It's been more than a year since the Sadlon Arena lease with its major tenant was to expire and there's still no new deal, although talks continue.
“Negotiations have not been completed yet and discussions are still underway with HorsePower Sports and Entertainment (Group), the owners of the Barrie Colts,” said Dawn McAlpine, the city’s general manager of community and corporate services.
“As we are still in negotiations, I have no comment at this time,” Jim Payetta, vice-president of business development and marketing with HorsePower Sports and Entertainment Group, said when contacted by BarrieToday.
The Colts’ first home game this season was Sept. 28 against North Bay Battalion.
The Sadlon Arena lease was to expire in June 2023, then was extended by city council until the end of February 2024, then extended again until April 30, 2024. The last public motion providing confidential direction to staff regarding Sadlon Arena negotiations was approved by council on June 19, according to city officials.
Negotiations for a new lease agreement between the city and Colts have not been without controversy.
Last fall, council decided the Colts need to comply with their existing Sadlon Arena deal with the city before a new one is signed.
An internal audit found the city wasn’t receiving its rightful share of advertising and concession revenue for the Barrie Colts' use of Sadlon Arena, located at 555 Bayview Dr.
The audit was referred to city staff by council to bring the Ontario Hockey League (OHL) club into compliance with existing agreements before a new lease is agreed upon.
The motion reads: "That the 2023 year-to-date internal audit status report dated Sept. 27, 2023 be referred to staff in recreation and culture services in order to bring the Sadlon tenant into compliance with existing agreements prior to execution of a new lease agreement."
City staff said Tuesday this motion still stands.
The audit indicated that thousands of dollars in Barrie Colts revenue has been under-reported and/or unpaid to the city in exchange for the OHL club’s use of Sadlon Arena.
Last year’s budget for the Sadlon Arena, a building which the city owns, included total gross costs of $1.7 million, city figures show. With total revenues of $1.2 million, the net cost was $510,000 — which was funded from Barrie property taxes. The net cost is expected to be slightly lower in 2024.
Colts officials have taken issue with the internal audit report’s findings.
Howie Campbell, the hockey team's majority owner, has made online comments about the matter. He has said the disputed amounts of advertising and concession money from Sadlon Arena are "small in nature."
Campbell also said he sent the city a letter July 17, 2023 requesting “abatement” for all the things he says have been promised to the Colts during the last 10 years of the lease, things that were not done by the city.
What’s owed to the Colts is "far greater than the disputed amounts," Campbell said in his statement, posted on social media and the team's website. The statement did not include any specifics on the amount of money the Colts claim to be owed.
Michael Prowse, the city’s chief administrative officer, has said there are five recommendations from the 2023 internal audit with respect to the city’s contractual rights, advertising revenue and concession revenue. The city’s goal, and that of its internal audit team, is to work with the Colts to achieve compliance with those five recommendations.
They involve the city’s contract rights to examine records, identify and collect city advertising revenue, collect outstanding advertising revenue, check the accuracy of advertising revenue and whether it’s complete, and check concession revenue earned but not reported.
The status report says the review assesses third-party compliance with the user and licence agreements, determining whether advertising and concession revenues reported to the city are adequately supported by the city’s contractual right to examine records. It concludes that advertising revenue reported to the city by the Colts is not accurate and/or complete.
The report also said the city’s portion of eligible advertising revenue for three seasons (2019-20, 2021-22 and 2022-23) had not been paid to the city.
The audit found that a net total of $19,296 in eligible advertising revenue, not including harmonized sales tax (HST) — for which the city is entitled to a portion — was determined to be under-reported for the 2017-18, 2018-19 and 2019-20 seasons.
The review also claims that concession revenue earned by the Colts from September 2021 to June 2022 at Sadlon Arena was not reported or paid to the city. According to the review, the city's portion of that revenue was calculated to be $50,717, not including HST.
The audit report concluded the city should work with the Colts to identify and collect the city’s portion of non-cash consideration received, such as services and gift cards, and collect the city’s portion for the three seasons owed (2019-20, 2021-22 and 2022-23) for eligible advertising revenue.
The report said the city should continue to perform periodic physical observations of the signs inside Sadlon Arena, by comparing the signs seen there to the advertisers reported on the corporate sales summary. If significant discrepancies are noted, the city should exercise its contractual right to examine records to support the advertising revenue reported.
The city could also consider whether alternative advertising revenue-sharing arrangements with Sadlon Arena, such as a flat fee rather than a portion of advertising revenue, might be beneficial.
