Arena Football League Deal To Cost City Money

May 24, 2002
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GRAND RAPIDS — The Convention and Arena Authority learned last week that revenue would be down slightly for both of its buildings in the upcoming fiscal year, which begins on July 1.

The projection shows that revenue for the Van Andel Arena could drop by $120,000 during Fiscal Year 2003, largely because the Grand Rapids Rampage will play in the building from February through June next year, instead of from April through August as the Arena Football League franchise has done for its first five seasons.

SMG arena general manager Rich MacKeigan told board members that playing those games earlier in the year would make it tougher to schedule concerts and other events during the building’s best booking months, which are usually February and March. He added that concerts and family shows result in a bigger payout for the arena than Rampage games, which are basically break-even propositions for the building.

The Rampage games will be played earlier next year because the league signed a broadcast contract with the NBC TV network in March, a deal that kicks off the week after the Super Bowl telecast. Still, revenue for the arena is expected to top $4.3 million in FY03, a figure that would give the building a net-income gain of $1.24 million for the 12-month period.

“We’ve had unusually high profits for the arena this year and we can’t expect to beat the MCI Center every Monday,” said CAA Finance Committee Chair Steven Heacock, who was referring to a Polestar magazine ranking that listed the arena as the third top ticket-seller in the nation for the first three months of this year.

Through April, the arena was already showing a profit margin of $1.26 million with two months of this fiscal year left.

Besides the schedule change, the Rampage is currently in the final year of its five-year arena lease. CAA Chairman John Logie said the two sides are ready to begin contract talks. He said DP Fox Sports and Entertainment, the owner of the Rampage, was considering the talks as a renewal negotiation.

But Logie, also mayor of Grand Rapids, said CAA counsel Richard Wendt was trying to determine whether the upcoming agreement legally qualifies as a renewal because the original contract states the franchise would play most of its games in the summer when bookings are traditionally down at the building.

“We’re still looking at that issue,” said Wendt, who also is a partner at Dickinson Wright PLLC.

MacKeigan added that moving the Rampage games could cost the arena more than the projected $120,000 loss in revenue. He felt the loss could go as high as $150,000.

“If the lease were to change that could affect the financials,” he said.

The projection for the Grand Center, which includes DeVos Hall, has that building also receiving $120,000 less in revenue during FY03 largely because a bi-annual trade show won’t be held there next year, an off year for the meeting.

Indirect expenses for the Grand Center are expected to rise by $180,000, with half of that being attributed to the hiring of a new sales director for the building. Also, another $45,000 will likely be needed to maintain the newly renovated lobby in DeVos Hall.

Overall, the Grand Center is expected to earn $1.99 million in revenue for FY03. But unlike the arena, the building should lose about $360,000 during the next fiscal year.

Through April, the Grand Center was a healthy $150,000 in the black. The FY02 projection had the building bleeding $357,000 worth of red ink at this point in the fiscal year.

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