Fort Smith negotiates outside center management

FORT SMITH — The city is moving forward to have a venue management and event programming company manage the Fort Smith Convention Center.

The Board of Directors heard from the Oak View Group of Los Angeles during a study session Tuesday. The city administration will negotiate a contract with the company.

The center is managed by the Advertising and Promotions Commission, City Administrator Carl Geffken said before the study session. A city employee, Tim Seeberg, serves as the general manager of the venue.

The city is considering an outside company, Geffken said, to see if there is a way to run it more efficiently.

“It’s just … the city’s continued path of examining what the city has done in the past, and are there different, better ways that can provide better service, more service at the same cost, or do the same with less cost,” Geffken said. “It’s just … constantly evaluating what we do.”

Geffken said the city subsidizes the convention center with $777,000 per year from the general fund. What the center doesn’t spend goes into its fund balance for future projects.

Seeberg said during a directors study session June 9 the center had record revenue for a sixth-consecutive year — taking in $912,661

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during 2019, a 9.49% increase over the $833,546 for 2018. This includes rental income and revenue from the sale of beverages, concessions and catering.

The convention center’s estimated impact in the Fort Smith area was more than $7.29 million, according to Seeberg. This resulted in $189,700 going to the city in sales-tax revenue.

The center also saw “an incremental increase” in expenses during 2019 compared with 2018, Seeberg said. This was a difference of 0.13%, rising to over $1.61 million. However, the increase in revenue, as well as cost control, resulted in a reduction of $77,042, or 9.9%, in its operating subsidy.

City Director Neal Martin described the center at the meeting as a “loss leader,” with the city spending money to generate economic activity.

In a memo to the board of directors, Geffken wrote the Oak View Group approached the city in the spring 2019. Shura Garnett, current senior vice president of convention centers for OVG Facilities, a subsidiary of the Oak View Group, made a presentation concerning the company’s ability on June 25, 2019.

Later that year, Geffken wrote, the city released a request for proposals for a company to manage the convention center. The Oak View Group was ultimately chosen after several proposals were submitted and reviewed.

The presentation of the proposal Tuesday was from Garnett, Sims Hinds, senior vice president of development for OVG Facilities, and Maria Rainsdon, general manager for the Grand Junction, Colo. venues for OVG Facilities.

Hinds described OVG Facilities as “very entrepreneurial.” The company’s list of clients it manages includes nine conference and convention centers, 20 arenas, seven theaters and amphitheaters, five stadiums and five multi-purpose complexes throughout the country.

Among the things proposed for the Fort Smith Convention Center, Hinds said, are a commitment to customer service, bringing in more events such as concerts, conventions and trade shows, and monetary investment.

“We’re the only company in our industry that consistently invests money in the facilities that we’re asked to operate, and our proposal to you has us investing over $500,000 in building out the kitchen so we can significantly increase your revenue, thereby significantly decreasing the operating losses that you’ve been subsidizing,” Hinds said.

Garnett said OVG Facilities saw a great opportunity to bring in-house food and beverage to the convention center.

“We do that for a variety of reasons,” Garnett said. “Quality of what we serve is uppermost in our mind, but secondarily, it is a huge source of revenue to your convention center, and to your bottom line, that you’re missing out on, and it can significantly reduce your operating shortfall.”

Garnett said for an $500,000 investment, OVG Facilities could build a full-service kitchen to serve up to 1,500 people. The company believes this would increase the convention center’s net food and beverage profit from $100,000 in the first year to $300,000 or more by the third year.

“We feel like what we would do is add in a bigger network, maybe a little more structure, a little bit more support from an industry standpoint to give them the tools and the ability to perform, and even out-do, … the good things they’ve done in the past,” Hinds said

Thirteen city employees work at the convention center, according to Geffken on Wednesday. In the event the city signs a contract for Oak View Group to manage the facility, Geffken said employees would usually become employees of the company, but they could remain city employees depending on what the city decides.