County Could Turn Over Carnival Center To Private Managers
Written by Dan Dolan on February 15, 2007
By Dan Dolan
If the Carnival Center for the Performing Arts continues to bleed money, the county may turn over business operations to a private management company, Miami-Dade Commission Chairman Bruno A. Barreiro said last week.
While no action is imminent, Mr. Barreiro said officials began kicking around the idea after arts center executives reported in January an unexpected $610,000 loss for the first two months of business. New budget projections filed with the county last week suggest the center could come up $6.2 million short this year if revenues don’t grow and costs aren’t capped.
Regardless of cost, closing the culture palace isn’t an option, Mr. Barreiro said. To protect its $472 million investment, Miami-Dade County must continue to subsidize center operations, which are now being underwritten to the tune of $3.7 million this year, he said.
"We certainly want to keep the center open," Mr. Barreiro said. "If we need more money to accomplish that, we’re going to have to step up to the plate and do it. Having said that, we want to make sure operations are as streamlined as possible. We have to look at alternatives, including putting the center out to a private company that would manage operations."
Mr. Barreiro said the county has two options for a private management deal. It can pay a flat fee to an entertainment management company and continue to be responsible for operational costs or lease the facility to a firm that would pocket all profits and eat losses.
"The bottom line here is we want to do what’s best for the taxpayers," Mr. Barreiro said. "If we give a company total control of operations, they’d take care of all costs, but we’d lose control over the types of events booked at the center. There are many ways to structure these types of deals."
Mr. Barreiro said Miami Beach’s private management agreement for the Jackie Gleason Theater of the Performing Arts could be a model for the county. After years of underwriting $1 million-plus annual operating losses, the city decided last year to lease the facility to Live Nation, a specialist in event promotions.
Although the deal is still in negotiation, Miami Beach cultural affairs chief Max Sklar said the company is offering $1 million a year for 15 years to lease the 2,700-seat theater. Live Nation would book all events, pay all operational costs and keep any profits, Mr. Sklar said.
Until the Live Nation contract is finalized, national entertainment giant SMG will continue to run the theater on a flat-fee basis, Mr. Sklar said. Last year, the city lost $1.5 million operating the Gleason. SMG also runs the city-owned Miami Beach Convention Center.
"SMG acts as an agent on behalf of the city rather than for themselves," Mr. Sklar said. "The city is responsible for all profits and losses."
Giving the Carnival Center to a private management company may not be so easy, government officials said. The county has a complex series of interlocking contracts with the Carnival Center’s non-profit trust and foundation.
Miami-Dade cultural affairs director Michael Spring said the trust is a stakeholder in the building, as are four resident performing companies. The foundation’s job is to raise money for the trust, he said.
Hammering out a management agreement would take time and patience, he said.
Mr. Barreiro said elected officials aren’t in a hurry. He said county staffers and Carnival Center executives will be given time to work out operational kinks. With less than four months of business under its belt, the center still is experiencing growing pains, he said.
Carnival Center executives and senior government officials agree. But government watchdogs led by Assistant County Manager Alex Muñoz are on guard.
"It’s too early to make conclusions after just one quarter of operations," Mr. Springer said. "The center’s budget is undergoing a very extensive review."
Miami-Dade Budget Director Jennifer Glazer-Moon said the Carnival Center will not be allowed to finish the year in the hole. County policy expressly bans budget deficits, she said.
"There will be a balanced budget," Ms. Glazer-Moon said. "The arts center will have to find other sources of revenue or reduce spending. Things don’t end in a deficit. We balance our budgets. We’re only in the first quarter, so there is time for this to be accomplished."
Ms. Glazer-Moon said the arts center’s proposed $27.2 million operating budget for the next fiscal year does not reflect a $1,000 deficit, as reported last week. She said the $1,000 line item in the deficit column reflects an accounting "rounding error," not a loss. Carnival Center staffers have offset deficient revenues for next year with a request for a $10.1 million county subsidy.
"These numbers don’t mean anything yet," Ms. Glazer-Moon said. "They are initial submissions and funding requests that must be reviewed. We can not say they are accurate."