Month One DeVos Place In Red
At the same time, the projected fiscal-year surplus for Van Andel Arena was reduced last week by $130,000 to $1.33 million, before capital replacement costs. At the start of FY04, the arena was projected to show a surplus of $1.46 million.
That surplus is vital because it is being counted on to cover the loss forecast for DeVos Place, which is expected to be $1.61 million by the end of the fiscal year next June.
Even though DeVos Place held 38 events last month, three more than projected, event and ancillary income fell short of expectations and expenses were higher than thought.
The forecast had the building earning $35,746 in net income for December. But the final tally showed the convention center was $79,677 in the red for the month for a difference of $115,423 between the budgeted and actual figures.
SMG, the firm that handles daily operations for DeVos Place and the arena, reported that more had to be spent on electrical work and decorating for the woodworkers convention, which opened the exhibit space in early December.
“Hopefully, the woodworkers show is not a trend,” said Chris Machuta, SMG director of finance.
Machuta told the Convention and Arena Authority Finance Committee last week that utility costs for the convention center could run 10 percent higher than projected for the remainder of the fiscal year, and he added that he hadn’t received the electric bill for last month. Nearly $1.2 million was budgeted for utility costs during the fiscal year.
Still, Machuta said it was too early to accurately predict what those costs will be. He felt he would have a better idea in April, at the end of a run of March consumer shows in the building ends. So right now, SMG is in the midst of a financial learning curve.
“If this same month happens a year from now, there will be about a $120,000 variance in the budget,” said Machuta.
Revenue to the arena was less than expected for both November and December after a strong financial showing in October. Machuta said back then that income for the building was likely to drop over those two months.
Net revenue for the arena, above expenses and before capital replacement costs, stood at $770,000 at the end of December, which marked the halfway point of the fiscal year.
“The arena is still selling a lot of tickets. From an industry perspective, we are still one of the strongest small markets in the country,” said SMG general manager Rich MacKeigan.
MacKeigan added that the revenue forecast for the arena may have to be adjusted again, but not by a major amount. He said they were looking to book a few more concerts for the building before the fiscal year ends. Popular music concerts are the most profitable events held at the arena, but touring groups are down right now.
“We’re scratching and clawing for everything that is out there,” said MacKeigan.
As for the Grand Center, it closed out its portion of the fiscal year with a $63,000 loss in November. The former convention facility ended the first five months of this shared fiscal year by losing nearly $640,000.