Bemidji City Council Voices Frustrations with Sanford Center Financial Situation

At a work session earlier this week, the Bemidji City Council was presented with an update on the Sanford Center’s financial situation by representatives from management company ASM Global. But a number of councilors voiced their concerns due to a controversial request from the firm.

After seasonal fluctuations at the Sanford Center in Bemidji led to it underperforming, ASM Global has informed the city that the center will require an influx of around $350,000 to meet its current and projected cash requirements. ASM Global representatives assured the council that everything will be repaid by the end of 2024.

But what really raised tensions in City Hall was that ASM Global was hoping the city would eliminate the termination clause in ASM’s contract, which lets the city end its management contract with the company if the Sanford Center is not succeeding financially.

“Your numbers were right at the end of last year if you had hit those cash injections this summer that might have come naturally from weddings or whatever it is that was going to take place,” said Bemidji Mayor Jorge Prince. “Those didn’t happen, so that is what’s causing the cash shortage. Why wouldn’t you just say, ‘OK, city, you terminate your contract. However, at year’s end, give us back the money that we, in essence, loaned you to get through this cash flow deficit.’ Why wouldn’t that be an acceptable solution as opposed to we’re not going to terminate it?”

In response, ASM representatives said it was difficult to get bigger acts to come to small-town Bemidji, which led to the cash shortage. Prince responded by saying cash flow shortage and operating loss are not the same thing.

“By my estimation as a finance person, the only reason you’re sitting in a shortage here is because you used too much of the cash that’s currently stuck in the business to fund receivables, payables, inventory, all those things to cover some of that loss, which is why we’re in this current situation.”

The council wasn’t pleased with past promises that ASM made. They noted that in past years, the city wasn’t so lenient with their previous management company. (The city ended its contract with that company, VenuWorks, in 2021.)

“[The Sanford Center] has had a history of eating up city money since that building was built, and we’ve worked with management companies to try to come out of it without the city holding that amount of money to pay back,” stated At Large Councilor Audrey Thayer.

“Last year was devastating,” said Ron Johnson, Ward 3 Councilor. “I mean, you’re talking this year of being [$]100,000 over with [$]350,000, you’re talking money that we terminated our last company because they couldn’t get below [$450,000]. You’re doing worse and you sold us on doing better.”

After close to two hours of debating back and forth, Bemidji City Manager Rich Spiczka proposed an option to revisit the discussion later in the future.

“If I were able to work out an agreement with ASM that they’d put in the money, the termination clause stays in place, but if we were to go separate ways, they’re going to get their money back and they were agreeable to that, would council be agreeable to that?” he asked.

No decision was made during the meeting, but the council hopes that later down the line, they can find ways to fund the Sanford Center’s shortfall and to add more requirements for ASM Global for the future.