Mayor Lauds RP Funding Center Chief, Then Insists He Further Slash the City’s Subsidy

RP Funding Center

Tony Camarillo kept the RP Funding Center doors open during a seven-year, $16 million renovation, negotiated a five-year, $5 million sponsorship deal that brought an NBA minor league team to Lakeland and reduced the city’s annual operations subsidy by 60% despite enduring a pandemic-induced “worst year ever” in 2020.

Camarillo, the center‘s director since 2015, drew high praise during the Lakeland City Commission’s February strategy session for the job he has done the last seven years managing the city-owned multipurpose entertainment/convention center.

“I’m very appreciative of the leadership he provides and the steps he has taken,” Lakeland Mayor Bill Mutz said of Camarillo.

Then the mayor assigned him another job: Cut $800,000 from the $1.8 million subsidy the RP Funding Center projects it will request from the city in next year’s budget — down from $4.4 million annual subsidies three years ago — while the commission ponders bringing in a professional venue management company or consultant.

Nearly two weeks later, Camarillo was trying to figure out how to accommodate Mutz’s demand to increase revenues and/or decrease costs to fill a prospective $800,000 slash in the city’s annual subsidy for the center.

“it is pretty impossible or very difficult” to cut more money from the center’s operations budget, he said, especially after it slashed nearly $500,000 from payroll by not filling seven vacant full-time positions last year, trimming staff to 42.

Tony Camarillo

“The only way we are going to do that is if we eliminate the type of events we do,” such as those that the center sponsors, he said, including the Broadway show series which often require a 16-month advance booking window.

“We are the promoters that pay thousands — $30,000 — up front to bring them in,” Camarillo said. “In this market, it is tough to do that but for many, many years, we have produced that type of entertainment for the community, even we don’t break even.”

If the center cannot invest in drawing big productions, Camarillo said, it will hamper its capacity to serve as the area’s “civic center that hosts events for cultural groups from the community” that aren’t money-makers but important for local residents.

That is part of another, broader conversation raised during the March 2021 strategic planning retreat — and during February’s 2022 version — about the RP Center serving as a community “arts hub.”

Big events, however, remain an iffy prospect, Camarillo said, even in these optimistically coined “post-pandemic” days.

“Clearly, we are in the business of doing large events and people are still uncertain about attending large event,” he said. “In my estimation, it’s not the best time to be having a discussion about the business. The pandemic is still affecting things. That’s everybody, not just us.”

But, Mutz said, “There is not an appetite” for the city “to suck it up much more” when it comes to subsidizing the RP Funding Center’s operations, adding, “We have many places we can point to” that could also use city subsidies.

Annual 5% revenue increases are not going to cut it, the mayor said. “We have to drive that higher for survival reasons or find someone who can take over so we don’t have these losses,” he said.

Mutz and commissioners were responding to Camarillo’s proposed five-year plan for the RP Funding Center, which charts projected revenues and expenditures through Fiscal Year 2027 (FY 27).

For FY 22, which began Oct. 1, Camarillo forecasts the center’s total revenues will top $5.2 million with costs about $8.23 million, a $3 million deficit. 

Of that $3 million, $500,000 is from the city’s public improvement fund (PIF), $653,000 is annual interest payment on the $16.3 million Series 2017A bond the city issued to co-finance the center’s 2017-21 renovation with Polk County, and $1.874 million is a direct transfer from the city’s general fund to cover operational shortfalls.

For FY 23, Camarillo forecasts $5.566 million in revenues and $8.426 million in expenditures, a $2.86 million deficit with the same amounts from PIF and for interest with the city’s general fund subsidy lowered by about $75,000 to $1.8 million.

That subsidy is lowered to $1.7 in FY 24 and $1.5 million in FY 25 when the first of two $2.5 million balloon payments end the 15-year RP Funding Center renovation bond about six years early. The 2017 bond issue outlines a 2018-32 payment plan that would total $20.5 million. Of that, $5.15 million was paid over first four years with $15.46 million remaining in FY 22, including $2.11 million in interest,

For FY 27, Camarillo projects $6.766 million in revenues and $8.652 million in expenditures with $400,000 in PIF and a $1.486 million general fund subsidy.

Mutz and several commissioners, noting the PIF allocations and bond interest payments are beyond the center’s control, said the annual operational subsidy must be reduced to no more than $1 million this year with cuts in ensuing years. They gave Camarillo a few months before summer budget discussions begin to present them with such a plan.

“Develop a sales plan that eliminates the subsidy, minimizes the subsidy, and RFP (request for proposals) for a management company that can do that,” Mutz said.

The mayor said one way Camarillo could increase revenues is nail down a better deal with RP Funding and the Orlando Magic in June when the original five-year deal expires.

“The Magic costs us a lot of money. If they don’t want to step up,” then the city should find better uses for the center’s arena, Mutz said.

The Youkey Theatre at the RP Funding Center. After RP Funding bought naming rights as part of the deal that brought the Orlando Magic’s G-League Team to Lakeland, the building was painted in RP Funding’s colors and the Lakeland Magic logo was added.

Camarillo said the deal is more complicated than just dealing with the Magic because it is tied in with RP Funding’s $5 million, five-year sponsorship agreement, which will be part of the renewed pact.

Under the original agreement, the Magic get most of the sponsorship money, with the city recouping about $150,000 annually. When the $8,400-per-game fee and sponsorship revenue is factored in, the team generates about $400,000 a year at the center.

“It is as profitable as any business we have put in the center,” Camarillo said, explaining that the team’s biggest value is 24 “guaranteed dates” that generate “good guaranteed money.” 

The city could charge the Magic more since the center hasn’t recently raised game-day rates and agree to an extension “but with better incentives” than the first contract, he said.

Camarillo said the Magic are looking for a 10-year extension. “I don’t know if we should do a 10-year deal but I would be in favor of a five-year deal with some incentives,” he said, calling RP Funding’s participation an “existing sponsorship that we can build on.”

The Magic are dealing with post-pandemic hesitancy as well, he said. The games “haven’t been drawing like” they did in 2019 when more than 1,000 fans a game were showing up. “They’re not quite at that level yet, like everyone else,” he said. 

Camarillo said his projected 5% increases in revenues this year, 7% in FY 23 and 5% in each of the subsequent years is “not conservative” despite the return of several popular events that were canceled during pandemic, including WWE wrestling, MMA events and Iron Horse Rodeo.

Commissioner Stephanie Madden, noting Camarillo has reduced the annual subsidy by more than $2.5 million over the last few years, asked if the city could use American Rescue Plan Act (ARPA) funds to pay down the bond debt.

Lakeland Finance Director Mike Brossart said ARPA monies cannot be used to pay down debt but could be used, maybe, “for payrolls or something along those lines.”

The interest and PIF expenditures are “going to be there” no matter what, he said. “If the commission had an appetite not to do anything with this building, you would always have this. You’d still have to pay the debt off.”

 By his accounting, Brossard said, if revenue growth was at 7%, the city’s annual subsidy would be under $1 million by FY 25.

That’s not fast enough, Commissioner Sara Roberts McCarley said. 

Commending Mutz’s  “push on this,” McCarley said the commission has been asking the center to balance spending with expenditures for years with little response, until recently.

“I don’t feel that it was as aggressively addressed as it should have been,” she said. “I agree with mayor’s wording” in demanding the city’s subsidy be under $1 million by next year, not under $1.5 million in five years.