LAWRENCEVILLE - Meeting a commitment to fund minor league baseball in Gwinnett could spell financial worry for the Gwinnett Convention and Visitors Bureau, but the chairman of the board said he does not want to rely on profits from the arena to pay for the stadium.
As part of a deal with between the bureau, the county and the Atlanta Braves, whose Triple-A affiliate is scheduled to begin playing games north of Lawrenceville next April, the bureau pledged to give up to $400,000 each year to pay back bonds to construct the $45 million stadium.
In addition, the bureau must set up within five years a capital fund for major repairs - $500,000 that must be replenished when money is spent.
"Early on, when we started getting serious with the situation, we knew we would have to have a financial obligation," said bureau board Chairman Richard Tucker. "We believe it was in the mission of entertainment and trade shows and stuff. We've got to spend it for the public good."
The bureau, which provides marketing and hosts conventions and events to boost the county's tourism industry, operates on a portion of hotel-motel tax revenues. While a prior agreement with the county gave the bureau a flat revenue stream of $2 million, the organization now receives a percentage of revenues, which fluctuates near the $2 million level.
Looking at those numbers, the $400,000 annual commitment is about 20 percent of the bureau's budget, but the financial situation is more complicated, explained Greg Hayes, a certified public accountant whose firm works for the bureau.
The board keeps a separate ledger for the Gwinnett Center. For years, the convention center was subsidized by the county's hotel-motel tax, but it has turned a profit since the Arena opened five years ago.
This year, that profit is expected to subsidize the spending of the bureau, although Hayes said spending may be cut short of the projected $241,606 deficit.
After paying a fee to SMG management company and including the GCVB's extra costs, the Arena is expected to turn a profit of about $400,000, Hayes said.
Tucker was surprised to find the number to be the same amount owed to the county for the baseball deal, beginning next year, but he said he did not intend to use Arena profits for the stadium.
Instead, the bureau already earmarked $2 million of reserve funds for the first five years of the Braves deal. Beginning with the next budgeting cycle this fall, Tucker said he wants to figure out a way to afford the stadium through the GCVB side of the budget, either raising revenues or cutting expenses to find the cash.
Then, the Gwinnett Center profits can continue to be directed toward a master plan for the Sugarloaf Parkway campus, plans that include the building of a four-star hotel on the site.
"There are certainly no dedicated funds from the Arena going to the stadium. They are two separate entities," Tucker said. "Over time, any excess profits generated by the Arena will be spent on or about the campus of the Arena. We fully intend to meet all our obligations at the Arena, and the stadium will be a separate animal."
Tucker pointed out that the stadium obligation is "up to $400,000," a commitment that was made because forecasters cannot clearly predict other stadium revenues, besides a $250,000 annual rent from the Braves. But money will also be generated through a $1 per ticket fee, which will have a minimum revenue of $400,000, parking fees, the selling of naming rights and a car rental tax, which became effective April 1. If those revenues are high, the bureau's obligation could be reduced.
The bureau has not determined how to fund the $500,000 maintenance fund, but the board has five years to fill it. Tucker said he has no problem with that commitment because he wants the stadium to be a well-maintained, aesthetically pleasing facility.
By the way, in the Gwinnett Center budget, the bureau is obligated to set aside $1.2 million a year for repairs. But in the stadium contract, the Braves must make any annual maintenance expenditures, leaving the big-ticket items such as scoreboards for the fund.
The bureau will begin setting aside money for the fund next year, Tucker said, pointing out that the board has held money for several other projects - including a parking deck currently under construction at the Gwinnett Center - which may not have to be spent.
"We've got a great story to tell, being stewards of the money, spending money that needed to be spent, saving money that needed to be saved," Tucker said of the GCVB's financial situation, although he acknowledged the stadium expense will require some hard decisions. "It's going to take some tightening, but I think it's achievable."
Tucker said the Gwinnett Center profits may help shore up the stadium's finances in the first several years.
"We have the flexibility of doing that, but I hope anything we do like that would be short term," he said. "We think the stadium will be financially successful on its own."