Wachovia Arena manager’s numbers kept secret
Lawyers disagree about decision not to disclose contract’s financial info
By Steve Mocarsky
Times-Leader Staff Writer
WILKES-BARRE TWP. – The board that oversees Wachovia Arena last week refused to release the financial terms of a new contract for management of the facility, and attorneys disagree on the legality of the decision.
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The Times Leader requested a copy of the contract between the Luzerne County Convention Center Authority and SMG – the company that has managed the arena for most of the last decade – after the authority board approved a new 10-year contract at a public meeting on May 13.
Authority solicitor Murray Ufberg had said he would release the contract after Chairman Patrick Judge signed it. Judge was out of town and had participated in the May meeting by conference call.
Ufberg provided the contract to a reporter at the June 10 meeting along with a letter stating that the newspaper’s request for the contract was “granted in part and denied in part.”
“Certain information … which concerns SMG’s compensation and other financial information which is relative thereto, has been redacted because it constitutes confidential proprietary information,” which is exempt from disclosure under Section 708(b), subsection 11, of the state Right to Know Law, the letter states.
Ufberg said SMG “engages in the management of a whole bunch of facilities. When dealing with an entity like the authority, they view that information – because it is competitive with other locations – to be proprietary,” he said.
Ufberg said the financial information would become “subject for every other arena” during contract negotiations, and releasing it would be “unfair” to SMG.
But Melissa Melewsky, an attorney with the Pennsylvania Newspaper Association, said the section of the Right to Know Law to which Ufberg referred doesn’t apply to financial records.
“Here, we’re dealing with a contract demonstrating how public money is being spent, and I think that’s clearly a financial record,” Melewsky said.
Melewsky said the Right to Know Law clearly states that only information exempted in eight subsections of the law may be redacted from a financial record, and the section that Ufberg cited is not one of them.
“Even if a financial record contains a trade secret or proprietary information, the Right to Know Law says it’s still public,” Melewsky said.
“When you have private companies dealing with a public agency, they have to realize that with that relationship, there’s a certain amount of accountability attached for the expenditure and disbursement of public funds. That money doesn’t magically become secret because it’s being paid to private individuals,” she said.
SMG’s compensation detailed
According to the contract, SMG is to receive compensation in several forms.
First, there is an annual “fixed fee,” the amount of which was redacted from the contract provided to The Times Leader. The fixed fee will increase each year by the percentage change in the Consumer Price Index.
SMG will also receive an annual “incentive fee,” which will be a percentage of operating revenues for a fiscal year. The fee will be capped. The percentage of operating revenue and the amount of the cap were also redacted.
Operating revenues will include such things as the arena’s take, if any, of ticket sales; ticket surcharges and fees; fees paid to the arena by concessionaires; rentals fees and sponsorships – excluding revenue from the sale of naming rights to the arena.
SMG also agreed to make a “capital contribution” to the arena “for capital improvements and capital equipment purchases relating to the food and beverage operations at the facility as well as other types of improvements, as mutually agreed upon” by SMG and the authority. The amount of the contribution was redacted.
If SMG’s contract is terminated before 10 years, the amortized value of the equipment purchased will be refunded to SMG.
The contract also calls for SMG to deposit money – the amount of which was redacted – into an “At Risk Event Fund” to be used for “promoting and developing new event activity” at the arena. Half the net profits (if any) from these events – up to $100,000 – will go back into the fund. And SMG will be able to keep all the money left in the fund at the termination of the contract.
SMG and the authority must agree on which events the fund will be used to promote and develop, and the amount to be used for each event.
SMG’s Web site touts it as “the world leader in venue management, marketing and development.” It was founded in 1977 with the management of its first facility, the Louisiana Superdome, and grew to manage entertainment and convention venues across the United States and in Europe.
The company now manages 77 arenas, 65 convention centers, 48 theaters or performing arts centers, 14 specific-use venues and nine stadiums in the United States, plus more than a dozen other facilities in Europe and Mexico.
