A roundtable discussion with Town Toyota Center’s Transition Committee

Posted on 05. Nov, 2009 by nevonnemcdaniels in News

A summer’s worth of research leads to a new management model and hope for black ink

by WBJ staff

When Dan Kelly signed up to serve on the Greater Wenatchee Regional Events Center Public Facility District, he said he and his six fellow board members expected to have little involvement in the daily operations of the PFD-owned Town Toyota Center.

Click on this photo for the Town Toyota Center basics

The 161,000-square-foot facility, which opened Oct. 5, 2008, was billed as a home for a new hockey club and a venue for concerts and events that would draw crowds from near and far. Management of the facility was in the hands of Global Entertainment Inc., the Tempe, Ariz.-based company that helped get the facility built and booked.

“We were just supposed to meet once a month,” Kelly said.

Rather than casual monthly meetings, however, Kelly and his co-board members found themselves front and center overseeing the facility’s operation after the PFD gave Global Entertainment 90 days’ notice on terminating its management contract and turned over accounting duties to city of Wenatchee staff.

That move in June was prompted by some financial concerns.

After six months of operation, Wenatchee City Councilmember Jim Bailey describes “getting rumblings that some things were not going well” at the Town Toyota Center. One of the issues was the city had promised the PFD it would cover shortfalls in bond revenue payments for the Town Toyota Center.

The question of what was to happen next, though, was up in the air. Enter, the Town Toyota Center’s Transition Committee and a summer’s worth of research.

Allison Williams, executive services director for the city of Wenatchee, said figuring out the next step required the cooperation of all involved.

“As we looked at the enormity of what we needed to do in the next 90 days, it made sense to pull together a group representing the Wenatchee City Council, the Public Facilities District, Town Toyota Center staff and city staff to make sure we fully understood what we needed to do to move forward with the facility,” she said.

So, Kelly found himself, along with PFD board members Shane Reichert, Alicia McRae and Dawn Collings, Wenatchee City Councilmembers Don Gurnard and Jim Bailey, Town Toyota Center staff Linda Haglund, Aaron Harvey and Eddy Mattson and Wenatchee city staff Allison Williams, Brenda Guske, Deanne McDaniel and Mark Calhoun, spending the summer researching what goes into managing an event center and booking entertainment.
The committee first met in July and soon developed three options:

• Full meal deal: Find a new management firm to replace Global Entertainment. The cost estimate was a minimum of $96,000 annually, plus negotiated costs on things like a percentage of sales, food service and revenue and reimbursement for corporate expenses to service the facility.
• Create a hybrid in which the PFD would be the employer of all Town Toyota Center staff and hire a general manager, but entertainment booking services would be contracted out. The cost would be $60,000 to $96,000.
• Do it all themselves. The PFD would be the employer of all Town Toyota Center staff and hire a general manager with entertainment and event center experience. The costs were already considered as part of the operating costs.

In August, the committee recommended the inhouse option. The PFD board and Wenatchee City Council agreed. The new general manager, Mark Miller, arrived for his first day on the job on Oct. 7.

The Wenatchee Business Journal wanted to know more about how the committee reached that conclusion and on Oct. 12 invited the committee to one final meeting, a roundtable discussion.

Those participating included PFD Boardmembers Dan Kelly and Shane Reichert; Eddy Mattson, Town Toyota Center’s director of operations; Aaron Harvey, Town Toyota Center’s box office manager; Linda Haglund, Town Toyota Center’s director of sales and marketing; Wenatchee City Councilmen Jim Bailey and Don Gurnard; and Allison Williams, Wenatchee’s executive services director.

Nevonne McDaniels (WBJ): Why did you volunteer to serve on this committee?

Jim Bailey (Wenatchee City Council): From the city’s perspective, I wanted to watch what was going on.

Once the decision was made to terminate Global, the big question was, “What do we do now?”

I guess one of the things that was sort of an eye opener to me was we had a lot of in-house experience. I think maybe at the beginning, there was some tentativeness that we really don’t know much about this so we should hire someone who does.

Don Gurnard (Wenatchee City Council): Once we started down this path and knew we were going to make a change, we wanted to make sure it’s done in a relatively quick fashion, but we didn’t want to leave anything untouched, unthought or unquestioned.

Shane Reichert (PFD Board): I felt like I had a responsibility as a PFD board member, and I think Dan and Alicia did, too. We had to make sure this was going in the right direction.

For me, I was wary of hiring another management company. With the experience we had before, I didn’t feel it was in our best interest to go that route and that really developed over time as we started to see these proposals.

Dan Kelly (PFD Board): I was more toward the management company because they have all the experience. I wasn’t sold on it, but that was the direction I had in my mind initially.
But once we started researching, I found out we could really do this with a general manager and make it work.

Linda Haglund (Town Toyota Center): I won’t speak for the other two members of the staff, but I felt it was a privilege just to be on the committee. We felt we would be valuable to this committee because we understand what happens on a daily basis. Having three of us from different places in the building, as far as job duties, also gave the committee a rounded perspective.

McDaniels: In the beginning, were you employees of Global?

