owing $600,000 just weeks after deciding to put it up for sale. We anticipated the funds would break even, and they just haven't, says Nadeau.
Burdened by the Colisee's financial ups and downs, the mayor and city council voted in June to accept bids for the Colisee to explore the possibility of selling the facility to a private company with the financial resources to operate it. A stipulation has been tacked on the proposal honoring the Maineiacs lease, which is up in 2018.
Just one buyer approached the city before the June 29 deadline.
Numbers game
Taxpayers are a part of the reason city officials decided to sell the arena. Though the Colisee doesn't have a direct financial impact on taxpayers, they indirectly pay for its capital improvement expenditures. The city, however, considers the Colisee a limited liability corporation rather than a municipal asset, so if the facility sells, administrators plan to revert assets back to the city to pay off debt. In the meantime, the Lewiston City Council recently voted to transfer $650,000 from cash reserves to cover the deficit.
The losses continued to come even after the city in 2005 hired a professional management company, Global Spectrum, to lure more events to the Colisee. The company helped bring touring events like the Monster Truck Spectacular and local events like the Lewiston/Auburn Home and Garden Show.
But with the $3,000 to $6,000 event cost and the concession revenue, the $2 million to $2.5 million the facility brought in each year wasn't enough to offset its annual fixed operating costs.
In order to meet the mark, the city needed to host 24 to 36 sizable annual events beyond Maineiacs games. Last year we had around a dozen major events, says City Manager Jim Bennett.
The reality is convention centers rarely ever pay for themselves. Steven Spickard, vice president of San Francisco-based Economic Research Associates, calls the Colisee's perpetual ownership change a classic case. Most of these things are money losing, he says. The idea is you're bringing in so much visitation it more than makes up for the losses. The hope is the overall system has a good healthy economic development strategy.
For some cities, Spickard noted, that means forming an economic development plan that returns a percentage of the revenue from the city's restaurants and hotels. He said the next best shot at success for a convention center is municipal ownership. That's because cities, as in the case with Lewiston, often are exempt from paying local taxes on such venues.
Facilities like this are owned by municipalities because they can't make money in the private sector, agreed Matt McKnight, vice president and governor of the Maineiacs.
McKnight said he has seen the proposal from the unnamed suitor, but doesn't have high hopes that a buyer would be able to make money. What's more, he expressed disappointment that the city would consider selling the facility, and said it was unnerving to know that the fate of his team's ice is resting in the city's hands. I'll work to make sure the city keeps the building, says McKnight. Lewiston is where we wanted to make [the Maineiacs] work. And that's what we're going to do.
McKnight adds it's unnerving knowing that the fate his team's ice is resting on the shoulders of the city. The Colisee is where Muhammad Ali won his first championship fight against Sonny Liston in 1965, he says. It's where the Maniacs won the President's cup league championship this year. It's a very positive point for the community of Lewiston during a redevelopment, not just for tourism but for a public pride standpoint.
Indeed, Bennett said the city has not yet committed to selling the Colisee, and agrees that the facility has been a bright spot for Lewiston. Some people in the community say this is the best move city made, he says.
Phil Nadeau, Lewiston's deputy city administrator, is not disclosing information about the offer ˆ whether the city is interested, or exactly what kind of buyer it's seeking. But with the offer, one thing is clear: The city of Lewiston could soon be out of the Colisee business.
Just three years ago, the city bought the building for $250,000 and carried the $4.7 million debt from its near-bankrupt former owner, Roger Theriault. Even at the end of that first year, the convention center exceeded operating costs by $350,000.
City officials changed the name from the Central Maine Civic Center to the Colisee in hopes of dropping the negative stigma of the rundown building the city bought into. And the company in 2004 agreed to host the Lewiston Maineiacs, the minor league hockey team that has been the Colisee's number-one revenue source.
But since then, the Colisee has been a financial drain. The city in 2005 hired a professional management company and spent $2 million on renovations, using taxpayer's capital budget funds. What's more, the city has faced increasing costs of utilities and the cyclical climate of operating a convention center.
Now, it's closing the 2007 fiscal year this month even further in the red, owing $600,000 just weeks after deciding to put it up for sale. We anticipated the funds would break even, and they just haven't, says Nadeau.
Burdened by the Colisee's financial ups and downs, the mayor and city council voted in June to accept bids for the Colisee to explore the possibility of selling the facility to a private company with the financial resources to operate it. A stipulation has been tacked on the proposal honoring the Maineiacs lease, which is up in 2018.
Just one buyer approached the city before the June 29 deadline.
Numbers game
Taxpayers are a part of the reason city officials decided to sell the arena. Though the Colisee doesn't have a direct financial impact on taxpayers, they indirectly pay for its capital improvement expenditures. The city, however, considers the Colisee a limited liability corporation rather than a municipal asset, so if the facility sells, administrators plan to revert assets back to the city to pay off debt. In the meantime, the Lewiston City Council recently voted to transfer $650,000 from cash reserves to cover the deficit.
The losses continued to come even after the city in 2005 hired a professional management company, Global Spectrum, to lure more events to the Colisee. The company helped bring touring events like the Monster Truck Spectacular and local events like the Lewiston/Auburn Home and Garden Show.
But with the $3,000 to $6,000 event cost and the concession revenue, the $2 million to $2.5 million the facility brought in each year wasn't enough to offset its annual fixed operating costs.
In order to meet the mark, the city needed to host 24 to 36 sizable annual events beyond Maineiacs games. Last year we had around a dozen major events, says City Manager Jim Bennett.
The reality is convention centers rarely ever pay for themselves. Steven Spickard, vice president of San Francisco-based Economic Research Associates, calls the Colisee's perpetual ownership change a classic case. Most of these things are money losing, he says. The idea is you're bringing in so much visitation it more than makes up for the losses. The hope is the overall system has a good healthy economic development strategy.
For some cities, Spickard noted, that means forming an economic development plan that returns a percentage of the revenue from the city's restaurants and hotels. He said the next best shot at success for a convention center is municipal ownership. That's because cities, as in the case with Lewiston, often are exempt from paying local taxes on such venues.
Facilities like this are owned by municipalities because they can't make money in the private sector, agreed Matt McKnight, vice president and governor of the Maineiacs.
McKnight said he has seen the proposal from the unnamed suitor, but doesn't have high hopes that a buyer would be able to make money. What's more, he expressed disappointment that the city would consider selling the facility, and said it was unnerving to know that the fate of his team's ice is resting in the city's hands. I'll work to make sure the city keeps the building, says McKnight. Lewiston is where we wanted to make [the Maineiacs] work. And that's what we're going to do.
McKnight adds it's unnerving knowing that the fate his team's ice is resting on the shoulders of the city. The Colisee is where Muhammad Ali won his first championship fight against Sonny Liston in 1965, he says. It's where the Maniacs won the President's cup league championship this year. It's a very positive point for the community of Lewiston during a redevelopment, not just for tourism but for a public pride standpoint.
Indeed, Bennett said the city has not yet committed to selling the Colisee, and agrees that the facility has been a bright spot for Lewiston. Some people in the community say this is the best move city made, he says.
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