New London ― Stung by several back-to-back years of slumping revenues at Ocean Beach Park totaling more than $1 million ― losses the city must cover ― officials for the first time in 25 years will entertain new management options at the celebrated seaside destination.

Mayor Michael Passero on Tuesday said the city in the coming months would begin soliciting proposals from companies interested in handling the day-to-day running of the park.

“It’s a good time to test the market, to see if there are any new groups that might offer some proposals,” Passero said. “But it’s a tough venue.”

The city in 1999 signed an agreement with the Boston Concession Group, now known as Sodexo Live!, to oversee the park after decades of what Passero called poor management by the city.

Revenue booms and busts

That contract, extended several times and set to expire on May 23, compensates Sodexo 10% of gross revenue from the park and a portion of net profits, with the remainder funneled to city coffers.

But if the park loses money, the city is responsible for funding the entire loss, including Sodexo’s contractual management fee.

“If the park makes money, the city makes money,” City Finance Director David McBride said. “If it loses money, so does the city.”

The park posted losses of $122,236 in 2019; $100,757 in 2020; $52,693 in 2021; $323,984 in 2022; and $324,921 last year. The city has so far only reimbursed Sodexo $422,236 of the $1.03 million in losses built up over years.

The park’s gross profits in any given year are eaten up by a series of operating expenses, including labor, utility and management fees, according to city financial documents.

For instance, during the 2021 season ― the venue’s financial year runs from July 1 to June 30 ― the park took in gross profits of $1.66 million, but operating expenses totaled $1.51 million, leaving an operating profit of just $150,500. That figure was further reduced when the 10% management fee of $203,249 was included, leaving a net loss of $52,690 for the city to cover.

The park has had stretches of profitability, returning roughly $765,000 to the city for years spanning 2012-2016.

“There’s a lot of infrastructure at the park and a lot of deferred maintenance,” Passero said, noting the park is home to a mini-golf course, banquet hall, arcade, boardwalk and pool.

The park has been named one of country’s top 25 by Travel + Leisure magazine for three years running. The magazine, like generations of visitors, highlighted the park’s “half-mile, golden-sand beach with gentle tides” and fantastic views of passing boat traffic and Ledge Lighthouse.

Using rate hikes to blunt profit losses

Sodexo employee Dave Sugrue, who has served as the park’s general manager since the 1999 contract was signed, during a City Council meeting on Monday described the beach business as a volatile one whose success is largely weather- and calendar-dependent.

“If it’s a sunny Sunday in mid-June to mid-August, we can do $125,000 to $150,000 in business,” Sugrue said. “If it rains on that same day, we might do $150 in business.”

Sugrue’s explainer ― he noted the beach only makes money 10 weeks each year ― came ahead of the council approving new beach entry rates for the upcoming season that included increases of up to $10 for some visits.

The cost for a one-day weekend visit jumps from $35 to $40 this year, while a July 4 entry rises from $50 to $60. Season passes for residents will increase from $35 to $45, while non-residents will pay $170, up $10 from last year. All-day pool and mini-golf costs will not rise and the park’s Monday cruise night option remains free.

The hikes, which Sugrue said could generate up to $60,000 more in annual park income, are designed to offset recent revenue losses.

Sugrue declined to comment for this article, deferring inquires to city officials.

McBride said Ocean Beach is not the only business whose profits are affected by weather.

“Places like marinas and ski destinations are able to rely on things like restaurants and retail to offset weather issues,” he said.

“Something has to change”

McBride said the City Council on May 20 would discuss a proposal to again extend Sodexo’s contract, but this time for a far briefer period.

“We’re not doing those five- or 10-year extensions this time, but one in the range of 16 or 28 months,” he said. “At the same time, we’ll issue (the) request for proposal for a new provider.”

Depending on the exact length of the new extension, Sodexo would oversee the park for either two or three more summers. That span is necessary to ensure venue bookings for weddings and other events aren’t interrupted.

McBride said the city also plans to require Sodexo to provide more financial data in the form of monthly reports that enable city officials to review profit and loss information in detail.

Passero, a former park lifeguard captain, said Sodexo could submit its own proposal to continue managing the park. He said the city expects to hire a consultant to craft the proposal language and help vet submissions. He expects to have a request for proposal ready to send out within the next 14 months.

“If a proposal can confidently show this beach can pay for itself ― or at least decrease the losses to the city ― and sustain that property, we’re going to take that seriously,” Passero said.

City councilors, while praising Sugrue’s dedication and community outreach, have expressed concern over the park’s downward revenue trend.

President Pro Tem John Satti and his colleagues have offered several potential profit-driving recommendations, from indoor tribute band performances to RV parking.

“(The park) could be profitable, weather or not, if you have the right facilities there, like a hotel,” Satti said on Wednesday. “I think there’s excellent entertainment at a cost that’s favorable to residents. Something has to change.”

j.penney@theday.com