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View Full Version : FargoDome in the Red!



bisonaudit
01-24-2006, 06:49 PM
According to the City of Fargo audited financial statements the FargoDome Enterprise Fund has experienced operating losses of $3.43, $3.08, and $3.66 million for 2002, 2003, and 2004 respectively. These numbers do not include sales tax revenue or investment income on idle cash; nor do they include interest expense on the bonds used to build the Dome. This seems reasonable, as the sales tax receipts are intended to pay the debt and I believe that both will be going away in 5 years or so, and in any case the sales tax was never intended to be a long-term operating subsidy for the building.

These numbers do include large non-cash charges for depreciation of $2.74, $3.06, and $2.95 million. But operating income before depreciation is still not close to the numbers the Forum reported for any of these periods. Approx. $50,000, $0, and $110,000 positive per the information released to the Forum and discussed at the FargoDome's finance committee meetings. Compared to losses of $690,000, $20,000 and $710,000.

If any publicly traded company presented one set of numbers in a public meeting and then filed audited financial statements with different numbers they are required by law to provide a reconciliation of the differences. The FargoDome owes anyone who paid Fargo sales tax the same.

On another important measure, operating cash flow the Dome is doing better but not as well as they'd like us to believe. 2002 - $28,000, 2003 - $893,000, 2004 - ($885,000).

What happened in 2004? If you believe the finance committee the Dome rebounded from a break even 2003 to make $110,000. If you believe Eide Bailly their operating income decreased $580,000 and cash flows from operations decreased a whopping $1.78 million.

I think we're owed explanations for the differences between the finance committee numbers reported by the Forum and widely consumed by the public and the audited financial statements.

MinotBison
01-24-2006, 09:51 PM
According to the City of Fargo audited financial statements the FargoDome Enterprise Fund has experienced operating losses of $3.43, $3.08, and $3.66 million for 2002, 2003, and 2004 respectively. *These numbers do not include sales tax revenue or investment income on idle cash; nor do they include interest expense on the bonds used to build the Dome. *This seems reasonable, as the sales tax receipts are intended to pay the debt and I believe that both will be going away in 5 years or so, and in any case the sales tax was never intended to be a long-term operating subsidy for the building.

These numbers do include large non-cash charges for depreciation of $2.74, $3.06, and $2.95 million. *But operating income before depreciation is still not close to the numbers the Forum reported for any of these periods. *Approx. $50,000, $0, and $110,000 positive per the information released to the Forum and discussed at the FargoDome's finance committee meetings. Compared to losses of $690,000, $20,000 and $710,000.

If any publicly traded company presented one set of numbers in a public meeting and then filed audited financial statements with different numbers they are required by law to provide a reconciliation of the differences. *The FargoDome owes anyone who paid Fargo sales tax the same.

On another important measure, operating cash flow the Dome is doing better but not as well as they'd like us to believe. *2002 - $28,000, 2003 - $893,000, 2004 - ($885,000).

What happened in 2004? *If you believe the finance committee the Dome rebounded from a break even 2003 to make $110,000. *If you believe Eide Bailly their operating income decreased $580,000 and cash flows from operations decreased a whopping $1.78 million.

I think we're owed explanations for the differences between the finance committee numbers reported by the Forum and widely consumed by the public and the audited financial statements.

I would like to see that explanation as well.

Unfortunately, I have an old dial up system, and it takes longer than I am willing to wait to access some of the information in the CAFR.

BisonBryce
01-24-2006, 11:11 PM
The forum today said that the Dome was in the black.

DIBISON
01-24-2006, 11:23 PM
The forum today said that the Dome was in the black.

Yes, as listed on the front page of The Forum, the FargoDome ended 2005 in the black, with a Net Income of $160,000. This was also an increase over the Net Income posted for 2004.

I'm not concerned about "playing" with the numbers, the FargoDome has produced revenues that have exceeded expenses, for every year that it has operated.

tony
01-25-2006, 12:04 AM
Reports to the public should always be accurate and never misleading.

I kind of think people are interested in whether the Dome would be self-sufficient without tax support beyond paying down the debt. The cash flow suggests that this isn't happening.

bisonaudit
01-25-2006, 05:45 PM
My point is that the numbers presented at the finance committee meeting and reported by the Forum may or may not be providing taxpayers with a complete and accurate picture of the Dome's financial performance.

