2003 - 2004
November 11, 2003
Prowlers get rent break at coliseum
City Manager Ed Kitchen calls for procedures that would ensure that event contracts are properly followed.
BY MATT WILLIAMS
GREENSBORO - The city-owned Greensboro Coliseum waived $35,500 in rental and expense fees this summer that the Greensboro Prowlers arena football team owed the city, only months after it gave nearly $90,000 in rent breaks to the Generals minor-league hockey team.
The rent breaks, which were not included in written contracts the teams had with the coliseum, have prompted City Manager Ed Kitchen to call for procedures that would ensure that event contracts reflect what groups are actually being charged.
The waivers began four days after coliseum Director Matt Brown and Prowlers owner Art Donaldson agreed to a contract that outlined fees almost four times what the team was actually charged. Earlier this year, Brown charged the Generals $89,850 less than its contract specified, saying that the moves were necessary to keep the team from folding in the middle of the season.
Donaldson, a Greensboro attorney, also owns the Generals and has since turned over the struggling hockey team to be operated by the coliseum. The Prowlers' poor showing this summer could also mean the end of its four-year run in the city. Donaldson said that he will regrettably shut down the arena football team if new investors don't come forward by Friday.
After agreeing to answer only questions submitted in writing, Brown wrote that he learned of the Prowlers' troubles while he was working to find new owners for the Generals, but he could not recall when he agreed to give the rent breaks. He wrote that "the necessity of making initial and subsequent adjustments in the Prowlers game expense fees were obviously because they were needed."
Kitchen said Monday that he is considering policy changes in response to an article detailing discounts given to the Generals and the findings of a 2002 internal audit that was critical of the coliseum's discounts to several tenants and events. Kitchen said the procedures would ensure that event contracts would be properly modified when Brown decided to grant fee waivers.
"I think it makes sense to have some procedures in place, but I don't want to unduly tie Matt Brown's hands," Kitchen said.
Late last week, Kitchen also announced several personnel moves among senior staffers, one of which was to place oversight of the coliseum under Mitchell Johnson, the former assistant city manager who was elevated in the moves to deputy city manager. Previously, Brown reported directly to Kitchen.
Kitchen said having Johnson oversee the coliseum would improve communication between City Hall and the coliseum because he is often too busy to devote enough time to oversight An outside review of the coliseum in 2001 suggested the change, but Kitchen said he didn't have enough staff until recently to make the personnel moves.
On April 1, Brown and Donaldson agreed to a contract giving the Prowlers the use of the arena for $5,000 per game. That fee covered expenses such as hiring security and ticket takers. The team also was to pay $1,000 for the use of the arena's Jumbotron, plus other expenses such as advertising.
When the Prowlers opened the season four days later, the team was charged half of the game expense fee and was not charged for using the Jumbotron. Instead, the coliseum picked up the tab for $3,714 in event expenses for that game.
By the fourth home game, Brown lowered the game fee to $1,000 and continued not to charge for the Jumbotron, an arrangement that carried through the end of the eight-game season.
Under the written contract, the Prowlers should have paid $48,000 in game and Jumbotron fees for the entire season. Instead, the team was charged $12,500.
The contract did not provide for the city to waive its fees and no modification was made in writing.
Coliseum Business Manager Laura Smith said that Brown and Donaldson had already discussed giving the rent breaks when they signed the contract. When asked why the contract wasn't changed to accommodate the lower fees, Smith said that other event promoters might also demand lower rates if the reductions were included in the Prowlers agreement.
Donaldson said that poor ticket sales and heavy financial losses forced him to ask Brown for the fee reductions.
"We realized early on that things weren't going well," Donaldson said.
A December 2002 report by the city's Internal Audit Department found several irregularities in coliseum events, including payments to performers that didn't have contracts with the coliseum and rent breaks given to event promoters, including the Prowlers. In the sample of 16 out of more than 800 coliseum events that year, the coliseum failed to bring in $169,882 in event fees because it didn't follow the published rate schedule, the report concluded.
The report recommended that the city require coliseum management to review what it charges tenants and "ratify settlements in accordance with contract terms."
Mayor Keith Holiday said he believed that contracts should accurately reflect what coliseum tenants are being charged. Holliday, a commercial banker, said if one of his clients asked to renegotiate the terms of a loan, he always makes a written modification to the loan document to reflect the changes.
Holiday said he did support Brown's efforts to keep the Prowlers and the Generals in the city. Unlike support for the arts, where city money is used to directly fund a community activity, Holiday said support for the two teams is mainly aimed at preventing the coliseum from losing them as major tenants.
Brown has always enjoyed more authority to run his department than other department heads. Soon after Brown was hired, then-City Manager Bill Carstarphen delegated his authority to approve coliseum contracts to Brown, assigning him "the responsibility and authority to execute lease agreements on behalf of the City of Greensboro."
Carstarphen required Brown to clear coliseum contracts with the city attorney and file a copy of the contract with the city clerk.
Assistant City Attorney Mike Williams approved the initial Prowlers contract but said he was not aware of any modifications. Williams said that ideally, Brown should have cleared changes to the contract with him.
"In a perfect world, yes, it would have been better way to do it," he said.
The contract was not filed with the city clerk until Oct. 31, two weeks after the News & Record first requested the document. Smith said the delay was the result of an office mix-up.
During the period that the coliseum gave fee breaks to the Prowlers, Brown was finalizing an arrangement where Donaldson would lease the Generals hockey team to Greensboro businessmen Don Brady and Bill Black for the 2003-04 season. Under the agreement, the coliseum has assumed operation of the team for the season, paying all expenses and taking in all revenues. Brady and Black are attempting to form an ownership group to take over the operation of the team after this season.
In an interview last month about the Generals, Brown said he also was concerned about the Prowlers' finances and was helping Donaldson find new owners for the team. On Friday, Brown wrote, "the Coliseum has not considered, nor is it considering operating the Prowlers."
Contact Matt Williams at 373-7004 or email@example.com
KEY AGREEMENTS BETWEEN COLISEUM AND PROWLERS
The contract between the city-owned Greensboro Coliseum set the per game fee for the use of the arena at $5,000, plus $1,000 for use of the arena's jumbotron. The team was never charged the rates specified in the contract. A total of $35,000 in fee waivers was given to the team.