'Deeply impacted us': REAL CEO says COVID-19 main reason for current deficit, financial challenges

The COVID-19 pandemic and an end to support funding in 2022 along with the lack of being able to host major events are contributing factors to the financial challenges Regina Exhibition Association Limited (REAL) is facing, the organization’s president and CEO said.

On Monday, a City of Regina document showed that REAL may have a negative cash flow of $6.9 million by September and that its current approved line of credit would be maxed out.

City administration is asking council to approve an additional $3.4 million of debt for REAL to help the organization make its obligatory payments for the rest of the year.

In an interview with CTV News, REAL president and CEO Tim Reid said since the onset of the pandemic they have been forced to run a deficit.

“Over the course of the last few years, really the last three related to COVID-19, we found ourselves forced to run a deficit for the first time in a long time.”

According to Reid, not being able to host events and the end of various funding programs created financial challenges REAL is still trying to recover from.

“That deficit, really in the first two years, was offset by the ability to receive funding that includes government grant funding. However, in 2022 we were not eligible for those funds and the lack of ability to host major events and really be fully operational and our inability to find funding alternatives resulted in a deficit,” Reid said.

Reid said financial statements prior to the pandemic would show that REAL would make a profit of about $250,000 to $750,000.

Since REAL is owned by the City of Regina it would then use those funds to reinvest into assets.

“So every dollar that we make we would essentially put back into capital and the maintenance of buildings on REAL District and the idea is then that is funding that we don’t have to ask for from the city,” Reid said.

Reid also feels the deficit the organization is now running is much smaller than it would have been if it weren’t for funding programs made available in the first couple of years of the pandemic.

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“In 2022 we just were not eligible for those funds, but our operating costs were still there,” Reid said.

Now Reid said they are looking for other ways to recover which will include accessing more money from loans they are already approved to receive.

“What our request is, we have a number of loans and before we’re able to draw upon those loans we have to ask the city. So we’re not actually asking for more money, we’re actually asking for the rights to use some of the debt facilities that are already in place,” Reid said.

According to the city’s document, $21 million of potential debt has been earmarked for REAL in Regina’s budget.

City administration’s recommendation of approving an additional $3.4 million for REAL to use to meet payment obligations for the remainder of 2023 would leave $700,000 of pre-approved loan money left over.

Reid feels it’s not unique for REAL or many businesses that have constant changes in their cash flow to use such loans.

“I think what is unique though is what is causing it and that’s the global pandemic and frankly in quarter one of last year our business was closed down and that deeply impacted us,” Reid said.

For REAL, most of its revenue is brought in when it hosts events.

Reid said like any other similar business in Canada, their soccer facilities, basketball courts and hockey arenas do not make them money.

Reid said as of late they are seeing a significant shift in the entertainment industry.

“I would say this is recovery related. If you look at a concert that we actually have a comparison of that we’re going to show council tomorrow [Wednesday] where we compared the same artist in 2019 versus the same artist in 2023 attendance was down by about 20 per cent.”

According to Reid, the artists’ costs were also nearly double what they were in 2019.

“It’s still profitable but it’s basically one-third of the profit that it was pre-COVID-19,” Reid said.

“So I think like many we are still being significantly impacted by the cost of delivery and honestly an industry that is recovering from COVID-19,” Reid said.

Reid is also confident REAL will not be in a similar position in one year’s time. He feels the organization is seeing consistent improvements.

“We’ll be in a better position next year just like we are this year going into year-end.”