The City of St. John's needs to figure out if Mile One Centre is there to make a profit or be an economic driver, according to a report commissioned by the city.

Coming up with a clear and concise mandate that will last through changing boards of directors or city councils is key in making St. John's Sports & Entertainment a functioning entity, according to the report, but won't solve the operating cost problem.

"That's the challenge," said city councillor Jamie Korab, who chairs the SJSE board, Wednesday. "Are we trying to have a balance where it doesn't cost any money, or is it an economic generator? In a way, it's a bit of both."

Coun. Jamie Korab is the new chairperson of the St. John's Sports and Entertainment board of directors. (Jeremy Eaton/CBC)

The report from consulting firm KPMG was released Wednesday.

It's a jurisdictional comparison for St. John's Sports & Entertainment Ltd., the organization that runs Mile One Centre and the St. John's Convention Centre.

The report concludes there is "a lack of a clear written mandate" to guide decisions and strategic planning for the direction of the organization, which was incorporated in 1997.

Who knows what could happen if someone buys it? It could change its use. - Jamie Korab

But since then, the operations have been modified by various boards and the interests of city councillors, while lacking a "concise relevant mandate throughout its operating history."

Without that clear direction, the organization has been "without a compass to navigate strategic operating decisions," the report states.

That lack of strategy is "exacerbated by the organization's lack of a short-term and long-term business plan," the report said, adding that a "laser-focused business plan would provide a guide" for all strategic operational decision to be weighed against.

St. John's Sports & Entertainment operates the St. John's Convention Centre and Mile One Centre in downtown St. John's. (Jeremy Eaton/CBC)

Korab said SJSE came up with a new mandate in June, and is working on a new business plan right now.

An estimated $5.9 million, or 64 per cent of St. John's Sports & Entertainment's operation expenses, is fixed — meaning profitability is contingent on how much the facilities are used, and every single event counts.

Compared with similarly sized venues in also comparable cities, it's a familiar struggle, KPMG said.

The struggle could intensify this year, with the St. John's Edge playing 18 home games this year, as opposed to 20 last year.

Korab said any impact on profit will be assessed at the end of the season.

Why not sell?

The report looked into several options, including status quo management, third-party management, or a hybrid of the two, as well as long-term leasing, or selling it off, says the report.

The owners of the Newfoundland Growlers and St. John's Edge have expressed interest publicly about buying the arena, or taking it over on a long-term lease or third-party management.

The teams currently have a 10-year lease, signed in September.

When asked if the city would sell the arena and convention centre, Korab said it would entertain any serious offers that made sense for the citizens of St. John's.

While the city could get out from under the losses of Mile One and the Convention Centre — $2.9 million last year — it would also mean losing control of the facilities.

"Who knows what could happen if someone buys it?" Korab said. "It could change its use. So, it's something we're open to, but there'd have to be an offer for it."

Geographical problem unique to St. John's

Any privatization options would be further complicated by the 10-year lease agreement reached between the city and the St. John's Edge and Newfoundland Growlers.

It would also be unprecedented, according to KPMG's jurisdictional scan.

"To date, we are not aware of any municipally owned medium or large-capacity arena or primary convention centre facility having been sold (or leased long term) in Canada," the report states.

The unique geographical location of St. John's also presents specific marketing challenges for the organization, the report adds.

The Newfoundland Growlers are one of the regular users of Mile One Centre. (Newfoundland Growlers/Facebook)

"Not only does the location present a potential obstacle to convention delegates and event goers, it also presents a logistical obstacle for travelling acts and exhibitors who often transport required equipment by ground," the report states.

No matter which option is pursued by the city, the report said the current lack of a clear mandate and performance measurements "has resulted in general confusion and mild friction between the city, the SJSEL board of directors and SJSEL management," the report states in the conclusions.

It will need to be clarified what business operations the organization should be engaged in, the level of subsidy that it should receive from the city, and key performance indicators against which to measure success.

Once that mandate is established, the city can look at evaluating potential operating models, the KPMG report said.

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