CEO of Regina Exhibition Association Limited (REAL), Tim Reed, is the final delegate at Regina City Council budget deliberations, which went into day two on Thursday.
He and the new voting board of REAL have increased the budgetary ask from $5.8 million proposed in November to over $6.4 million.
The increase comes from an ask of an additional $1 million from city council to fund REAL’s 2024 capital budget.
The remaining $5.4 million in that ask would go towards operational funding and principal and interest funding.
Nikki Anderson, Chair of REAL, says that this is a conservative budget.
Back in November, REAL said it was asking for more than five times its normal funding.
For the last three years, the city has been funding REAL $1.1 million per year.
REAL is currently facing more than $17 million in debt, much of which comes from when Mosaic Stadium was built.
REAL’s annual financial statement said it lost $5.1 million in 2022, its second worst year behind 2020, when it lost $5.6 million.
“Our business just is not coming back the way that it was prior to COVID-19,” Reid said back in November.
“We’re a business that makes about half a million dollars a year going into COVID-19 and then our revenues turned off.”
In council Thursday, Reid said the current revenue model for REAL is aggressive.
“Forecasted revenue is optimistic based on the most recent performance.”
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Coun. Bob Hawkins asked for more details around REAL’s debt.
“Any debt that REAL has is approved by you as council,” Reid said.
He explained that they can’t take on any debt unless it is brought before city council.
Reid said between 2014 and 2017, REAL had virtually no debt, but that changed in 2018 when it took on $8.1 million in debt.
He said it was before his time, but he said it related to three items; the Viterra International Trade Centre, Mosaic Stadium and improvements at the Queensbury Convention Centre.
In 2020, REAL took out an $8 million loan at the time due to not being able to operate due to the COVID-19 pandemic, of which they drew down $5 million. Reid said they drew down the remainder in 2021.
“Ultimately, our debt has continued to escalate because we’ve been servicing debt that we’ve had to pay and we’ve been operating at a loss and drawing down from the reserve fund the city has provided through COVID-19.”
Coun. Shanon Zachidniak asked why REAL has no cash reserves.
Reid said REAL has operated on a break-even model as far back as they can remember.
“Any earnings that we have from operations we will invest back into the facilities themselves,” Reid said.
Reid said they don’t subsidize their assets, saying they take their profit sectors and use them to offset their loss sectors.
He said something like Garth Brooks coming to Regina makes money, but those gains help offset some other things like their recreational assets.
“It’s been a historically very successful blend, I would say.”
He spoke about sponsorship in the city, saying they’ve been very successful driving sponsors to their buildings.
“The biggest shift that we’ve got is we’re not driving the special events that we used to, and those special events are not driving the bottom line earnings that they used to pre-COVID-19.”
Reid said they are currently struggling to find events that will fill the stadium, saying they are a relatively small market with a relatively small venue.
He pointed to larger stadiums, saying the successful ones have a capacity over 50,000 people and are in a much larger market.
He explained that it takes about $400,000 to prep Mosaic Stadium for a concert, saying it works well for 16,000 to 20,000 people, but becomes very cost-prohibitive for any number below that.
Coun. Terina Nelson asked about the restructuring of REAL’s executives.
Reid said restructuring is currently in the works, saying they’ve had a reduction of three vice-presidents, but noted that not all of the restructuring is completed.
“So there will be a total restructuring that involves eight out of scope employees.”
It was noted that if REAL’s request is approved in the operating budget, the 2024 mill rate will increase to 2.82 per cent, which would cost homeowners roughly $70 more a year on their property taxes.
Other things listed on the agenda include the general and utility operating budget and the four-year general and utility capital plan, to name a few.
Deliberations will continue into Friday.
— with files from Katherine Ludwig and Andrew Benson
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