REGINA - Executive Committee in Regina has given Regina Exhibition Association Limited the go-ahead to take on more debt to keep its operations going this year.
REAL has been approved to acquire $3.4 million of debt within an already approved debt guarantee of $21 million, to manage its cash flows to the end of the year.
REAL had been staring at being in a negative cash flow position of $6.9 million by this September. REAL had also exhausted its previously approved line of credit and so needed council’s permission to acquire the $3.4 million.
Executive Committee also voted Wednesday in favor of working with REAL to develop a strategy to address the organization’s long term sustainability, with a report to be presented to council on it later this year.
In making the motion at Executive Committee, Councillor Bob Hawkins explained why this was an “entirely sensible recommendation from administration.”
This provided “short term financing for REAL while a long term plan can be developed,” said Hawkins. “What we are being asked to do here is simple, to provide REAL with $3.4 million in credit facilities to enable it to carry on over the summer. I think that the electorate in Regina would be furious if we didn’t do that. They’d be furious because ultimately to fail to provide this money to REAL… would effectively severely limit their ability to provide community services over the summer months and their ability to run the very events which enable them to start to develop a new financial plan.”
Still, the votes were not unanimous, and there was considerable concern expressed from councillors about how REAL managed to get itself into this financial state.
In his presentation to council, REAL CEO Tim Reid noted that the issues were largely due to the shutdown due to COVID-19. They needed to access debt to keep operating during that time.
“It forced us to draw upon our credit facilities, lines of credit more than we would traditionally would have,” said Reid to reporters. “And because of that we needed to have access to some of the other debt facilities that were already in place.”
During his presentation Reid pointed out that in normal pre-COVID times REAL was able to post small profits. He expressed confidence of being able to get back to that level, by hosting one concert and one large scale event per year.
Reid voiced confidence about REAL’s ability to host major events pointing to the national volleyball championships this weekend, the Brier next year, and possibly the World Juniors after that.
But Reid noted a big challenge facing their organization was in attracting large summer stadium concerts. He told council they were being out-bid.
He said REAL had two events scheduled for Mosaic Stadium, one a country artist and another a classic 90s rock band, and “the truth of the matter is those have gone to other jurisdictions.”
“The biggest challenge that we have is we are a small market but a relatively big stadium. However, Edmonton has a bigger market and they have more seats in the stadium and so the math just seems to work better there.”
The other bidders also were able to offer almost bargain-basement-price deals to promoters that Regina simply couldn’t compete with.
In both scenarios, Reid told council, the competing stadium was provided at deeply-reduced or free scenario and there were provincial and city funds made available.
Another issue Reid noted was that major acts concentrated on the major markets in the aftermath of the pandemic and then were toured Europe. But he expected they would return to tour the “secondary markets” at some point.
“Because we were closed last year we missed the routing, we just have to wait for our turn for them to come back.”
“I actually think we are living the results of COVID(-19),” Mayor Sandra Masters said to reporters afterwards about the situation at REAL.
“I think the restructuring in debt is probably appropriate now given the last fourth quarter of 2022 was fantastic and a little bit more in line of the expectations for the site, and so if that continues and we can do that every year or every other year and have at least one quarter like that and not have a quarter shut down, it should work itself out.”
Now that this is approved at Executive Committee, the next step is for bylaws for borrowing to come back to council, and then a report comes back later this fall regarding the longer term restructuring and potential financing of REAL.
