VIRGINIA BEACH, Va. — Council members could soon cut ties with the company managing the Virginia Beach Sports Center, the $68 million facility that opened at the Oceanfront in 2020.
If the City of Virginia Beach terminates its contract with Eastern Sports Management, they would be on the hook for more than $6 million, according to a presentation to council members on Tuesday.
During the briefing, city administrators said they recommended members vote to end the contract with Eastern Sports Management. They discussed a February 2023 audit that reported operational losses and issues with the company’s financial statements, among other things.
Convention and Visitor’s Bureau Director Nancy Helman said because of issues — such as the COVID-19 pandemic, underperforming programming and sales, rental waivers and other cash flow concerns — the operator said it can no longer move forward under the current operating and management agreement.
However, Helman noted the center has brought a lot of tourist action to the Oceanfront.
“Victus Advisors estimated that the sports center would bring in approximately 33,000 room nights into the market," Helman said, referring to research conducted by an outside company. "You can see by year three we have almost doubled that projection."
If the city takes over operations, Hellman says it will pay the following from the Tourism Investment Program Fund:
- $4,604,266.53 for furniture, fixtures and equipment payoff.
- $1,506,095 for accrued expenses which includes management fees, cash advances, accounts payable and unpaid gate receipts.
Some council members said the center had challenges opening in 2020.
“I think we need to keep in mind this is a facility that opened in the middle of the pandemic," Councilman Joash Schulman said.
Councilwoman Sabrina Wooten talked about the importance of transparency on this issue.
“I do appreciate the staff coming, being transparent, this is what the six million is for, this is why, that is very important, that’s very important to the public as well," Wooten said.
The vice president of Eastern Sports Management said the company can not comment during negotiations.
Helman said since Aug. 15 there have been negotiations between the city and ESM to reach a possible resolution.
City council members will vote on the contract on Nov. 21.
If council members vote to terminate the contract, they would take over operations on Nov. 30. City Manager Patrick Duhaney said they would look for an interim operator and then start the formal request for proposals process.