An initial audit of the financial activities at the Southeast Kentucky Agriculture and Exposition Center in Corbin shows the facility made over $81,000 in profit from the beginning of the year through June 30, but city leaders say they are waiting for their own auditors to provide a more clear financial picture of the facility.
The News Journal obtained this week a copy of an audit conducted on the 5,000-seat arena, performed by Baldwin and Associates, PLLC of Richmond. The audit was completed and presented to SMG on Oct. 2. SMS is the management firm that handles day-to-day operations of the arena. The city of Corbin owns the facility.
According to a statement of operations provided in the audit, the Arena garnered $1,008,450 in revenues during the six-month period and had a gross profit of $308,550. After $267,185 in administrative expenses, that left an income of $41,365. Adding in another $40,000 of "other income," the source of which is never explained in the audit, that leaves a net income of $81,365.
Corbin City Commissioner Phil Gregory said he is familiar with the audit, but hasn’t studied it too closely. He said city leaders have ordered their own auditing firm, Cloyd and Associates, to do another audit of the Arena to get a more in depth look at what is really happening, financially, at the facility.
"I fell like this is just something preliminary and were are getting our own done so that we can look at it and arrive at a better conclusion."
Corbin City Manager Bill Ed Cannon said this first audit of the Arena’s finances was performed as part of a contractual obligation on SMG’s part. The Philadelphia based company, one of the world’s largest event and venue management firms, has a one-year contract to operate the facility. The contract expires in March 2010.
According to the city’s contract with SMG, the company receives a fixed fee of $120,000 paid in $10,000 increments every month. It is adjusted upward on the first day of each fiscal year by the percentage change in the consumer price index. Also, the company receives six percent of all food and beverage revenues at the facility. In addition, SMG will be awarded a bonus amount depending on performance, based on a sliding scale, as an incentive fee. The bonus starts at a $300,000 loss for the facility and goes upward.
According to the audit, SMG is due $228,831 for its fees, salaries and other expenses.
During the auditing period, the Arena collected $1,422,869 in ticket sales.
Some city leaders have been mildly critical, publicly, of inactivity at the Arena in recent months. Since July 1, only two events have been held at the facility – the Stimulate This Tour featuring the rock band Staind, and a lightly attended Legends of Rock cover band event.
The audit does not include any money expended for physical improvements to the building or the cost of construction during the period.