Regina Exhibition Association Limited (REAL) is searching for more than five times its normal funding from the City of Regina as we head into the new year.
For the last three years, the city has been funding REAL $1.1 million per year. Now REAL wants more than $5.8 million.
In May, Regina city administration contracted a third-party expert, MNP, to develop an independent financial scenario for REAL that would allow the city to better understand its long-term sustainability.
What they found shows a difficult future for REAL.
“MNP’s report shows that the current business model for REAL does not appear to be self-sufficient in the short term and medium term,” the agenda for Wednesday’s city council meeting reads.
The report notes with current facility use and rates, the majority of REAL’s activities do not achieve the requisite contribution margin (43.8 per cent) needed for operational breakeven.
“If changes are not made in the cost structure and revenues of REAL, the City would need to explore significant additional subsidy amounts or additional debt,” the agenda reads.
REAL is currently facing more than $17 million in debt, much of which comes from when Mosaic Stadium was built.
REAL’s annual financial statement said it lost $5.1 million in 2022, its second worst year behind 2020, when it lost $5.6 million.
Tim Reid, the president and CEO of REAL, said lots of the financial struggle comes out of COVID-19 and not being able to host events.
“Our business just is not coming back the way that it was prior to COVID-19,” Reid said. “We’re a business that makes about half a million dollars a year going into COVID-19 and then our revenues turned off.
“We’re not seeing revenues return the same way and our cost structure is up,” Reid said. “The business model isn’t working today. It doesn’t mean it will never work again, I think it’ll get back to better times, but certainly right now it’s struggling.”
Reid said REAL is a municipally run asset, and thinks the increase in funding will be a sustainable budget.
“We operate almost two million square feet of facilities on behalf of the city, and we do so at a 95 per cent cost recovery,” he said.
Reid expects that next year, REAL will have an operating deficit of $1.8 million.
“Our ability to service that debt really relies on the city,” Reid said. “We can either change the way we operate, or we can ask the city for support. And what we’ve done is we’ve gone forward and said to the city, ‘You’ve asked us for a sustainable budget, this is what we believe it looks like.’”
City council’s executive committee is set to discuss REAL’s request at its meeting Wednesday.
Last week, council voted unanimously to remove Tourism Regina from REAL’s responsibilities. It instead will be operated by the City of Regina.
© 2023 Global News, a division of Corus Entertainment Inc.