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Rochester Ends SMG’s Blue Cross Arena Contract

Rochester Americans

Rochester, NY is ending SMG‘s operating agreement for the city-owned Blue Cross Arena at the War Memorial, a decision that comes more than a year before it was to expire. 

SMG had managed Blue Cross Arena at the War Memorial since 2000, and its latest three-year agreement with the city was to run through December 2019. However, Rochester officials revealed late last week that they are ending that contract, a move that becomes effective later this month.

Financial issues are at the root of the split, though the two sides are offering different accounts on what caused those problems. Rochester officials are saying that SMG had failed to meet certain revenue goals, forcing costly subsidies from the city. SMG, meanwhile, counters that the city was not meeting its operating expense requirements, a claim that is being refuted by Rochester officials. More from the Democrat and Chronicle:

City budget records show taxpayer subsidy of Blue Cross Arena has oscillated in recent years, and is projected to top $1.2 million in the fiscal year beginning July 1. That is substantially more than the current year, but less than the year before, and the arena has a busy fall lineup with comedian Jeff Dunham and singer/songwriters Luke Bryan and Josh Groban on the schedule….

[SMG general counsel Bruce Hanson] said it wasn’t SMG failing to live up to the contract terms, but the city failing to cover operating expenses as required, then coming to SMG with concerns. He said SMG was “surprised” by the city’s action, but also that he suspected the city and Sabres started talking about facility management “a long time ago.” Nonetheless, he said, the company planned to “put all this behind us” and work toward an orderly handoff.

[City Corporation Counsel Timothy] Curtin called the claim that the city had not allocated funds toward operating expenses “absolutely not true.” SMG was paid its management fee, he said, “and we had to cover all operating expenses irrespective of the income, so we got into a situation where the revenues weren’t even close to expenses, and that’s why we took the action.”

The city and SMG are midway through a three-year contract, which is set to expire at the end of 2019. Terminating the agreement involves amending the contract, to set the new termination date, and entering into some sort of wind-down agreement. All that was finalized by day’s end, Curtin said.

The city is expected to pursue another operator for the arena. Blue Cross Arena at the War Memorial is used for a variety of events and is home to several teams, including hockey’s Rochester Americans (AHL). The Americans are owned by Pegula Sports and Entertainment, owners of the NHL’s Buffalo Sabres, NFL’s Buffalo Bills, and other sports franchises, and the city is talking with Pegula Sports and Entertainmentabout assuming management of the arena.

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