Trouble in RiverCentre

St. Paul built a new hockey arena for the Wild and a new convention center for the city. Guess which one is losing money?

Coleman supporters defend the poor performance of the joint operating agreement in 2000 by stating that there were bound to be some bumps and glitches in the transition from public to private management. RiverCentre's performance under SPAC in 2001, however, indicates that the problems can't be dismissed so easily. Put simply, revenues were down and expenses were up yet again compared with 2000.

Ibister says that SPAC has added more staff since taking over in July of 2000, in part to maintain the look and quality of the convention center. It's important to note, however, that the building is less than four years old and that over the last two years more than $750,000 has been budgeted by the city to account for amortization and depreciation expenses at its RiverCentre facilities. Ibister also allows that additional personnel, including four more full-time security workers, were hired "because there are a lot more people around the place." Still, a primary reason for this increased foot traffic is that people are walking through Touchstone on their way to hockey games or concerts at the Xcel Energy Center, where the money they spend on tickets, hot dogs, and beer goes to both SPAC and the Wild--not the City of St. Paul.

Given the physical proximity of the Xcel arena to the Touchstone convention center and Wilkins Auditorium, it is inevitable that conflicts of interest will arise. For example, as part of its management duties at RiverCentre, SPAC is charged with monitoring the performance of Wildside Catering, which is partly owned by the Wild, SPAC's corporate parent. (Fortunately for all concerned, Wildside has improved RiverCentre's bottom line during its 18 months on the job.)

Other conflicts could be fuzzier and less overt. What if a musical act could sell out the Roy Wilkins Auditorium but might also do a pretty good business at Xcel, which happens to have an open date? If electricians are working on a major project to upgrade the power capacity at both the Xcel arena and the Touchstone convention center, who pays the costs? How do you bill promotion expenses for a large event that takes place in the both facilities?

The best way for RiverCentre to get what First Ward council member Jerry Blakey refers to as "its share of the cut" is to assign someone to keep close tabs on SPAC's management operation. The RiverCentre Authority is the agency designated by the city to perform this oversight, but since the Authority's board is made up entirely of volunteers, the person most responsible is the RiverCentre Authority's executive director, who is paid $98,000 a year by the city.

"In my opinion, the executive director has to be somebody who knows budgeting, accounting, fiscal analysis, accounts receivable, accounts payable, tax reporting, financial management--am I making myself clear?" says city council president Bostrom. "We have to get a fair and accurate count of revenues going through that building, and for that we need a controller-type person."

But instead, days before SPAC took over the management of RiverCentre in June of 2000, Norm Coleman appointed Erich Mische.

 

With a blunt, take-no-prisoners style that he honed while serving as Coleman's campaign manager (twice) and spokesperson, Mische is simultaneously one of the most admired and disliked public figures in St. Paul. Even his most bitter detractors would admit he is a shrewd marketer and political operative; even his best friends would acknowledge that finance is not his strong suit. He filed for personal bankruptcy in 1996 (though, to his credit, he eventually paid off his debts), and he generated more buzz than profits as the point man for the high-profile Smithsonian exhibit at the Civic Center back in 1996. Between 1997 and 1999, Mische worked as the director of client services for the public-relations firm Media Rare, which produced the Titanic Exhibit at Union Depot, another extravaganza that made more headlines than money.

Mische left Media Rare in May of 1999 and returned to the city to work as Coleman's director of strategic initiatives at an annual salary of $72,500. It was his job to be Coleman's point man on whatever development schemes the mayor's office was concocting. Thirteen months later Coleman gave Mische a $25,000 raise and added the title of RiverCentre's executive director to his list of duties. Strategically, the move made sense: Coleman had just pushed the RiverCentre Authority to expand its mission into various marketing, promotion, and development projects around the city.

Before Mische's appointment, however, his ability to be an objective watchdog over SPAC's financial management was already hopelessly compromised. When he was at Media Rare, the Wild hired him to help lobby the state Legislature to secure funding for the Xcel arena. When he was working for the city and drumming up support for one of Coleman's earlier baseball stadium proposals, he was assisted by Wild CEO Jac Sperling. Finally, to call attention to any problems in the RiverCentre's joint operating agreement with SPAC would besmirch Coleman's "Chamber of Commerce agenda" for the city and potentially damage the political fortunes of Coleman and Randy Kelly. (After being elected, Kelly appointed Mische--who had left his RiverCentre post in October--to be the city's marketing director.)

In March of 2001, Mische, Deputy Mayor Kimberley, and nearly all the members of the RiverCentre Authority board went before the city council to push for approval of the agency's expanded mission statement. The presentation captured their simultaneous zeal for marketing and lack of interest in either divulging or paying attention to the signs of financial trouble at RiverCentre.

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