The Barrie Colts need to comply with their existing Sadlon Arena lease deal with the city before a new one is signed.
An internal audit claims the city isn’t receiving its rightful share of advertising and concession revenue for Barrie Colts' use of Sadlon Arena. The audit was referred to city staff by council to bring the Ontario Hockey League club into compliance with existing agreements before a new lease is agreed upon.
The audit was referred by council to staff last night, with no discussion among councillors.
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."
The current lease agreement, extended last spring, runs until the end of February 2024.
The audit says 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 the Bayview Drive arena.
This year’s Sadlon Arena budget includes total gross costs of $1.7 million, according to city figures. With total revenues of $1.2 million, the net cost is $510,000 — which is funded from Barrie property taxes. The net cost is expected to be slightly lower in 2024, although next year’s budget is still being drafted by city staff.
Colts officials have taken issue with the internal audit report.
Howie Campbell, majority owner of the Colts, and Jim Payetta, the team's vice-president of marketing and business development, did not respond to a request for comment.
But Campbell 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 requesting “abatement” for all the things he says have been promised to the Colts during the last 10 years of the lease, things he claims were not done by the city.
And 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 does not include any specifics on the amount of money the Colts claim to be owed.
HorsePower Sports and Entertainment Group, which owns the Barrie Colts, has also taken issue with a column written by former city councillor Barry Ward that was published Oct. 4 on BarrieToday.
Michael Prowse, the city’s chief administrative officer, has said there are five recommendations from the internal auditor with respect to the city’s contractual rights, advertising revenue and concession revenue, and the city’s goal, and that of its internal audit team, is to work with the Barrie 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, from city internal audit director Sarah MacGregor, 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 says the city’s portion of eligible advertising revenue for three seasons (2019-20, 2021-22 and 2022-23) has not been paid to the city.
The audit says 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 concludes 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.
And 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.
