SOAP has requested a meeting with senior staff of the Seattle Center on March 1st. "A SOAP representative contacted Seattle Center on Tuesday and requested a meeting. We actually aren’t clear what the purpose is," Seattle Center spokesperson Kari Shaw told the SGN on Thursday.
As a thank you to our blog readers, I have posted our story below. However, the story is printed in today's edition of the SGN and will be available on our website, www.sgn.org, shortly.
Seattle Center cancels site contract
SOAP admits $30,000 more debt
In a certified letter dated Friday, February 16, the Seattle Center declared Seattle Out And Proud, organizers of Seattle Pride in 2006, as being in “Default and Breach” of their three-year contract. The letter also stated that the Seattle Center would be releasing the dates for Seattle Pride 2007 and forwarding SOAP’s account to the City of Seattle Law Department for collection.
The letter was issued because SOAP failed to pay its $100,026.33 debt from 2006 or arrange a payment plan by the February 15, 2007, deadline the Seattle Center had established last fall. The letter was sent in response to the proposed budget that SOAP had submitted via e-mail to the Seattle Center hours before the deadline.
SOAP’s proposed 2007 budget provides for a debt service payment of $40,000 on their 2006 debt from potential revenue earned as a result of the 2007 event. It also provided for $65,000 towards 2007 expenses incurred by the Seattle Center, which is $40,000 below the actual cost in 2006.
SOAP signed the contract with the Seattle Center last year to host the Seattle Pride Festival, which followed the Pride Parade along 4th Avenue. According to the contract, the Seattle Center buildings and grounds were provided at “no cost” to SOAP. However, the nonprofit was required to reimburse the Seattle Center for its operational costs for each day of the festivities. The Seattle City Council later signed off on the deal.
LETTER FROM SEATTLE CENTER
“...[O]n February 15, 2007 I am in receipt of a one-page e-mail from you, with no payment plan, simply a budget with a $40,000.00 payment to Seattle Center at some point after your 2007 festival and a vague commitment to resolve your debt to Seattle Center by the end of 2009,” wrote John Merner, Seattle Center Director of Productions. “It is in this context that I tell you that I no longer have any faith in your ability to resolve this issue and inform you that we are declaring you in Default and Breach of the contract and are terminating the contract for cause under ... our agreement. We will be releasing your 2007 dates and forwarding your account to the City of Seattle Law Department for collections.”
Merner’s letter also details the Seattle Center’s interactions with SOAP.
On October 26, 2005, the Seattle Center met with SOAP and provided an 11-page detailed estimate of the costs associated with producing the Pride Festival.
“I think we have been very clear with SOAP from the beginning,” Seattle Center spokesperson Kari Shaw told the Seattle Gay News. “From the beginning, I mean 2005 when we started contract negotiations where we gave them an estimate of what we thought this event would cost. That estimate was very accurate. I think the actual cost came within $500 less than what that initial estimate was.”
Merner wrote that he and Seattle Center’s Event Service Representative Katie Plymale had “repeatedly advised” SOAP on ways that it could reduce costs through better organization during the development of the festival. “We were regularly told that you had produced this festival for years and that the incremental costs were not a problem,” he said about those discussions.
Following the festival, in July of 2006, Seattle Center tried on “numerous occasions” to meet with SOAP to discuss its bill, prior to it being issued, according to Merner. “Seattle Out and Proud leadership was unavailable to meet with us,” he added.
The bill was issued to SOAP on August 28, 2006. On October 2, SOAP was notified that the bill had begun to accrue interest and penalties.
“We heard nothing from you until we called to set up meetings in October. Meetings set for October 4 and 18 were cancelled by your organization,” wrote Merner, who had sent the first of three demand letters seeking payment on October 27, 2006. “When we finally met on November 2, 2006, Seattle Out and Proud agreed to submit a payment plan within 10 days. No payment plan arrived.”
On November 16, 2006, Merner wrote the second demand letter. In the letter, Merner asked for a payment plan by November 22 and stated that payment would need to be received by February 15, before planning for Seattle Pride 2007 could begin.
Five days later, Merner received an e-mail from SOAP Vice President Weston Sprigg, who said that a payment plan would arrive by the second week of December. “In that e-mail you acknowledged that you couldn’t move forward until your 2006 obligation was resolved,” wrote Merner about their exchange.
Sprigg again acknowledged the February 15 deadline in an e-mail to Merner on December 27, 2006. Sprigg said he had not yet discussed a payment plan with the Board, but SOAP would make public a plan to resolve the issue shortly. “I responded by e-mail reiterating that all outstanding balances must be paid by February 15, 2007 or we would not be able to move forward with the 2007 festival,” Merner wrote.
