In part two of the News special project, the Journal reviews the financial status of AMS services Tricolour Outlet and the Publishing and Copy Centre.
Although still in the red, the finances of Tricolour Outlet are slowly improving, according to outgoing Retail Services Director Ashley Eagan.
Tricolour Outlet opened last September, combining Destinations with AMS Merchandise Services (TAMS) stores Tricolour Outfitters and the Used Bookstore.
“When the two services were amalgamating, they were in deficit of $67,000 ... not the best,” Eagan, ArtSci ’11, said, adding that Tricolour Outfitters and The Used Bookstore were considered one service because they were organized under the same operating budget.
She said putting Destinations under the same budget resulted in a substantial decrease in the operating budget.
“Operating expenses were cut by 20 per cent,” she said. “Administrative and space costs are major charges, but instead of paying for three spaces you’re now paying for one. Cutting all-around expenses, staff sizes, wages, administrative costs—this is how there has been improvement.”
Tricolour Outlet occupies the AMS retail space in the upper Erickson Wing of the JDUC and offers custom clothing, school supplies, a Tricolour express bus, ISIC cards, event tickets, used books and more, Eagan said.
Since its inception in 2007, TAMS has run a deficit every year. In its first year of operations in 2007-08, it ran a deficit of $139,083, and last year it ran a deficit of $67,000.
Eagan said Tricolour will likely remain in deficit by about $3,000 at the end of the year.
“After amalgamating the services, the plan was to come out with a small deficit after the renovations and added depreciation, and aim to break even in the following years,” she said.
“TAMS was kind of rocky since it was ever created, and I’ve known Destinations at good times and bad times … A lot of services are up and down.”
She said even though the services were in deficit, they were still popular among students.
“Currently, the used book portion of the service has generated $232,532 … This is still 18 per cent lower than we had budgeted but this could be very much due to the fact that the service is still figuring how to market itself as one large super unit,” Eagan said.
“Operating expenses are literally almost the same as what was budgeted, which is amazing.”
Tricolour’s operating expenses include cost of staff wages, manager salaries, training, advertising, uniforms and upkeep.
“Up until this point Tricolour had budgeted to spend $162,269 in operating expenses, with an actual cost of $162,841. I do expect Tricolour to hit their year end operating expense of $214,652.36 as we have been walking beside our budgeted targets all year and they have stayed in sync quite nicely,” Eagan said.
Projections have stayed on track due in part to trend tracking and research.
“I’m really making sure as a director that I’m doing my research … for example, how Megabus could affect Tricolour Express sales,” she said.
As of the end of January, Tricolour Express ticket sales stood 37 per cent below the budgeted year-to-date revenue of $453,284.00.
“This is due to lower foot traffic in the JDUC, outside competitors and inconsistent service,” she said. “There’s so much competition with our service and VIA Rail and Megabus, but next year we’ll be selling Tricolour tickets online as well as having partnerships with Coach Canada, so prices aren’t overlapping.”
Nick Cornish, the chartering and events manager of Tricolour Outlet, said that competition from Megabus is a huge factor in low Tricolour Express ticket sales.
“Megabus has lower prices … they have the same times as us with cheaper prices,” Cornish, ConEd ’11 said. “They offer prices as low as $14 from Kingston to downtown Toronto, while tickets with Tricolour are $40.”
Cornish said the decrease in foot traffic in the JDUC may not necessarily be to blame for low ticket sales.
“With the merger we have had some foot traffic … we can always do more to get the frosh involved,” he said. “It’s generally the competition from Megabus.”
A meeting with Megabus next week will hopefully lead to a decrease in competition with Tricolour.
“We’ll be discussing with them to see if they’ll raise prices,” he said.
The JDUC’s other major service, the Publishing and Copy Centre (P&CC) remains a viable and financially sustainable service for students, despite some bumps in the road.
