Buildings See Many Happy Returns

July 19, 2002
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GRAND RAPIDS — Both buildings did very well in a less-than-healthy economy.

The Grand Center, which holds the city’s convention facility and performing arts hall, did much better than expected. And the Van Andel Arena had its second-best operating surplus in its six-year history.

The buildings accounted for about $800,000 more in revenue than was predicted.

Budgets put together by building manager SMG in February 2001 projected that the Grand Center would lose more than $400,000 this year and the arena would have a net revenue gain of $1.2 million.

The un-audited numbers that came in last week had the Grand Center with only a $23,000 deficit and the arena with a $1.665 million surplus for the fiscal year that ended on June 30.

“I’m very excited about the results, particularly considering the softness of the economy,” said Steven Heacock, chairman of the Convention and Arena Authority finance committee.

“It’s great that after six years, it’s still great,” said Birgit Klohs, a member of the CAA finance committee on the arena margin.

“We had a very successful fiscal year,” said Chris Machuta, SMG director of finance.

A deficit was predicted for the Grand Center because of the construction going on in and around the building, which is being renovated and expanded for the new convention center, DeVos Place.

Despite the very strong financial performance that will mark the building in what will be remembered as a difficult and dusty year for it, general manager Rich MacKeigan said he was most impressed with the operational accomplishment that was achieved this year.

“We anticipated that the construction was going to have a significant impact on our ability to do business in the facility, as well as people’s perception of whether they should come to an event or whether they should even book an event,” he said.

“I think our staff as well as the construction folks and our arts tenants worked extremely hard to try to mitigate some of those challenges that we were faced with, and we really came out of it exceptionally well,” he added.

One challenge SMG faced was actually having to plow through a man-made, par three hole in Welsh Auditorium the first morning after the Golf Show, which made its initial booking this past year, in order to get things moved from DeVos Hall.

Another was getting some tall scenery into DeVos Hall for the run of Beauty & the Beast. The normal route was blocked by construction work, so staffers — on ladders — had to scramble ahead of the props to make sure there was enough room to bring the scenery in without damaging it, the ceilings or the building’s sprinkler heads.

“Those are just two small examples of how operationally our guys really went to the wall to try and make things happen. I think the biggest indication of their success is the bottom line,” said MacKeigan.

Machuta added that DeVos Hall had its best revenue year since SMG took over the management of the Grand Center in 1995.

February and June were the reasons the arena had such a stellar year. The numbers for the first six months weren’t all that terrific, as the building limped along fiscally until the concert season took hold in February.

“February and June ended up being exceptionally strong months,” said MacKeigan.

It’s no secret that the concert business drives the arena’s tills, and this fiscal year it drove the building down a more prosperous road than it did the previous fiscal year. For instance, from January to June of 2001, MacKeigan said the arena sold 34,431 concert tickets. Over the same period this fiscal year, the arena sold 138,431 concert tickets. That’s an increase of 400 percent. On June 21, the arena hosted its highest-grossing concert ever when the Eagles played the Van, a performance that accounted for $1.326 million.

MacKeigan pointed out that the arena was busy the last half of FY01 with basketball and hockey tournaments, opera and other events, and that the arena’s total financial gain for the year wasn’t 400 percent.

“But from a financial performance perspective, concerts are a real good indication of the turnaround for the last six months. In February, we sold over 47,000 concert tickets. In June, we sold over 42,000,” he said. “So those really are the highlights of our fiscal year.”

The arena’s biggest revenue year occurred in FY99 when the operating surplus reached $2.2 million. But $300,000 of that came from parking revenues, which aren’t included any more. So in today’s situation, this year’s fiscal performance of $1.665 million was only about $240,000 short of the all-time record.

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