REAL facing ‘worst-case scenario’ of $6.8M deficit in 2020

Array of events cancelled by virus

A truncated CFL season, the loss of the Grey Cup festival in Regina and a host of cancellations due to COVID -19 has thrown the Regina Exhibition Association Limited’s (REAL) 2020 outlook into disarray.

President and CEO Tim Reid said REAL, which operates the Evraz Place grounds, was on pace to profit $1-million this year. That all changed when concerts, events and the Grey Cup festival were cancelled.

According to Reid, REAL is bracing for a worst-case scenario of a $6.8-million deficit in the coming year.

That worst-case scenario means REAL not being able to return to normal operations before year’s end.

Before the pandemic, REAL was anticipating a strong year.

Since the pandemic hit, the REAL workforce has been slashed from approximately 1,700 employees to 55, according to Reid, explaining the organization is not eligible for the federal wage subsidy because it is municipally owned.

In 2019, REAL didn’t quite meet its financial predictions, but the company made close to $200,000 in profit.

“Some of our projections just didn’t turn out the way we thought they would,” said Reid.

REAL was anticipating that Garth Brooks would play three shows instead of two, the Regina Pats underperformed — leading to declining ticket sales — and Canada’s Farm Progress Show made $250,000 less than anticipated.

The Tim Hortons Heritage Classic, however, was a stronger money-maker than anticipated.

But even with that, the profit in 2019 was more than offset by the infrastructure and buildings at Evraz Place depreciating in value by almost $12 million.

“Every year our assets depreciate by $10 million, we have to be generating that kind of cash to keep our assets to the same level they once were,” said Reid.

At the moment, REAL is not able to generate that much money each year.

REAL operates Evraz Place with Economic Development Regina, the Regina Downtown Business Improvement District, and the Regina Warehouse Business Improvement District.

Saskatchewan Roughriders games make up only a sliver of annual revenue for REAL. According to Reid, each Rider game brings in about $60,000 to $100,000, which translates to between $700,000 and $1 million annually.

“Arenas don’t generally make money for us,” said Reid.

By comparison, Canada’s Farm Progress Show, which has been postponed from its normal June dates, generates about $1.2 million to $1.5 million in earnings.

“The loss of that three-day event is actually more significant than the entire Rider season for us or, frankly, the Grey Cup,” said Reid.

If the entire CFL season is scrapped in addition to losing the Grey Cup festival, Reid projects a loss of $2 million.

Reid said two major unannounced shows for 2020 (one country, one rock) were cancelled at Mosaic Stadium. Reid wouldn’t say who was slated to play, but hinted that there would be an effort made to get them here in 2021.

The summer months, with the Queen City Ex and Canada’s Farm Show, generate much of the company’s profit year after year.

The uncertain future and the potential damage wrought by COVID-19 has prompted REAL to consider shifting focus to more diverse means of making money, including bringing a grocery store, movie theatre, restaurants or retail outlets to the grounds.

But Reid said the moment the Saskatchewan Health Authority gives the go-ahead, REAL will be able to pack its event centres and halls.

“Our bookings are full,” said Reid. “We don’t know when our business turns back on.”