According to Head Manager Jeff Heenan, the P&CC is one of several AMS services, like TAPS and Common Ground not funded by any student fees.
“All of the money that comes through is generated by revenue we get from products that we sell,” Heenan, ArtSci ’10, said.
As of the end of February, the P&CC had generated $383,814.02 in revenue with a $93,593.25 profit margin.
“So far it looks like we’re doing quite well. When it comes to AMS services, their goal is to roughly break even … our fundamental goal isn’t to create massive profits,” Heenan said.
He said the P&CC is a fairly consistent service from year to year. Last year the service ended the year with $9,523.17. This year they are budgeted to close the year with $14,535.33.
One of the reasons revenue is so high is due to the unexpected success of the course packs.
They were expected to bring in $141,511.91 in revenue but generated $218,414.35 by the end of February. Heenan said this is because they changed their marketing strategy this year and explained to professors why the course pack is useful and explained to students how to get them.
Another reason that revenue is higher than expected is due to an error in the budgeting of copyright payments. P&CC was originally budgeted to have a deficit of $6,492.28 at the February month end.
“We’re way ahead in revenue … the copyright payment we’ll be making in April was incorrectly budgeted to happen in January instead,” he said, adding that the copyright payments on coursepacks have also not been made yet, contributing to a miscalculation in budgeted year end revenue.
Copyright royalties continue to be the P&CC’s biggest expense, but after a payment error last year, the line item is being closely watched. “Last year they made a mistake when they submitted the first royalty payment in October, and we overpaid by [about] $30,000,” Heenan said, adding that the error was noticed shortly after the invoice was paid in October 2009.
“The actual amount due for that quarter was $40,579.30, but we paid $73,582.95,” he said.
ACCESS Copyright held on to the extra money as a credit, Heenan said. The credit ran out in April 2010 when the P&CC paid their final copyright quarter payment of the year.
This year copyright royalties are on track for a projected total of$75,161.10.
Nonetheless, Heenan said certain parts of the budget, such as wide-format poster prints and self-serve photocopying aren’t doing as well as expected.
“Now printing is bigger than copying because sources are available online,” Heenan said, adding that despite the online presence of materials there is still a high demand among students for the P&CC’s services.
“I have noticed decrease in traffic,” he said. “But don’t know how much that’s affected our financial performance. People will still need to come for our service.”
Ashley Eagan, outgoing AMS retail services director, explained that AMS services are funded by an AMS specific fee, which is set at $65.81.
“This fee is distributed throughout services,” Eagan, ArtSci ’11, said. “The specific fee allows us to gain surpluses that cover the deficits from other services we provide.”
Apart from this fee, the service essentially funds itself, Eagan said, adding that if one service doesn’t do very well one year, the other services can help make up for the loss.
“Essentially all AMS money is kept in one large pool … all surpluses that our organization incurs goes into this large pot and is then used to cover any deficits from the services as well as funds the services in the summer when they aren’t bringing in high sales such as during the school year,” she said.
As an AMS director, Eagan said she helps the head manager create a budget for how much money the service will need.
“They get transition information from the past manager but as a director I come in and do a presentation for them,” she said, adding that making a budget is the best way to get managers familiar with their service.
“You have to allow them to draft [a] budget on their own because it’s their service but I oversee their draft with the board of directors.
“We always make sure we budget realistically, rather than being optimistic … it’s good to set a higher goal, but if we’re not meeting optimistic goals, it looks horrible on us,” she said.
Ben Hartley, AMS vice president (operations), said it may appear like a service is doing quite poorly financially depending on when the budget is looked at.
“The day the budget looks best for the year is right after April 30, because our biggest revenue driving months are months like March,” Hartley, ArtSci ’10, said. “The fiscal year starts on May 1, but students aren’t really around until September – so we have to spend eight months making money back.”
Hartley said draft budgets for services are submitted in the summer to the Board of Directors. They provide feedback over the summer months until the final budget is approved at the end of August.
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