Haglund: We were employees of Global Entertainment until the 3rd of September, so we were very careful to do this on our own time. And in all honesty, there were certain things the committee looked at that we couldn’t participate in, things that directly impacted us as far as employment or our future.

McDaniels: Your first meeting was in July. By then, did you know what your task was? How did you figure that out?

Allison Williams (city staff): We had initiated a couple of processes. We knew we had to take care of ticket sales. We had a separate committee that took care of that. We put out Requests for Proposals for a management company and for a general manager.

We had the RFP responses in hand pretty close to when we had our first meeting.

The first meeting in July was basically brainstorming — let’s get everything out on the table that we need to deal with in the next 90 days.

Gurnard: We really didn’t have any direction when we first started. What we did have is a whole plethora of questions. And as we got those answered we started to form some options — a GM-run formation, the company-run or the hybrid thing. And that came after we got hundreds of questions answered.

Williams: Once we had the options, we did a cost and benefit overview of each based on the proposals we had from the management companies.

Gurnard: We had to find out about several facets — booking, entertainment, cost, facility operations, HR, finances. All of it had to be broken down a little bit and brought back together to see what the picture would look like.

We actually did that through all the questions and interviews.

Kelly: The research process was helpful for the PFD board. I was fortunate to go to Spokane and sit and listen to what they do and how they go about things. They have three buildings and run them without a management company. So, for me, it was really valuable to talk to their PFD board members and find out the role they play.

There were things that came up about the PFD board that we didn’t know. We jumped into the fray when this started. We had to build the building and then we had to run it and there were other things that came up.

Spokane had some guidelines and information they shared with us that will be important down the road.

Also, for us, too, it’s the connection. They have connections with other PFDs and other buildings. It was pretty cool to get that kind of information.

Haglund: I think in the midst of a crisis you can lose sight of the beauty of the public facilities district legislation. It’s really about the future. The legislation allows for other projects to be part of that .033.

We’re kind of stuck right now, but we were reminded by Spokane and by Everett, who has built a children’s museum. This legislation allows us to do other projects in the future as far as the community goes.

Reichert: What really helped is that Allison and Brenda not only did the research in Spokane, but on other PFDs in other states that had the hybrid model, for instance. We didn’t really know how to operate it. So getting that feedback and how that operated led us in the right direction.

Yvette Davis (WBJ): What is the benefit of using a general manager vs. a management company?

Reichert: A lot of that had to do with local control. The fact of the matter is, a management company is getting paid regardless. We’re now paying a general manager, but there’s a vested interest because he works for us, the PFD board.

With a management company, they’re getting paid every month and they’re going to bring in the talent and book events that they want.

Here, we know that he’s looking out for the best interest of our community.

Aaron Harvey (Town Toyota Center): With a strong general manager, we are able to pick the right performers, the right events, the right activities that are good for this area. You just can’t get that from Phoenix, Ariz., with the management company. They aren’t here and they don’t know what works.

With the general manager, he’s looking out for our interests. The management company? They look out for themselves first. They would purchase an event and use it at all their venues because they got a good deal. Well, that same event that’s going to work in New York or Arizona or Texas, just isn’t going to fly here.

Reichert: And that plays a role for community events, too. The Town Toyota Center now will have a lot more flexibility. If there’s a high school event we want to host, as opposed to some event booked by the management company and they say, “Sorry, we have to have it that day,” there goes our local flavor. I think it’s real important to keep that.

Eddy Mattson (Town Toyota Center): As the operations director, I know we can bring in the same shows the management firm can bring in, but I believe we can bring them in cheaper. And now we can tailor our shows to the Wenatchee Valley.

And it’s going to be a benefit to the people of the Wenatchee area, to the surrounding area, to the employees because we know what’s going on now.

Haglund: We wanted to chime in on that conversation [about whether the staff could handle the booking]. That is one we had to step away from, so we never saw those proposals, nor were we in on those interviews and you can see why. But what was fun for us is that’s the direction they ended up going. We knew those answers already.

Gurnard: We knew the staff was good, but we didn’t really know how well they were actually operating that facility. Aaron with the tickets and Eddy in the back and Linda. The understanding and the knowledge that they were gaining along the way.

That’s why we were comfortable with going past our 90 days because we knew the staff had the expertise to hold the fort while we were still making our decisions.

Reichert: It’s been proven by the transition. Mark only just came on board and they’ve been operating for over a month without a new general manager or a management company and, hockey season has already started.

One of our biggest fears was starting hockey season without a general manager or a management company.

Fortunately, Kris Miller, the temporary GM, was outstanding and helped lead the way. But I think the local staff proved they know what they’re doing.

Williams: You certainly couldn’t define our city government support this summer as typical. We have a couple city staff members who went over and above and burned lots of hours making sure that we diligently worked through this process and provided a lot of resource and support for us.

Gurnard: Brenda [Guske] and Deanne [McDaniel] and Mark [Calhoun]. Brenda and Deanne, they should have a medal. That was a lot of time and effort and a lot of work to get all that in line.

McDaniels: What input were you getting from the public?

Haglund: “Do you have a job?” That’s what I heard.

McDaniels: What did you say?