On January 26, 2007, Merner sent his third and final demand letter but said he “heard nothing” in response until the February 15 e-mail from SOAP.
“The determination from the executive staff is that we couldn’t go forward until we had some plan in place to deal with the 2006 debt,” said Shaw. “We have done the best that we can up until this point. We will continue to work with SOAP, but – at this point – we don’t have a lot of hope that the bill is going to be paid. ... There is no demonstrated ability to make good on the payment and no established revenue source with those numbers.
Shaw said the February 15 deadline represented a point when “some serious planning would be taking place,” because it was nearly four months before the 2007 Seattle Pride Festival was to take place at the Seattle Center. “The deadline was established last fall and we established at that time why we had to have a deadline and what the consequences of the deadline would be,” she said.
On Tuesday, February 20, SOAP called Seattle Center senior staff to schedule a meeting with the Seattle Center. Shaw said the Seattle Center was unclear about the purpose of the meeting. She also said the she understood that SOAP had received the February 15 letter this week.
According to Shaw, members of the Seattle City Council’s Parks, Education, Libraries and Labor Committee – the committee charged with oversight of the Seattle Center -- and openly Gay Councilmember’s Tom Rasmussen and Sally Clark had been notified of the Seattle Center’s termination of SOAP’s contract.
SOAP PRESIDENT PINS HOPES ON MARCH 1 MEETING WITH SEATTLE CENTER
SOAP President Eric Albert-Gauthier responded to questions from the SGN shortly before press time on Thursday. He said the March 1 meeting with the Seattle Center will “will determine which direction SOAP will proceed.”
“SOAP hopes that the City and SOAP will be able to work out details regarding past and future events so that orderly progress can be made on producing the 2007 event,” he said. “The Seattle Pride 2006 event at the Center was a huge success and we would like to see the event continue on in that fashion.”
When asked about the February 15 letter from Merner and how it would affect SOAP's plans, either for the 2007 event or in the long term direction of the organization, Albert-Gauthier said only that it “is to be determined in part as a result of the upcoming meeting on March 1.”
He said SOAP had made mistakes, but that the organization has learned from the experience. “The Board has been working diligently to prepare for this year's event fiscally and logistically,” said Albert-Gauthier. “Many of the lessons learned last year have been incorporated into planning for this year, along with asking the Center to assist us with this. We are looking at ways we can cut costs while putting an event on at the Center.”
Albert-Gauthier said that the potential cuts could include the cancellation of events on Friday night during Pride weekend and a significant curtailment of entertainment costs and a shift toward local talent.
In an interview published Thursday in the Seattle Times, SOAP’s attorney said the group was weighing several options, including a parade route change to Myrtle Edwards Park, becoming a for-profit corporation, and charging for admission. However, Albert-Gauthier said “no official plans have been made.”
“Those are brainstorming ideas. We are doing our due diligence to think of ways to make Seattle Pride a reality for the community,” said Albert-Gauthier. “The organization is examining all of its options but needs to have the scheduled consultation with the City on March 1 before we can discuss how to proceed.”
BOARD MEETING SHEDS NEW LIGHT ON SITUATION
SOAP’s governing body was well represented at a regularly scheduled Board meeting on Sunday, February 17, which included an audience of 20 people. In response to stern and pointed questions from members of the region’s Lesbian, Gay, Bisexual and Transgender community, SOAP Vice President Weston Sprigg and the organization’s attorney, Dave Coffman, detailed the long saga that has lead to a debt that could now exceed $130,000.
In addition to the Seattle Center debt, SOAP owes other creditors at least $30,000. Coffman acknowledged the group faces a lawsuit from a $3,200 debt it owes to a provider of portable toilets since 2004.
SOAP brought in $116,000 in revenue in 2006 and had about $249,000 in expenses. SOAP’s single largest expense in 2006, according to Sprigg, was the $73,000 the organization spent on entertainment. However, he cautioned, that the cost for entertainment would be higher if you include expenses incurred by the Seattle Center for labor, lighting and the four stages.
According to Sprigg, the committee spent approximately $121,000 in 2005, while the event was held on Capitol Hill. This year their costs ballooned to a quarter of a million dollars after moving the parade to 4th Avenue and the festival to the Seattle Center.
The problems began early for the organization. Poor record keeping and lost digital data have long plagued the organization, they said. “When I joined the organization in ‘04, there were debts from the 2000 and 2001 years that were still being dealt with. And, by and large ... I think all the debts have been cured except one debt from the ‘04 year ... for the rental of the portable toilets,” said Coffman. “So, I think that significant progress has been made in order to right that ship. The records, to be quite honest ... are non-existent for anything prior to the ‘04 year. ... I don’t know what happened in the prior years before I came on board, but I do know that records are gone or non-existent.”
