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October 19, 2003 Coliseum gave fee breaks to Generals The city-owned arena agreed to forgo $89,850 in rental and expense fees last season. BY MATT WILLIAMS Staff Writer GREENSBORO - Before it took over operation of the ailing Greensboro Generals minor-league hockey team this year, the city-owned Greensboro Coliseum last season waived $89,850 in rental and expense fees the team owed the city. The fee breaks came after an internal city audit of the coliseum raised questions about discounts given to a number of tenants, including the Generals. Coliseum Director Matt Brown said he made the adjustment after team officials said they were having financial difficulties. Brown said he had the authority to reduce the team's charges and didn't want to risk having the Generals shut down before the season was over. "There isn't a building in the league that would want to see them not complete the season," Brown said in an interview. "You wouldn't want to burst the bubble of excitement that the community had for that team." The Generals' financial trouble ultimately led Brown to decide that the coliseum would take over the operations of the team for the coming season, which began Friday. The fee waivers meant that, despite collecting record amounts of concession and parking revenues, the coliseum's overall profit from Generals' games was $201,350. That's the lowest profit in the three years the team has played full seasons at the coliseum. Beginning with a home game on Jan. 2, the coliseum charged the team half of the required game expense fee of about $5,000, which covers the use of the arena and coliseum staff such as security and ticket takers. The coliseum also stopped collecting the $1,000 per game fee for the use of the arena's Jumbotron. Later, the coliseum waived the entire fee for three weekday games in March and four playoff games in April. In all, the coliseum forgave part or all of the fee for 21 home games, more than half of the Generals' season. Documents show that for the first 19 home games, fees charged to the team followed a lease contract signed June 27, 2002 between Brown and team president and minority-owner Rocco Scarfone. That agreement set the game expense fee at $5,130 for games played on Friday and Saturday and $4,800 for games played Sunday through Thursday. It also said that the team and the coliseum would split the cost of operating the Jumbotron, which costs $2,000 per game. Brown said he had the authority to modify the amount charged to a tenant after a contract was signed and did so for many events. After learning of the Generals' financial troubles, Brown said he consulted with coliseum Business Manager Laura Smith and decided to lower the fees. The contract did not provide for the coliseum to waive the game expense fee, and no modification was made to the contract in writing. Scarfone said the coliseum knew that the Generals were hurting financially, but it was no worse than any of the team's three previous seasons. The discounts were welcomed, but Scarfone said they weren't necessary to keep the team solvent. "We made it through every other season and the financial picture was the same," Scarfone said. "Would the team have folded if I didn't get a rent reduction? No way." Scarfone said he couldn't remember whether he asked for the reductions or if Brown volunteered them. He said there was no modification made to the contract in writing. "It was just something that was done," he said. Art Donaldson, a Greensboro attorney and the Generals' majority owner, did not return several phone messages left at his office last week. A month before the coliseum began to waive the Generals' game fees, a city audit of the coliseum looked at fees charged for a sample of 16 coliseum events. The audit found that all but one, including a Generals game, did not follow the city's published rate schedule. The Dec. 2, 2002 audit said that the coliseum potentially lost $169,882 on the events by not sticking to its standard rates. The audit recommended that all events at the coliseum have signed contracts and "require management to ratify settlements in accordance with contract terms." Responding to the audit, Business Manager Laura Smith wrote that in the future the coliseum would require that all events have signed contracts and that "payments be supported contractually." In her response, Smith also cited a coliseum policy that allowed Brown to approve contracts that waive rental fees for certain events. The policy does not address whether the coliseum could waive fees after a contract has been signed. Brown could not be reached for comment regarding the audit's findings. The findings mirror problems found in a 1984 audit of the coliseum that eventually led to the resignation of then-coliseum director Jim Oshust. That audit concluded that the coliseum hosted events without a proper contract and that event promoters were charged less than the written contract specified. The 1984 report stirred controversy not just about unauthorized rent breaks but also about irregularities in the arena's relationship with advertisers, nepotism on the coliseum staff and the arena's failure to document payments to novelty and food vendors. Oshust resigned under fire about a month after the audit was disclosed publicly. During the period the coliseum forgave rent for the hockey team, Brown was actively involved in finding new owners for Donaldson's franchise. Brown, worried that the city might lose the Generals as an anchor tenant for the coliseum, spoke several times with City Manager Ed Kitchen about trying to keep a franchise alive. Kitchen authorized Brown to take an active role in the Generals. Kitchen could not be reached for comment regarding the Generals' fee waivers or the 2002 audit's findings. By June, Brown had put together an arrangement where Greensboro businessmen Don Brady and Bill Black would lease the team from Donaldson for the 2003-04 season. The coliseum would assume operation of the team for the season, paying all expenses and taking all revenue. Brown plans to operate the team on a $1.2 million budget, about $400,000 less than what the team spent last year. Brady and Black and their partners have agreed to pay the city up to $200,000 to help cover expenses. Brady and Black say they will spend this season trying to develop an ownership group to take over minor-league hockey in time for next season. Staff writer Taft Wireback contributed to this report. Contact Matt Williams at 373-7004 or mwilliam@news-record.com COLISEUM FEE BREAKS During the 2002-2003 season, the coliseum waived fees that the Greensboro Generals owed for the following games
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