GR Is Holding Two Full Houses

March 7, 2005
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GRAND RAPIDS

DeVos Place
and Van Andel Arena are booked on Saturday.

Saturday will be the first day both buildings will be fully leased since the massive exhibit space at the new convention center opened in December 2003.

Convention and Arena Authority Chairman Steven Heacock saw that full house, or full houses, as cause for an optimistic future in an address he recently made to board members and staffers. So far, Heacock said, the board has been very successful and very lucky.

Successful in that construction of the convention center came in under budget and ahead of schedule and the arena continues to run in the black. Lucky in that the board had CAA staffer Dale Sommers, SMG general manager Rich MacKeigan, and former board members David Frey and John Logie working with them.

Heacock said the combination of that success and luck resulted in the turnstiles of both buildings clicking well over 1 million times last year.

"During 2004, the Van Andel Arena was used by about 750,000 patrons and DeVos Place was used by about 600,000, which is a total of about 1.4 million people," he said.

But despite calling 2004 a good year, Heacock said there was more work to do in 2005. Toward that end he outlined four goals he wants the CAA to reach this year.

One is to address the future capital needs of the buildings. He called for a five-year plan, along with a longer one, because he jokingly said there might actually be a year when Cher won't stage a farewell show at the arena. The arena surplus covered the operational deficit of DeVos Place last year and is being counted on to fill this year's expected shortfall, too.

The board was told in May that in coming years they would need to set aside about $2.2 million each year to keep both buildings in tip-top shape. DeVos Place will need about $1.7 million by itself. If the performance hall is included, another $200,000 can be added to the tab, which would bring it to $2.4 million. It's been suggested that the setting aside should begin in FY06. Heacock, though, said he wasn't certain $2.2 million is the figure the board needs to focus on.

"I think that number includes replacements to the buildings, or a massive replacement. I don't know that you can really plan for that. I think that 20 years from now or 40 years from now, if the community decides it needs a new arena, it's going to have to gather the money and you're not going to save for that," said Heacock, a CPA.

"On the other hand, if it needs a new roof in 10 years, we should be able to save for that. So that's what I want to get to — determine what do we realistically need to set aside."

Heacock said the CAA would have a larger reserve account at the end of this fiscal year than the board anticipated because DeVos Place cost less to build than expected, and those extra dollars will go into that fund. Major repairs aren't needed yet at either building. But he wants the board's Finance Committee to look at what repairs may be needed in 10 years.

The forecast for the current fiscal year has the CAA ending the year with a balance of nearly $4.4 million. But with the excess from the construction account, that fund could grow closer to $8 million and possibly even $12 million.

Heacock said the committee also would try to decide whether an outdoor concert venue would be a feasible project for the board to undertake. He feels if an amphitheater could be successful here, then the CAA should build it — alone or in a partnership — instead of having a competitor build one and siphon off event income during the warmer months.

Concert revenue is vital to the continued existence of both buildings, and to lose those dollars to another venue for up to five months of every year would be a difficult financial dilemma to overcome. Twenty-three concerts are in this year's arena fiscal forecast and they are expected to be worth about $1.52 million, or 54 percent of the building's event income.

"We rely greatly on those concerts for our financial health. So I wanted the group to include in their thoughts what would happen if an amphitheater was built," said Heacock.

"It's nothing more than that. I just want the group to think about it."

Heacock said the CAA needs a long-term fiscal plan because Kent County and the city of Grand Rapids are on the line for any losses that can't be covered by the buildings. Both units are busy filling their own financial gaps and neither needs another one to fill. He wants the report from Finance Committee done by the end of this fiscal year, which is June 30.

DeVos Place is on track to lose $1.27 million this fiscal year, while the arena should have a surplus of $1.32 million.

Heacock also wants the board to review the convention center booking policy, find more events that would draw African-Americans and Hispanics to both buildings, and improve communications with the city and the county.

Come Saturday, DeVos Place will host the Michigan Reading Association, a women's show, a motorcycle show, and events with Ferris State University and Bristol Meyers. The symphony will play in the performance hall Saturday evening, and the Griffins will do the same in the arena.

"So how do we measure success?" asked Heacock, also an attorney, before he answered his question. "Just look at our facilities. Thanks to our staff and partners, on March 12, 2005, the CAA will have every single room in use at both buildings for the first time."    

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