Budweiser Gardens is reporting a financial loss for the 2019-2020 fiscal year, but city staff say they do not anticipate that it will have a large impact on the City of London’s budget.
The venue’s 2020 annual report was presented to the corporate services committee on Monday and showed an overall loss of $648,422 in its last fiscal year.
In the report, city staff note that Budweiser Gardens was “on pace to have another successful year” before the onset of the pandemic, which forced the venue to close.
“This significantly impacted their ability to generate revenues, which resulted in Budweiser Gardens incurring a financial loss for the first time since it began operations 18 years ago,” staff explained.
“With near-term challenges expected as the world navigates COVID-19, the future outlook for the City’s share of proceeds will be limited until the venue is able to reopen and generate ‘normal’ operating revenues.”
The City of London and Budweiser Gardens have a public-private partnership with the city owning the land and leasing a portion of the lands where the facility sits to London Arena Trust “for a nominal base rent for 50 years.”
London Arena Trust leases the building to a partnership made up of EllisDon Construction and Spectra Venue Management. Spectra manages the building on behalf of the partnership and takes care of naming rights sales, advertising, attractions, operations, and more.
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As part of the agreement, the city receives a minimum $50,000 annual payment from Budweiser Gardens as well as a share from ticket sales. Through 2016 to 2019, the city received between $262,974 to $386,912 from Budweiser Gardens as part of its agreement.
“It seems that after a year of COVID, we’re now seeing some really hard data on the effects of this,” said Councillor Michael Van Holst.
Van Holst asked city staff about what kind of impact the loss would have over the next few years “because the profits are going to go to pay for the losses of the operator.”
Chief financial officer Anna Lisa Barbon says that while the city receives funds annually from Budweiser Gardens — averaging about $296,000 a year — the commitment is for a guaranteed $50,000 annually that is part of the budget and so anything above that is typically put in a reserve fund to pay down debt.
“We do have enough in that reserve fund… it’ll be tight, but we anticipate there’ll be enough to pay down the debt as planned, that there’s approximately just over $2 million that is outstanding and that will be completed in 2023,” Barbon explained.
“Through the agreement that the City of London created many years ago when this was initially created all of the profits do come through, but certainly we know that those aren’t guaranteed so we’ve budgeted accordingly and have been conservative with those amounts to ensure that there is no tax impacts if that doesn’t materialize.”
The staff report also notes that there is a possibility for the city to divest of Budweiser Gardens without a financial penalty during the first six months of the asset’s 2022-2023 fiscal year. However, “civic administration does not believe that there would be a significant benefit to pursue divestiture of this asset.”
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