The city’s controversial Starbucks franchise opened in Servus Credit Union Place Friday morning, looking to pump more revenue into the money-losing facility even as there were rumblings of both good and bad news on the sponsorship front.
By 9 a.m., patrons were exiting the rec centre holding Starbucks drinks with other users inside lined up underneath the franchise’s custom-designed hockey stick light fixtures.
Facility director Diane Enger said the feedback from customers has been positive with no hint of the criticisms that dogged the idea from its inception.
“It’s been well received by our members and users coming in the building,” Enger said. “Service has been excellent and it’s a great addition to Servus Place.”
In its first full year of operations, administration is conservatively budgeting about $47,000 in net revenue, ramping up to roughly $90,000 each year for the next five years. The new franchise features two permanent and 15 casual staff.
The city’s decision to pursue the franchise was critically received when it was announced earlier in the year, as it would put the city in direct competition with other tenants, as well as other coffee shops in the city, all of which are privately operated.
But the city is more focused on bringing Servus Place’s operating deficit as close to break-even as possible. The facility is forecasting a deficit of about $670,000 for 2011, down from a projected $862,000. For 2012 the forecast is for a deficit of about $837,000, climbing to $1.2 million in 2013. The facility had a $2.3-million operating loss in its first full year of operations. Along with the Starbucks franchise, it has also voted to increase user fees at the facility by an average of 4.35 per cent next year.
But more funding for the city might be on the way in the form of a significant corporate sponsorship. Left outstanding from the facility’s pursuit of sponsors in 2006 for naming rights to different building components is Performance Arena. Enger informed councillors Thursday night she has a letter of intent to present to administration and council, expressing interest in the naming rights to the arena.
Enger wouldn’t disclose the name of the potential sponsor in a subsequent interview. She did say the proposal closely resembles what the city was looking for in 2006 when it announced all of the sponsorship opportunities for Servus Place. Naming rights for Performance Arena, the second-most significant in terms of dollar amounts, were valued at $1 million over five years.
Enger said those funds, which haven’t been built into the budget, could help the facility’s bottom line.
“It will help contribute,” she said.
But any financial support from securing that sponsorship will be offset by the loss of Sturgeon County as a sponsor. The county had contributed $100,000 for the last five years. Its agreement expires Dec. 31.
Answering a question from Mayor Nolan Crouse Thursday night, acting city manager Chris Jardine was not optimistic the sponsorship could be renewed.
“I’d be remiss if I didn’t point out that, in conversations I’ve had with my colleagues, it appears the sponsorship from Sturgeon County is extremely at risk,” Jardine said.
County Mayor Don Rigney all but confirmed that Friday morning, saying though council had yet to vote on anything official, he sensed there was little interest in renewing the agreement.
“My take on it now is that council isn’t prepared to support it,” Rigney said. “That’s the indication I’m getting and I think unless [Coun. Ken McGillis, a former supporter of the agreement] is having second thoughts, it would be unanimous.”
Crouse was extremely disappointed with Rigney’s statements, but said he was waiting to hear something official from the county. The city had proposed increasing the value of the contract to $125,000.
“Sooner or later they will finish their budget work and if that’s where they proceed, we’re disappointed,” Crouse said.
