The Abbotsford Heat will receive an additional $68,034 from the city due to a profit shortfall in the 2010/2011 season.
That is in addition to the $1,305,511 already allotted to the team to cover its losses.
As part of the city’s 10-year deal with the Heat, a supply fee agreement was created guaranteeing the hockey club a break-even mark of $5.7 million. If the Heat fail to reach the break-even point, the city compensates for the shortfall.
In September of 2011, the city released the final financial figures for the local AHL hockey squad, indicating the $1.3 million shortfall. However, the Heat’s investor group disputed the claim stating the actual shortfall was just under $1.4 million ($1,397,530) a difference of approximately $92,000.
Both sides have been negotiating in an attempt to settle the disagreement.
Pat Soanes, general manager of finance and corporate services for the city said the biggest question involved credit card fees.
“Because the agreement just deals with the revenue side, the differences came down to the treatment of certain expenses,” she explained.
She said credit card fees, the amount of money paid back to the credit card company for “the privilege” of accepting them as a form of payment, totaled more than $60,000. The city consulted with its financial auditors to get an “appropriate interpretation” as to how those fees should be handled. In the end they concluded that the Heat had in fact treated them appropriately.
“The test was if they ever actually got the revenue and they did not. They get the net amount remitted back to them from the financial institution,” said Soanes.
She said now that the issue has been settled, it shouldn’t arise again.
“We have clarity now. Basically, it was an area where we hadn’t really had a conversation about it and there was a difference of interpretation. These are the things that keep accountants employed.”
Lane Sweeting, a member of the investors group that run the Heat said he’s glad that the issue has been resolved and that both sides have clarification on what is revenue and what is an expense.
“It was just a matter of us working our way through four or five items,” he said.
Sweeting said that going into the future, any more small items which “fall into the grey area,” the city and the Heat will talk about it before finalizing financial statements.
“In the future we’re just going to have it pre-approved or pre-determined what it is.”
The official payment to the Heat for the 2010/2011 season is now $1,373,545.
Council is expected to approve the fee adjustment during Monday night’s meeting.
In it’s first year of operation, the Heat lost $450,637 and the city is estimating this season’s losses to be close to the $1.1 million mark.
If that figure is accurate, the hockey club will have cost taxpayers approximately $2.92 million in its first three seasons of play.