LOWELL - In Global Spectrum's first year managing the Lowell Memorial Auditorium, the historic facility posted an operating loss of $404,072, according to information Global provided the city.
The shortfall for the fiscal year ending June 30 was more than $150,000 worse than the city had projected in the budget approved last year, according to City Auditor Hannah York.
Global replaced Mill City Management, which after 17 years decided not to seek a new contract with the city.
The City Council voted 5-4 last year to approve then-City Manager Bernie Lynch's recommendation that they authorize him to enter into a five-year deal with Global. The contract included an option for the city to extend the pact for three additional years.
Under the deal, the city is responsible for covering all operating deficits. The city had projected a $250,000 deficit in Global's first year.
City Manager Kevin Murphy said he was very troubled by the large shortfall and his administration plans to review documents to verify the amount. Murphy also said he wants to try to rework the pact with Global.
"It is very disturbing," Murphy said. "We are in the process of verifying the figure and negotiating a new arrangement in the future."
Murphy added: "Unfortunately the agreement that was entered into in the previous administration is we would pay for any deficit. There is not a lot incentive to perform well in that type of agreement, so we are looking to change that in the future.
Auditor Hannah York said the $154,072 worse than anticipated shortfall will not affect free cash since the city set up an LMA Enterprise Fund. But the city will have to fund the deficit in the tax rate recap it provides to the Department of Revenue. York told The Sun that several deficiencies were identified that contributed to the shortfall.
"Some shows that were booked in May/June were canceled or rescheduled at the last minute, and several other shows underperformed from their original projections/expectations," York wrote in an email.
The overall shortfall was also greater than the $320,000 annual subsidy the city had provided to Mill City Management to operate the auditorium.
The city's contract with Global eliminated the automatic subsidy, but some councilors opposed to the deal raised concerns that the city was taking on too much exposure by having to cover any losses. If the historic auditorium did not turn a profit under the deal with Mill City, the company took the loss.
Then-Mayor Patrick Murphy voted to approve the contract with Global last May along with Councilors Marty Lorrey, Bill Martin, Joseph Mendonca and Vesna Nuon.
Councilors Rodney Elliott, Ed Kennedy, John Leahy and Rita Mercier voted in opposition. Those four voted in favor of Elliott's motion to ask Lynch to re-negotiate the pact.
Global, a subsidiary of Comcast Spectacor of Philadelphia, already manages the Tsongas Center at UMass Lowell and more than 100 venues worldwide. It was the only firm to bid to manage the auditorium after Mill City announced it was stepping down.
The budget the City Council approved this June calls for the Auditorium to run a $200,000 deficit this fiscal year.
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