City of Regina questions sustainability of REAL business model, as company seeks to take on debt
CBC
Regina city council will weigh whether to allow Regina Exhibition Association Limited (REAL) to use debt to get out of the red, and whether city administration will develop a plan to help make the company sustainable in the long term.
A report forwarded to the city's executive committee states REAL will owe $6.9 million by September, but it won't be able to make its payments without taking on more debt, or getting a cash injection.
Delegates from REAL, including president Tim Reid, presented the organization's financial situation to the committee Wednesday. They suggested the COVID-19 pandemic was the leading cause of the company's money woes, but further questioning from councillors and Mayor Sandra Masters cast doubt over REAL's current business model.
"We need to ensure that we are being fiscally responsible for all of our tax dollars," said Coun. Lori Bresciani during the meeting.
"We actually have to look at a different business model, because I don't think this business model, this financial model, is sustainable."
REAL, a municipally owned corporation, oversees the city's exhibition grounds, Mosaic Stadium, the Brandt Centre and Tourism Regina. Part of its work includes drawing events to the city — such as sporting events and concerts — which, Reid said, drive much of the organization's revenue.
Public health restrictions implemented during the pandemic limited gathering sizes, thus hurting the entertainment industry. REAL is recovering from that loss in business, but it is still in debt, Reid said.
The company is on pace to meet its revenue targets this year, he said, but generally its profit margins are thin, which limits how the business can spend money.
It also carries roughly more than $40 million in deferred maintenance on city-owned assets.
"REAL can be sustainable for operating, but what we really need help with is to dig us out of the debt that we dug ourselves into, that the pandemic forced us [into]. Then, also invest back into our infrastructure and our buildings to make sure we can be that community pillar," said Dallas Skulski, REAL's director of finance, who also attended as a delegate on Wednesday.
The executive committee voted in favour of letting REAL arrange to take on $3.4 million of debt, within its $21-million debt ceiling, to help pay off what it already owes.
It also voted in favour of directing the city administration to develop a long-term financial plan for REAL that would be presented to city council before the next budget.
Coun. Bob Hawkins, in particular, supported the moves.
"We are supporting an organization that we rely on — that we've relied on in the past, we will rely on in the future — to help develop this city … the recreation and entertainment values that this city needs," Hawkins said.
