Regina Exhibition Association struggling to keep afloat financially, report says

The Regina Exhibition Association (REAL) will likely be unable to meet its financial obligations by September if city council doesn't clear the way for it to take on more debt, according to a report from city administration.

The report says that REAL is expected to have a negative cash flow of $6.9 million by September and its approved line of credit will be maxed out.

According to the report, REAL's "limited cash reserves" were drained following the onset of the COVID-19 pandemic and a slower-than-anticipated recovery.

The organization, which manages numerous facilities including the Brandt Centre and Mosaic Stadium has been hard hit by low attendance numbers and has struggled to attract events to the city, the report says.

"REAL continues to be impacted by low attendance numbers and attracting events to Regina," the report read.

"REAL advises that coming out of COVID there have been challenges securing entertainment due to aggressive competition from other organizations using financial incentives and other measures to attract events."

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City administration is asking council to approve an additional $3.4 million of debt for REAL to help pay its bills through the end of 2023.

Administration says roughly $4.1 million is still available but that the extra $3.4 million would provide “sufficient flexibility."

The extra headroom would still fall within the $21 million in potential debt earmarked for REAL in the city's budget, according to the report.

“As the debt would be within the $21 million debt guarantee and administration applies the $21 million debt guarantee against the city’s $450 million debt limit when determining remaining debt room, any debt acquired would not impact the city’s calculation of its remaining debt room,” the document read.

Prior to the pandemic, REAL averaged annual revenue totals of around $44 million in 2018 and 2019. Those years the organizations saw net losses of $1.5 million and $2.2 million respectively.

Revenue dropped significantly in 2020 with REAL recording a net loss of $3.9 million. Financials bounced back slightly the following year with a net loss of $2.8 million. However, REAL ended 2021 with just $145,000 in cash.

REAL’s five-year capital plan is also in jeopardy and faces a combined $6.4 million shortfall in 2023 and 2024.

“Overall, REAL’s current and future earnings before amortization and interest projections do not appear sufficient to fund REAL’s long-term capital plans,” the report stated.

REAL also owes the city approximately $4 million for food and beverage installations at Mosaic Stadium.

In light of the potential funding shortfall, administration says the current funding model for REAL needs to be reviewed by the city because of the long-term fiscal challenges the organization has faced.

Administration said it will collaborate with REAL and a third party to develop a strategy to address its long-term financial sustainability.

The goal would be to have a plan to present to city council as part of its 2024 budget deliberations.

REAL CEO Tim Reid is expected to discuss the financial report with the city’s executive committee at its meeting on Wednesday.