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Arena Surplus Goes To DeVos Place
GRAND RAPIDS — The latest financial projection has DeVos Place closing the fiscal year with a loss of $1.61 million, up a bit from the $1.59 million shortfall that was initially projected last summer.
The $1.46 million surplus expected to come from Van Andel Arena will subsidize the loss sustained by the new convention center and leave the Convention and Arena Authority with a deficit for both buildings of $146,000 for the current fiscal year that ends on June 30.
The forecast also contains the preliminary budgets for the buildings in the next fiscal year, in which the bottom lines for both are seen as improving slightly. FY05 begins on July 1.
But DeVos Place is still projected to show a loss of $1.57 million for the year, the first full fiscal year for the convention center. The arena surplus, though, should rise to $1.51 million for FY05 and cut the loss the CAA will have to cover next year by 58 percent to $60,864.
Board members will have to dip into the authority’s reserve fund to cover the losses for both fiscal years. That account has a balance of $2.7 million for the current fiscal year and an expected balance of $2.9 million for the next fiscal year.
The CAA should review those numbers and others on Wednesday.
SMG, the management firm that oversees daily operations at both buildings, compiled the budgets board members will evaluate.
In April, DeVos Place lost $90,210 after two consecutive months of surpluses. The building hosted more events than expected, 50, but 13 were small meetings that had little economic impact. Income for the month was above the budgeted amount.
Indirect expenses were the major reason for the loss. Those came to over $408,000 and reflected the cost of operating and maintaining a larger building, as the utility and cleaning charges for the month were $183,000 higher than in April of last year
The arena had a surplus of $84,706 for April from 10 events, with the strongest being concerts from Kenny Chesney and Metallica.
“The arena performed consistent with our budget. Concerts continue to be our bread and butter,” said SMG Finance Director Chris Machuta.
It should be noted that the projections for DeVos Place and Van Andel Arena are for operations and capital replacement costs and don’t include either building’s debt service, payments that total nearly $9 million this year.
The Downtown Development Authority meets the obligation to arena bondholders at a tune of $4.92 million this fiscal year. Revenue from the county’s lodging excise tax is paying for the DeVos Place construction cost exceeding the private gifts and state, city and federal money given to the project. That bond payment is $4 million for the current fiscal year.