Alerus Center originally uploaded by matt17bakke
We’ve been covering the Burnsville Performing Arts Center and how VenuWorks is managing the facility poorly and while we’ve spent a little time discussing the various ways that Burnsville might have handled the entire ordeal a bit better from the get-go, what we haven’t spent too much time researching is exactly how they should have went about doing that. Well, following up on a comment that Thought Leader posted in the last thread about how Burnsville allows VenuWorks to ignore their contractual obligations, I took it upon myself to contact the City of Grand Forks, ND who also have a VenuWorks managed facility and request their VenuWorks contract and financials to see how they handle things across the border. What I found was quite interesting.
First, before I go any further, Grand Forks has been dealing with VenuWorks (and its predecessor) for about five years already. So before we go jumping to any conclusions about how stupid Burnsville is currently acting compared to Grand Forks, at least know that Grand Forks may have already been down the same road that Burnsville has been. Now that said, perhaps Burnsville’s City Staff should have done their homework prior to hopping on board with VenuWorks and contacted each and every single city that has worked with them to see what was done there before moving forward and then implemented whatever suggestions they had prior to entering into any contract with this particular management company.
If you take a look at the contract documents (part one and part two) available from the City of Grand Forks (which, I might add, was the most responsive government agency I have ever dealt with while digging for information–not only did they respond quickly but they gave me everything I asked for and even asked if I wanted more! The MVTA, MDH, and most South Metro cities have a lot to learn from them!), you will see that they have an interesting addendum to the contract signed back in December of 2007 which basically states that if VenuWorks fails to meet their projections for revenue in any particular year then they owe the city the difference up to the amount collected by VenuWorks known as the “Performance Management Fee” and at which point both parties agree that VenuWorks isn’t going to meet its projection, the city is permitted to cease paying the “Performance Management Fee”. Makes sense to me. Why doesn’t Burnsville have this clause already? If you look at the original VenuWorks contract with the City of Grand Forks, you’re going to notice a lot of similarities to the one that Burnsville has signed. It would appear that Burnsville’s City Staff, in its infinite wisdom, decided it would be a great idea to utilize VenuWorks’ boilerplate contract language instead of consulting with other cities who have dealt with VenuWorks and seeing what they have done to better protect themselves against VenuWorks’ proven poor performance.
Unfortunately, even with those protections written into the contract, the financials provided for May 2009 and June 2009 (I am still waiting on data going all the way back to 2001) show that Grand Forks’ Alerus Center is losing money in a very similar fashion to the way that the Burnsville PAC happens to be. This seems to be an on-going problem with VenuWorks and even though they have had 5 years to get ramped up in Grand Forks (where there is very little, if any, nearby competition) they have shown that they are incapable of properly managing a facility and making it profitable. It’s a little troubling to me why, after looking at this data, Burnsville would decide to utilize VenuWorks for management of the PAC. As we all know, the PAC is supposed to start turning a profit after 5 years under VenuWorks’ control. While we all knew that it was unlikely the Burnsville Performing Arts Center would ever turn a profit, it looks even less likely now that we see that the Alerus Center in Grand Forks, in its fifth year with VenuWorks, is still losing money in a bad way.
Now that you have seen data from another failing VenuWorks facility, what do you think about Burnsville’s choice to hire them as their preferred management company? Do you feel that the City of Burnsville did its due diligence in researching the company and its other venues, contracts, and financials before moving forward and signing a seemingly boilerplate contract? Whatever you think about the data provided by the City of Grand Forks, ND and how it applies to the Burnsville Performing Arts Center, go ahead and comment on!