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Tuesday, September 17, 2013

City has lost $503,644 in Metro Centre ticket sales

Former Trade Centre Limited president Fred MacGillivray moved the operation without authorization, while the city paid him $486,118.

Posted By on Tue, Sep 17, 2013 at 8:27 PM

The city has lost a half a million dollars over five years in ticket revenue at the Metro Centre. The loss is identified in an audit performed by accounting firm Grant Thornton.

Former Trade Centre Limited president Fred MacGillivray
  • Former Trade Centre Limited president Fred MacGillivray
Since the 1980s, the city has contracted with provincial crown corporation Trade Centre Limited to manage the Metro Centre, which is a city-owned venue. Up until 2007, the Metro Centre had its own ticketing facility called Box Office, but in that year TCL took over the operation, folding it into a bigger operation called Ticket Atlantic. The takeover was not authorized by city council or the TCL board of directors, and was apparently OKed only by then-TCL president Fred MacGillivray.

While Box Office no longer existed, its old bank account, owned by the city but managed by TCL, continued on. It was this account that became the conduit for $7.4 million in secret loans to concert promoter Harold MacKay, meant to finance concerts on the Halifax Common. The last $400,000 of those loans was not repaid; minus a deposit, the city ate $359,550.

In the wake of the concert scandal, city auditor general Larry Munroe discovered the takeover of Box Office, and the lack of documentation for the reimbursement of ticket sales. Specifically, the city would be paid just 40 cents for each individual Metro Centre event ticket sold at Ticket Atlantic, but nothing at all for group ticket sales or for Skyboxes. Munroe requested an audit of the entire Metro Centre/TCL arrangement, and in August, 2012, council directed staff to hire a firm to conduct the audit, at an estimated cost of $50,000. The completed audit will be delivered to council’s audit committee Wednesday.

The audit compares Metro Centre to six other civic arenas in Canada. On average, the other six have about half the revenues of Metro Centre, but by that comparison Grant Thornton shows that Metro Centre is managed reasonably well, turning a slight profit—annual returns of between one and eight percent—on revenues of between $6 and $9 million annually.

But zeroing in on the Box Office issue, the audit shows that Metro Centre has “foregone” an total of $503,644 in revenues it would have received had the Box Office operation remained in place. Oddly, Grant Thornton soft pedals that amount, first by saying that if we break it into six annual payments, it is just $84,000 a year. Then, the auditor makes the remarkable claim that we should not consider the ticket sales of the 2009 International Ice Hockey Tournament; without those sales, the loss would be just $25,000 a year. Still, lost revenue is lost revenue: the city is out a half-million dollars.

Although the text of the audit doesn’t mention it, a table in an appendix to the audit (page 41) shows that, additionally, Metro Centre had been paying half of MacGillivray’s Supplemental Executive Retirement Plan, a pension over and above the normal pension paid to provincial employees. That SERP was approved by the province, and not by city council. Between 2004, the first year covered by the audit, and 2009, the year MacGillivray retired, Metro Centre paid $486,118 into MacGillivray’s SERP plan.

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