Halifax will have to pay more than $500,000 for last year’s deficit at the building formerly known as the Metro Centre — but like the convention centre, we still don’t know what COVID-19 means for the current fiscal year.
On Friday morning, Events East, the Crown corporation that also runs the convention centre, posted fiscal 2019-2020 financial statements for the downtown Halifax arena named for a bank, known by the Halifax Examiner as the $48 NSF Fee Centre.
Halifax owns the arena, but has an operating agreement with Events East. Under that agreement, any operating surplus from the centre goes to the municipality, but it also covers any deficit. Halifax is also responsible for capital upgrades, for which it budgeted $5.5 million in 2019-2020.
It doesn’t appear that the deficit, totalling $534,077, is directly related to COVID-19 — it’s the fifth in a row, following more than $1 million in 2018-2019 — though the centre missed attendance targets due to the pandemic.
The introduction to the financial statements addresses the impact of COVID-19.
At year end, the global crisis resulting from COVID-19 began to significantly impact the sports and entertainment industry. Due to the public health measures put in place to limit the risk of the virus, [the $48 NSF Fee] Centre temporarily closed in mid-March for event hosting, impacting events scheduled for March and into the next fiscal year.
With the timing of eased restrictions on large public gatherings unknown at year-end, the following analysis does not assess the longer-term impacts of COVID-19 on our business or the sports and entertainment industry overall. Our focus remains on rescheduling events while we also prepare for the safe re-opening of our facility under new health and safety measures.
There were 15 events cancelled or postponed in March, the last month of the 2019-2020 fiscal year, due to the pandemic, including the 2020 IIHF World Women’s Championship.
The financial statements show revenue was more than $750,000 over budget for last fiscal year, at more than $9 million. But that revenue was more than offset by higher-than-budgeted expenses for events, administration and technology, operations and shared facilities and building costs.
As a result, the budgeted transfer to Halifax Regional Municipality of $12,000 in surplus, is now an actual transfer from HRM of $534,077 to cover the deficit.
The Halifax Examiner has asked the municipality where that money will come from, whether it was budgeted, whether it knows the budgeted 2020-2021 deficit, and when Events East will present the business plan to council. We’ll update this article when we get a response.
There have been no events at the centre since the pandemic began, and it’s unlikely they’ll start again any time soon. The Quebec Major Junior Hockey League hopes to begin its season in October, but there’d be no Mooseheads fans in the seats.
Events East has yet to quantify the losses, but HRM will be covering them:
The Centre cannot currently estimate the duration or future negative financial impact of the COVID-19 pandemic, however, it is expected that the COVID-19 pandemic will significantly impact operating results for the coming fiscal year due to the cancellation of sports and entertainment events and tenant league suspensions. Discussions are ongoing with event promoters and major tenants with respect to rebooking events once restrictions have been lifted and health and safety policies and protocols have been established.
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Any resulting deficits in future periods due to the impact of the COVID-19 pandemic on operations will be fully funded by the Centre’s shareholder, HRM.
Update, Monday, Aug. 24: City spokesperson Maggie-Jane Spray provided the following statement:
[The $48 NSF Fee] historically operates based on a break-even position, which is what was budgeted for 2019/20. However, the cancellations in March significantly impacted the final year end finances. Any surplus realized at the end of a fiscal year, as well any deficit, is posted to the Major Facilities Reserve.
The municipality is working with Events east to determine the financial impact of COVID-19 on the current fiscal year. This information will be available through the Events East business plan.
No date has yet been scheduled for 2020, however, it is expected to be available for review in the fall.
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