Media mis-report “showdown” between Richard Butts and Harold MacKay over Metallica show

Under the headline “Concert promoter agrees to pay HRM thousands,” last week, CBC broadly implied that concert promoter Harold MacKay had paid back about $40,000 of the the $359,550 lost in the Common concert fiasco:

The city had been trying to recover approximately $359,550 — a portion of a $400,000 advance issued to MacKay’s former company for the Black Eyed Peas and Alan Jackson concerts.

Tickets sales for the concerts were poor and the municipality ended up losing the money.

Sources told CBC News the city told MacKay that if he paid a settlement of $40,000, it would not withhold municipal services for the Metallica concert next month. The July 14 concert is being put on by MacKay Entertainment Inc., run by MacKay’s wife.

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Although Halifax Regional Municipality officials declined to comment on the story on Wednesday, they confirmed there are ongoing discussions about how to recover the rest of the money.
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Today, in his column in Metro, Stephen Kimber takes the ceeb’s implied recovery of past due amounts from MacKay and runs with it:

We don’t know the details — transparency is not the Halifax way — but we can surmise Butts squeezed MacKay. Pay back last year’s grant or no services — and no concert.

It wasn’t pretty. And it may not have been entirely legal. But Butts had MacKay by the same short hairs MacKay employed in reverse to such great effect last year — the threat to cancel the concert, but this time if MacKay didn’t come up with cash.

In the end, he did. Not much. Probably about $40,000 of the $350,000 the city shelled out to him last year.
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But there’s no evidence whatsoever that MacKay has paid one penny of the $359,550 related to past Common concerts. As far as I can determine, MacKay is under no legal obligation to do so, and although we don’t know for certain, it certainly looks like it was MacKay who brought the battle over Metallica services to the media in the first place.

So what’s this $40,000 all about, if not money owed to the city?

Put simply, people are confusing two pots of money. One pot of money is the $359,550 lost on last year’s Black Eyed Peas and Alan Jackson concerts—money I would argue neither MacKay nor the city owes anyone. Rather, I argue, it’s simply a loss to the balance sheets to Trade Centre Limited. TCL gave an invoice for the money to the city, but the city’s proper response should be to tell TCL to take a hike. In any event, there’s no indication MacKay has paid any of this to anyone.

The second pot of money is whatever it’s going to cost to provide city services—police, fire, building and food inspections, etc.—to next week’s Metallica show. We don’t have a precise figure for this pot of money, but we can get a pretty good idea from the money the city spent for “in kind” services to past Common concerts. As auditor general Larry Munroe revealed in his investigation (pg. 37):

The accounting for the value in kind services was not consolidated in one place, making it difficult in most cases, to determine the actual total spent. Additionally, in 2009 and 2010, the costs for the two concerts were recorded together. Therefore, we cannot determine how much was spent on the individual concerts in these two years. It is clear that HRM provided more than the maximum set by Council in both 2008 and 2009 (there were no concerts on the North Common in 2007). In 2007, Council approved $100,000. There was one concert in 2008 which occurred under this approval and we were able to identify from the official financial records, at least $169,655 spent for in kind value items. In 2009, Council approved $150,000 per concert up to $300,000. There were two concerts held and we were able to identify from the official financial records, $384,129 for in kind value items.

The city’s accounting for in kind services was so shoddy we have no idea what the money was spent on, but it seems reasonable to assume that a good portion of it was for the same sort of police, fire, building and food inspections, etc. services that will have to be provided to next week’s Metallica show. City hall seemed unrestrained in its spending for past shows, and probably overspent in a major way; let’s guess that actual costs for streamlined services provided to the Metallica show will cost somewhere between $50,000 and $100,000, and suddenly the $40,000 being charged to MacKay upfront starts making a lot of sense.

So, in short: MacKay’s payment of $40,000 is related to the Metallica show, and not at all to any past due amounts.

I do think the city’s demand for an upfront payment related to the Metallica show suggests that city administration is extremely wary of losing more money on concerts. That’s a good thing.

But the demand for upfront payment also might suggest that ticket sale figures for Metallica aren’t as rosy as MacKay suggests. As I’ve reported, Parks Canada insists on a per ticket royalty payment, so is tracking ticket sales, and those figures are most likely conveyed to the city so it can adequately plan for police and fire services; I’m guessing that city hall started becoming alarmed that further losses to the city would result to this show if, as with the Alan Jackson and Black Eyed Peas show, MacKay can not make good on money owed and closes down shop.

At some point, there will be another public accounting of the $359,550, and we’ll know for sure what was and wasn’t paid, and by whom. I’ll eat crow if I’m wrong, but there’s no indication whatsoever that MacKay’s $40,000 payment to the city has anything to do with the $359,550.

This article appears in Jun 30 – Jul 6, 2011.