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Newbo evolve loses $2.3M, director fired

Board chairman John Myers and board treasurer Seth Wear talk with reporters after a news conference at the GO Cedar Rapids office in Cedar Rapids on Tuesday, Aug. 21, 2018. Myers will step in as chief executive until an interim CEO can be found, replacing former CEO Aaron McCreight, after the board found the organization had $2.3 million loss from the recent newbo evolve festival. (Liz Martin/The Gazette)
Board chairman John Myers and board treasurer Seth Wear talk with reporters after a news conference at the GO Cedar Rapids office in Cedar Rapids on Tuesday, Aug. 21, 2018. Myers will step in as chief executive until an interim CEO can be found, replacing former CEO Aaron McCreight, after the board found the organization had $2.3 million loss from the recent newbo evolve festival. (Liz Martin/The Gazette)
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CEDAR RAPIDS — Leaders of the local tourism bureau were mislead about ticket sales, sponsorships and spending for a three-day music festival called newbo evolve, which leaders have learned sustained staggering losses, GO Cedar Rapids board chairman John Myers told reporters on Tuesday.

The 18-member board of directors had been receiving reports — both oral and written — up until days before newbo evolve, an intentionally lowercased music and arts festival featuring Maroon 5 and Kelly Clarkson on Aug. 3-5, Myers said. A preliminary review showed the event lost $2.3 million and sold far fewer tickets then the board was told, he said.

“Information provided to the board during planning as well as up until days before the event regarding both tickets sales and sponsorship dollars raised were simply not accurate,” Myers said during a morning news conference. “We do not know if this was done intentionally or negligently. However, these reports led us as a board to make decisions we would not have made otherwise.”

As a result, the board fired Aaron McCreight, the bureau’s chief executive, on Monday. McCreight fired the event’s creative director Scott Tallman on Aug. 9, although did not provide a reason, Tallman previously said.

Myers, who is also executive director of the Indian Creek Nature Center, said it was not clear who on staff was responsible for the incorrect information. While attendees gave positive reviews of the event, the financial revelations were “troubling” and “disappointing,” he said.

McCreight, who was hired in 2015 from the Casper, Wyo., Convention and Visitors Bureau, defended the event in an interview with The Gazette on Tuesday, saying the thousands of people who came to town or learned about Cedar Rapids from the social media followings is “something to be proud of.”

“We took a risk as an organization, and we knew it was from the beginning,” McCreight said. “We knew this was an investment in travel and tourism and awareness of the destination. I certainly wish that the investment wasn’t as large as it has been reported.”

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McCreight added, “To the extent that someone might say I did something wrongful, I don’t feel that I did.”

Myers and Seth Wear, board treasurer, detailed the financial information they have gathered.

The board had approved spending of $3.889 million, and the final total was $3.8 million. The budget predicted income of $3.244 million, but only produced $1.48 million.

The board was comfortable with a loss of $644,000, not the $2.3 million loss the event sustained. By comparison, the bureau’s annual budget, which is largely supported by public tax dollar’s is $2 million.

“It was shock, disappointment,” Wear, during a later interview, said of his reaction to learning the true financial picture. “This is not was what was represented to us before the event.”

The board had been told at one point 15,000 tickets had been sold, Myers said. In reality, 1,862 general admission tickets were sold for the Kelly Clarkson show, 6,478 general admission tickets for Maroon 5, 602 three-day passes, and 3,804 complimentary tickets were given out.

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CEDAR RAPIDS - The board of directors for the tourism bureau GO Cedar Rapids reported staggering losses, minimal ticket sales and incorrect data about the three-day festival newbo evolve.

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Organizers had been hoping to sell 4,000 three-day passes for $375 each and about 11,000 general admission tickets to each of the Clarkson and Maroon 5 concerts.

Only three-day pass holder could access the array of speakers, which included film director John Waters, fashion expert Carson Kressley, Olympic medalist Adam Rippon and woodworker Clint Harp.

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Many questioned the timing of newbo evolve, the same weekend as more established and less costly festivals Lollapalooza in Chicago and a growing Iowa festival called Hinterland the same weekend, but McCreight had said organizers believed they found a “sweet spot” between RAGBRAI and the Iowa State Fair.

Myers has assumed day-to-day operations of the organization until an interim director is named, likely with in two to three days. Myers said the interim director will help complete the internal review, and an external audit is anticipated, he said.

GO Cedar Rapids will continue operating with a focus on its core service mission, Myers said. The organization will need to maintain its “great staff” to do so, but he noted layoffs can’t be ruled out, he said.

He confirmed the GO Cedar Rapids information center at the NewBo City Market has been closed, leading to the elimination of two part-time positions, but said that had been discussed before newbo evolve.

GO Cedar Rapids, which has a staff of eight, provides travel marketing services, books conventions, supports sports tourism and hosts events, among other services.

The preliminary review also revealed some vendors had not been paid. The full extent of who has not been paid and how much money is owed remains under review and may take some time before that is fully known, Wear said.

The board had approved a $2.25 million line of credit with Bankers Trust, and $1.5 million still is owed. The city of Cedar Rapids also advanced GO Cedar Rapids $500,000 of its hotel-motel tax allocation.

Myers said the organization is committed to repaying vendors. A repayment plan proposal will be provided to Bankers Trust within the next 40 days, he said.

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Myers said the group has directed the city to withhold the next two installments of its hotel-motel tax disbursement to cover the city loan. The Cedar Rapids City Council has been allocating $1 million per year to GO Cedar Rapids and last month approved $500,000 for fiscal 2019.

Cedar Rapids Mayor Brad Hart said he remains confident in the board of directors and does not foresee a need for changes. However, he said, the City Council will be following the developments at the bureau and could decide to change its allocation in future years.

“I am not sure how it got to this point,” Hart said. “They have strong experienced board members. I am happy they didn’t all say, ‘to hell with it.’ I am happy they are stepping up and dealing with it.”

l Comments: (319) 398-8310; brian.morelli@thegazette.com

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