The income numbers discussed publicly are considerably different than those in the audit report.

There may be valid reasons for this, but without seeing a reconciliation and commentary there's no way to gage the legitimacy of the Dome's assertion that they are making money.

RedRiver
01-25-2006, 06:44 PM
My point it that the numbers presented at the finance committe meeting and reported by the Forum may or may not be providing taxpayers with a complete and accurate picture of the Dome's financial performance.

The income numbers discussed publicly are considerably different than those in the audit report.

There may be valid reasons for this, but without seeing a reconciliation and commentary there's no way to gage the ligitimacy of the Dome's assertion that they are making money.

The bottom line is that the FargoDome revenue exceeded expenses during 2005. As a Fargo taxpayer that is all I am concerned about, rather than having it the other way around like the Alerus Center.

tony
01-25-2006, 07:17 PM
I think bisonaudit's point is that, despite the story in the Forum, it's hard to see how they come to the conclusion that the FargoDome is in the black. Both the Alerus and FargoDome use sales tax money to pay the debt rather than operating revenue, so neither is making money in any real sense. The difference between the Alerus and Fargodome is that (I think) the Alerus counts 1/4 of the sales tax collected as Alerus Center revenue.

I'm not the person in my family qualified to read an income statement though (personally, I'd like to see a detailed income statement for the FargoDome separate from the rest of the city budget). However, unless I'm misinterpreting something, the FargoDome tax takes in quite a bit more money than is needed to pay down the debt ($3 million more this year). However, it doesn't look like this money is being invested (or at least not invested well) because investment income was only 30k.

MinotBison
01-25-2006, 08:07 PM
Just out of curiosity, over what period of time is the Dome itself being depreciated, and what is the method of depreciation?

bisonaudit
01-25-2006, 08:46 PM
Tony:

You're close to my point.

I'm saying excluding the debt payments, sales tax revenue, and any investment income on the excess sales tax revenue, FargoDome operations are losing money. Even if you exclude the depreciation on the building, they're still losing money.

This is my reading of the Audited Income Statements of the FargoDome Enterprise Fund based on the level of detail provided in the 2002, 2003, and 2004 City of Fargo CAFR.

The numbers in the Forum are what the FargoDome says they are. The numbers in the CAFR start at the FargoDome and are audited by the Fargo City Auditor as well as the independent accounting firm Eide Bailly.

The numbers in the Forum may be reasonable and correct, mearly prepared on a differenct basis than the numbers in the CAFR. That is different expenses or revenues my be included or excluded in their calculation of income. Those inclusions and exclusions may be reasonable and appropriate but without additional information there's no way to tell.

Without more information I'm inclined to trust the audited numbers over the numbers in the newspaper.

If a public company issued a press release that said they made over $100,000 for the year and then, 6 months later, their audited fiancial statements said they actually lost over $3,000,000, with no explanation what do you think would happen?

My point is, we're entitled to the explanation.

sambini
01-29-2006, 06:25 PM
Give John Cosgriff a call. He is like a watchdog for the Fargdome. He was the one who questioned the football offices etc up there. You make very good points Bisonaudit.

bisonaudit
01-30-2006, 08:15 PM
Thanks for the suggestion. I've emailed Mr. Cosgriff.

In the interim, I have recieved some additional information from the FargoDome. They were quite helpful and prompt. The email response that accompanied 2004-2005 income statements indicated that the information provided to the finance committee and reported in the Forum has been prepared on the same basis since the inception of the Dome so year to year comparisions of this information would be a valid way to assess changes in operating performance.

However, this information is not prepared on the same basis as the City's audited financial statements. The information reported in the Forum only includes revenue sources and costs which the management firm has a reasonable degree of control over. This is a logical way of assessing the performance of the management firm, but may or may not provide a complete picture of the facilities financial health.

For 2004 the city reports $474,202 more revenue than the FargoDome as well as $1,302,400 more operating expenses (excluding depreciation). So there's still an $828,198 difference in the operating income. If these additional revenues and costs are recurring in nature I believe that they should be included in any assessment of the facilities performance.