Haglund: I said, “I don’t know.” That’s why I said those days were hard for us.

I think generally the public was supportive. You always hear the most from the most negative people. You don’t hear the people who stop you in the grocery store and say, “I had the greatest time at Kenny Rogers,” or, “We had so much fun. We were there for this or that.”

I’ve said before that this building is all about community. And the community on the whole has embraced this building and love it. That’s what I heard.

Harvey: Here’s what I heard from the public: We had a sell-out hockey team. They were still showing up.

Kelly: I would get questions from people about what was in the local paper. If I was in a meeting or whatever, I would say, “Don’t believe everything. They don’t have all the information.” I told them this building is here and it’s not going anywhere. We’re going to make it work.

Mattson: We got a lot of questions from the staff asking us if they still have a job. Our comment to them was, the building is not going anywhere. It still has to be cleaned. It still has to operate.

I think one of the exciting things I heard was when a guy stopped by the community rink. And he goes,

“I was one of the biggest naysayers of this building. I didn’t want it built. I thought it was going to be a failure. But I had to stop in and tell you, you guys won.” And I thought that’s pretty good if you get a big naysayer coming in and saying you guys won. That’s encouraging.

Davis: What did you hear on city council?

Bailey: I think the public in general has a lot of questions. Is it going to work? I guess I’m optimistic and say, “Yes, it will.”

In the very beginning, I think we were overly optimistic about what this facility would be or do. And how soon it would do it. Take any startup business and it’s at least three or four years before you show a legitimate profit.

I tell people now, we’ve made the transition. We have the general manager on board. But it won’t be solved by Christmas. We are two or three years out before we’re going to see this thing really significantly change.

I think we’ve made the kinds of decisions at this point that will allow that to happen.
And to back up a little bit to what we said earlier. The decision that we came to, it was really interesting as you do your research, you end up where you’re supposed to end up.

We evolved as a committee, in our views, particularly on the financial side of things. In my mind, the corner turned when we started talking to the general manager candidates and realized we can do this ourselves. We don’t have to have an outside company.

The management company was just a black hole that hemorrhaged money. If we do it ourselves, the money might as well stay here and support this community.

So, I’m optimistic. I think we made a good decision. And again we will have to be patient and diligent about what we do and how we do it. But I think we’re on the right track.

Davis: So you predict in two to three years it will be in the black?

Bailey: I won’t do that. There are a lot of financial issues. We built the thing last October and the economy went south. Had that not happened I think we still would have been in the red, but not as bad.

Stepping in as quickly as we did to deal with the situation was advantageous to us.

Haglund: Too, I think the thoroughness of this process was important. I remember at one meeting Don Gurnard saying, “No stone goes unturned.” The words “due diligence” were repeated over and over.

Gurnard: It was top to bottom. We looked at finances, at HR, how all that would work. It wasn’t just, “We have a number here. Why don’t you just use that number?” It was, “Why is that number there? Who put it there and why?” That was all part of the process.

Reichert: To go back to when we can predict what’s going to happen, it’s only fair to say this is still a learning curve. Mark Miller is going to have some time to get adjusted and that’s not going to be easy. It’s going to take six months to a year to get a grasp of this town. It’s going to take time before he starts making some changes and gets things going in the right direction.
For us to say, “Yep, at year three we will be making money,” is, I think, unfair.

Gurnard: If the events center breaks even, I’ll be happy. The impact is outside the arena. It’s the hotels we fill, the people coming into town to shop while they visit and the businesses that want to build around it if it’s successful.

Haglund: This building required a certain amount of risk. When we started this four and a half years ago, it was about stopping what we called “bleeding” — all the money that bled out of this area to entertainment or athletics or something in another area. I think we have proven that it works here. But it took risk.

McDaniels: Given the research that you did and everything you know now, could you have done this from the beginning?

Williams: I truly think things happen for a reason. We went into this and it took all of our effort just to get the legislation passed, the PFD formed and the financing in place, plus we got a $10 million grant in the middle of all that. So if we would have had all that, plus managing the building on top of it, I might be living in a little room with soft walls.

Now we have the benefit of the local staff and our knowledge that has taken place over the year. That really helped us with the decision to go with a general manager.

Gurnard: And our sponsors have helped, too.

Haglund: Yes, thank the Lord. The only sponsor we lost was one that actually went out of business. The rest have stayed with us.

You know, people in the community want to know how to help make this successful? Buy a ticket and buy a sign. Buy advertising. That’s how you can directly impact the success of this building.

Mattson: The community has been very supportive. Even the shows that have been coming in since this transition has taken place. We’ve had a number of shows that said, “We’ll be back next year.”

Bailey: This being a year old, we don’t have a lot of history to work on. But one of the things I picked up working on this team is that one of the keys to success is having annual, community oriented events that make it an integral part of the community so at some point, people can’t envision the community without it.

I was here when we built the convention center and that was hugely unpopular. There was a lot of unhappiness in the community about the city going into the convention center business.

Yet today, you sit back and you can’t envision Wenatchee without the convention center. It helps make this community successful and a viable place to live.

So, again, we need the time and the patience for that to happen with the Town Toyota Center.

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