Commission Heeds the Will of the (Tennis) People

Votes to Keep Tennis Ctr. Vendor. Will City Negotiate More $$ This Time?

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Last Monday, the City Commission chamber filled up fast with supporters of the current management at Winter Park’s Azalea Lane Tennis Center. In the three years High Performance Sports Management has run the Tennis Center, HPSM president Angie Zguna has made a lot of friends – and at Monday’s City Commission meeting, Angie’s friends stood up for her.

They also sent email – lots of it – to City Commissioners.

The formidable email campaign mounted by Ms. Zguna’s supporters made an impression on the city’s politicians, creating a buzz at City Hall culminating in a unanimous commission vote that gave the nod to Zguna’s company. The commission vote in favor of negotiating a new contract with HPSM was a rejection of the city’s own selection committee whose first choice was competing vendor NetResults Tennis LLC. HPSM and NetResults bid proposals and selection committee evaluations of both vendors can be accessed by clicking the buttons below.

HPSM Proposal    NetResults Proposal    Selection Committee Evaluation

Angie Zguna’s High Performance Sports Management Wins Commission Approval

A review of Angie Zguna’s career highlights and qualifications (provided to the city by Ms. Zguna) shows that she established herself as a formidable competitor at an early age. In her native Latvia, she rose quickly in ranks of young tennis stars, earning a high ranking in singles and doubles tournament play. Her performance in her home country ultimately lead to a #16 “Junior” ranking in the Soviet Union republics. After moving to the U.S. in the 1990s, Ms. Zguna played collegiate tennis in Louisiana before transferring to Rollins College where she earned the title of #1 Singles player in Division II.

Despite the strong support Ms. Zguna received from Winter Park’s tennis devotees, she has had to overcome many obstacles to win acceptance at City Hall – including opposition three years ago during her initial bid to manage the center. That opposition included other competing bidders and some Tennis Center members who opposed her in 2009, but are now supporting her.

In 2009, Ms. Zguna bested another strong competing bidder – who also happened to be the first choice of the city’s selection committee – and then managed to survive a second challenge when the losing bidder contested the City Commission’s vote in her favor.

All sources the Voice spoke with – inside and outside city government – agree that HPSM is managing the Tennis Center better than the city did and that Winter Park’s tennis players are happy with the arrangement.

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Why Did Tennis Center Lose Money before 2010 and Make So Much After?

According to a Jan. 25, 2010 story in the Orlando Sentinel, “the city lost $200,000 in the past four years” leading up to the management change. In 2009, the Tennis Center earned $128,420 in gross revenues, but the city’s cost to run and maintain the center was $213,655.00. The city’s yearly losses are cited as a key reason the city chose to privatize the management of a Tennis Center. In 2010, the center experienced a dramatic turn-around when the city privatized center management. Under HPSM management, Winter Park’s Tennis Center quadrupled its gross revenues over the next two years – moving the center from annual gross revenues of $128,420 in 2009 to $519,240 in 2011.

The Voice asked John Holland, Director of Parks and Recreation, how the Tennis Center managed to lose so much money when city staff was running it prior to 2010. Though Mr. Holland has testified to Ms. Zguna’s skill at running the Center and lauded her expansion of membership at the center, he credited a single factor as the key reason Tennis Center revenues turned from loss to profit so quickly: Tennis Pro fees.

Mr. Holland told the Voice that, prior to 2010 when the city ran the center, tennis professionals teaching at the center were only required to pay the city a small annual fee to teach on city-funded courts. When HPSM took over management of the center in 2010, the city required Zguna’s company to charge these independent pros a percentage of the private lesson fees they earn at the Tennis Center. According to Holland, this significant increase in revenue played a large part in turning the Tennis Center from loss to profit virtually overnight.

Was the City/Zguna Deal Too Sweet?

The Voice has spoken with sources close to the story who question whether the city might have driven a harder bargain – requiring HPSM to share more of the revenues generated by the Tennis Center, which is still city-owned. City staffers confirm that they do not know – year to year – what those net revenues are because Ms. Zguna’s company is not required to report profit and loss information to the city. However, Ms. Zguna did submit tax returns to the city as part of the current bid process.

The city’s current contract with Zguna’s company specifies that HPSM pays 10% of annual gross revenues to the city with the remaining 90% going to HPSM. According to the city, HPSM was not required to pay any sort of fee or “buy-in” to take over the city facility.

Per its contract with HPSM, the city has been obligated to cover most of the expense of maintaining the Tennis Center (including utilities) except for the cost of HPSMs own administrative overhead which includes their personnel costs. The Voice has confirmed with city staff that the city’s current negotiation with HPSM on the new contract includes a requirement that HPSM will pay for the center’s water and electric utilities starting this year – a concession worth about $40,000.

Despite the limited financial information the city receives from HPSM, city staff has provided the Voice with information on its own Tennis Center costs and assumed HPSM annual revenues. This information appears to support speculation that the center may be generating significant net profits for HPSM. In the years since the city created a defacto “partnership” with HPSM by handing over 90% of revenues in return for management services, the city has continued to provide much of the maintenance and upkeep of the HPSM-run center. City costs have been at least partially offset by the 10% of revenues the city receives from HPSM.

New Contract Negotiations: Will City Leave Too Much Money on the Table This Time?

In response to Voice inquiries, the city provided the information shown below documenting the 10% payments the city has received from HPSM over the last three years. Also shown are the gross revenues the city assumes the Tennis Center is earning as extrapolated from the 10% payments received by the city:

2010 — 10% = $34,310 / Assumed HPSM gross: $343,100
2011 — 10% = $51,924 / Assumed HPSM gross: $519,240
2012 — 10% = $50,521 / Assumed HPSM gross: $505,210

According to John Holland, the city’s Director of Parks and Recreation, the cost to the city of maintaining the Tennis Center in 2012 was $50,791.73. $40,393.00 of that cost was for water and electrical utilities – a cost that will be shifted to HPSM under the new contract. If city estimates of Tennis Center gross revenues are accurate, the center grossed almost $400,000 more in 2012 than it did in 2009.

Angie Zguna Responds

The Voice spoke with Angie Zguna, who accepted the city’s numbers and assumptions, though her own calendar-year accounting and royalty breakdowns are slightly different than the city’s fiscal-year-based accounting. Ms. Zguna also points out that HPSM covers “all operational expenses of the facility” while acknowledging that the city supplies significant assets, utilities and maintenance per its current contract with HPSM.

In her statement to the Voice, Ms. Zguna expressed her gratitude for the support she received from Winter Parkers: “We are thrilled to have once again been chosen to manage the operation of the tennis center. We love Winter Park, the community, Rollins, and feel that this is our home and to be able to continue managing the courts is a privilege and honor. We intend to take the center to the next level by continuing to work with the community to attract more local residents to learn tennis, to provide community outreach by working with local schools to introduce tennis as a lifetime sports to elementary and middle school children, to bring more tournaments, increase membership, and to attract international players to Winter Park tennis center as a world class training facility.”

The Voice has asked all City Commissioners and the Mayor to comment on this story. None have commented as of press time.

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