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<br /> There are two broad areas of attack. On the operations side, the Board and management must
<br /> concentrate on the following areas, and no doubt others:
<br /> • Expand program offerings in kind and number
<br /> • Increase utilization of the facility during weekdays
<br /> • Make sure all programs are subscribed to the max(marketing)
<br /> • Make sure service is top-notch throughout the facility
<br /> • Continue to search for cuts in expenses to the maximum possible
<br /> • Find significant non-program sources of revenue
<br /> Some of the steps we see to these ends are described below.
<br /> Secondly, it is crucial that Eaton-Vance retain confidence that the Board and management are working
<br /> diligently to solve the financial difficulties and that the County is behind us. To this end, the Board has
<br /> hosted Eaton-Vance representatives in Hillsborough on several occasions, and RMSC keeps Eaton-Vance
<br /> thoroughly informed of the status of the business. In addition, RMSC has frequent discussions with Eaton-
<br /> Vance about debt management issues. We don't know whether these discussions will eventually have a
<br /> major impact on how we deal with the debt, but we believe we must do all we can to maintain a cordial,
<br /> responsive relationship and dialogue with Eaton-Vance.
<br /> III. The strategy for resolution of the financial situation through operations
<br /> Opportunities for resolving the financial situation through operations boil down to three: Having well-
<br /> run, popular programs throughout the day and week, marketing those programs and the facility vigorously
<br /> and successfully, and keeping expenditures as low as possible. The program and marketing areas have two
<br /> complexities: First, people must be drawn to the SportsPlex. Because of its geographical situation, one does
<br /> not just drop in to the facility, typically, one goes there for a specific purpose. Secondly, programs and
<br /> marketing must be carefully adapted to our market, and this requires experimentation and, alas, time. A full
<br /> presentation of the issues in these areas would be ponderous, so we have presented a few highlights.
<br /> Expense-cutting measures taken or in progress
<br /> One of the most important responsibilities of the Board and RMSC is to keep costs to a minimum
<br /> consistent with providing the necessary programs, service to the public, security, accounting and revenue
<br /> tracking, and building maintenance, and both groups have been active in this area. Examples of substantial
<br /> cuts made are:
<br /> Personnel budget: Personnel has been a major area for cost cutting. The month-by-month evolution
<br /> of the personnel budget since RMSC took over in June, 1996, is shown in Figure 4. The very important
<br /> overall tendency is shown by a trend line, included in the figure, which indicates that, on average, the
<br /> personnel budget has declined from$43,000 per month to$35,000 per month. This is a monthly savings of
<br /> $8,000, or$96,000 per year.
<br /> The two peak months on the figure must be explained: The first is August, 1996, in which personnel
<br /> payments were made for staff employed in programs contracted for by previous management, i. e., out of
<br /> RMSC's control. The second is the month of January, 1997, which reflects the fact that the activity level in
<br /> the rink is extremely high in this month.
<br /> Insurance: Insurance is a major concern and a major cost for a facility of this sort. In two rounds of
<br /> negotiation and shopping, the Board and RMSC have achieved reductions of the insurance bill from about
<br /> $71,000 for the first year of operation to$43,000 for the coming year, for equivalent coverage; this is a
<br /> savings of$28,000 per year. Although we will continue to search for the best arrangement possible, the
<br /> insurance bill seems unlikely to go much lower.
<br /> Water usage: Water is a major raw material at the SportsPlex, and one expects consumption to be
<br /> high. Nonetheless, water consumption was extremely high in much of the first year of operation and on into
<br /> the second(Figure 5). For the 12-month period ending July 31, 1996, the average was 670,000 gallons per
<br /> month. The excessive consumption is largely unexplained, although in July, 1996, RMSC discovered a leak
<br /> which probably explains part of the problem(Figure 5). For the 8 months from August, 1996 through
<br /> March, 1997, consumption has averaged approximately 362,000 gallons per month, a drop of 308,000
<br /> gallons per month. This drop represents a savings of approximately $16,400 per year.
<br /> Report to the Orange County Commissioners 5 May, 1997 page 8
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