Canadian Finals Rodeo has been an unexpected drag on Westerner’s finances but CEO Mike Olesen remains confident the event can prove profitable.
The 2021 event — the first since the rodeo was postponed in 2020 because of the pandemic — proved the most successful, but last year bad weather took a toll.
“It was an absolute disaster from a weather point of view and that really affected the event. It could have been such a good year for us otherwise if we didn’t experience those challenges.”
Westerner lost about $160,000 on the 2022 event, not including an estimated $300,000 worth of staff time co-ordinating the finals. Since 2018, the finals has cost Westerner about $1.45 million.
“Any major event takes time. It grows from where it starts and I think it can get there (to profitability), but it’s still a long ways to come.”
On Monday, city council unanimously voted to provide a $1 million emergency line of credit to the Westerner and ease loan repayment requirements. It is expected Westerner will not start repaying the loan for up to five years so it can build up its cash reserves and improve its bottom line.
During council debate, Coun. Vesna Higham said it was impossible to overstate the economic impact the rodeo finals has had for the area.
However, for the Westerner the event is an “unsustainable burden in the current iteration,” she said.
Olesen said Westerner Park and the Canadian Pro Rodeo Association have been working together to improve the event’s bottom line.
“We’ve done a lot to renegotiate that contract to work together as two partners in redesigning the finances of the event to have it in a place where it’s more sustainable,” he said on Monday.
“It’s as close as it’s ever been. But we’re basically seeing a maximized event in the sense that we’ve sold just bout every ticket every year and we’re generating a lot of great sponsorship at a level that makes sense for an event of that size.”
But its current form as a loss leader for the Westerner, at the same time, generating an estimated $35 million in economic spinoffs for the region, has been difficult financially, he said.
While the event is close to break even, revenues have been up and down.
“I don’t think any two years have been the same,” he said. Red Deer hosted the first rodeo finals in 2018 and it ran two years until the pandemic forced the postponement of the 2020 event for a year.
Meanwhile, Westerner Park’s financial year ends on March 31, and it is expected to have a surplus of about $1 million. However, that includes a $3 million grant from the city, which was used to make the first payment on a $19 million city loan to cover what was left owing on the Exhibition Hall.
Before the recent financial difficulties, Westerner averaged annual surpluses of around $1 million, which Olesen said was a “reasonable” return for a facility of its size. The decision to borrow about $20 million for the 70,000-square-foot Exhibition Hall opened in 2019 along with pandemic-related challenges hurt finances.
The Westerner is not the only key city amenity that has fallen on hard financial times. The city-owned River Bend Golf and Recreation Area has also struggled to repay a $1.7 million loan the city provided in 2004 and of which $1.5 million is still outstanding.
Council gave them some financial breathing space last October by pushing back repayment obligations until next year.
Mayor Ken Johnston acknowledged the similarities between River Bend and the Westerner’s situations.
However, a detailed Relationship Framework Agreement signed with the Westerner provides a higher level of ongoing financial scrutiny, he said.
“The material difference between the two is the whole Relationship Framework Agreement,” said Johnston. “It’s that constant checking in. It’s that financial accounting, it’s that financial reporting…”
Johnston said the ongoing oversight from the city’s number crunchers is akin to taking regular “blood pressure checks” on the Westerner.