Coffman said that policies and procedures had been established in recent years to provide greater accountability. “We have spent just part of the time trying to get polices in place, procedures in place – from a Board perspective – to say, ‘Okay, we need to have a budget. We need to have an audit trail. We need to be able to do these things’,” he said.
They also characterized past Pride events as financial black holes. “If you look at it from a [profit and loss] perspective, the organization has never been in a positive position,” said Coffman. “However, there has been a decrease of the negative position in prior years.”
Johan Lysne IV, co-chair of the Freedom Day Committee, the predecessor to SOAP, in 2002, 2003 and 2004, challenged Coffman on his assertion. At the end of the 2003 event, he claimed, there was a $30,000 surplus. Jim Coburn, a co-chair for the Freedom Day Committee in 2000, 2001, and 2002 and a volunteer coordinator for SOAP in 2003 and 2005, said Johan’s number is probably a conservative estimate of the surplus.
“We are unsure if there has been a surplus in the past as records are incomplete,” Albert-Gauthier told the SGN on Thursday. “The organization, for a long time, has run on very narrow margins and increasing costs and attendance have made it more difficult to put on an event of the magnitude we are now dealing with.”
The blame for this year’s deficit was three-fold they say. First, they pointed the finger at the Seattle Center.
“In discussions prior to the event at Seattle Center, it was known that there would be a deficit run at the Center for the costs at that time. The information that we had from the Center was that there would be a significant period of time to cure that deficit. That had been the case with nearly every event that had ever been established at the Center, including Bumpershoot; the Folklife Festival,” said Coffman. “All of these entities had run deficits and a few continue to run deficits at this time with a plan to pay them off. There have been some discussions with the Seattle Center along the way about that.
“In the [bill] summary we have and in the conversations we have had with John Merner and others was that within a three year timeline, we would get the entire bill squared up with the Center. That’s the position from which this organization has been operating all along. That was the general idea put forth from the Center in the discussions that were had.
“The final bill with the Center hasn’t even been discussed yet. When you have a bill that large you sit down and you talk about things that don’t make sense and so on; whether there are overages and so on. That discussion has not been had yet with the Center by Seattle Out And Proud.”
Coffman also pointed to a member of the board who did not follow the proper procedures when signing contracts; however, he would not “name names” or “go down that path.”
“The Board had a whole bunch of signed contracts by individuals that did not follow Board policies, did not clear it with the board treasurer and did not include all the costs as to what happened,” said Coffman. “The contracts are legal because the contracts were signed by the representative of the organization. They have the power and the authority to do so. Now, we haven’t had the full discussion with the Board yet about what we are going to do about that from a corporate standpoint.”
Sprigg also pointed to a poor level of corporate sponsorships of last year’s event as another reason for SOAP’s financial troubles. The group brought in $27,000 from sponsorships in 2006. “The biggest sponsorship before was Budweiser; a lack of money from K & L Distributors. ... That money was not available to us last year. That money went to other events on the Hill, I think,” he said. “So, we had to replace that. If we had that money, we would have been closer to where we had been. We had to replace that with small sponsorships.”
“There were a couple people who were working on sponsorships making big promises and didn’t follow through. That is one aspect of what happened,” added Coffman.
SOAP HIRES SPONSORSHIP PROFESSIONAL
This year, SOAP commissioned Cindy Baccetti to solicit sponsorships on their behalf. Baccetti will receive a commission consistent with industry standards when working with nonprofits, according to Coffman. She told the SGN on Thursday, she has successfully secured corporate sponsorships events such as Taste of the Nation, Washington Wine Highway, Chef's Night Out, Art Rocks @ EMP Opening Gala "DoubleTake: From Monet to Lichtenstein", Vulcan, Inc's "STARTUP: Albuquerque and the Personal Computer Revolution" Opening Gala, Seattle Ad Federation's "Ad Bash" 05, and Port of Seattle's "Cruise a thon" 05.
“Per my agreement with SOAP, and all subsequent agreements with our sponsors, details of such sponsorships are to remain confidential until formally announced by SOAP,” she said. “Countless sponsorship meetings are on-going and we have several new sponsors confirmed for the 2007 event. Again, all sponsorship announcements will be made by the Seattle Pride leadership.
“Additionally, I am not able to comment about issues regarding Seattle Pride.”
Sprigg said on Sunday that SOAPs 2007 budget was available online. He also stated that a 2006 financial statement would soon follow. A review of SOAP’s website failed to reveal any statements from previous years.