Concert Revenue Could Hit Mark

April 18, 2005
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GRAND RAPIDS — After Sting sings at Van Andel Arena on Sunday, members of the Convention and Arena Authority could be whistling while they work when they get together for their monthly meeting the following week.

The performance from the former vocalist of The Police will mark the 22nd concert to play the arena this fiscal year, just one short of the goal arena manager SMG set last June when the firm released the building’s FY05 budget. And at least three more concerts are booked for the arena before the fiscal year ends on June 30. So the year could finish with 25 shows, two more than the 23 SMG projected.

Reaching and surpassing that number is vital for the operational budget of not just the arena but also DeVos Place, the convention center. The arena surplus, expected to be $1.32 million, will allow the CAA to cover the $1.27 million loss projected for DeVos Place.

Concert revenue contributes about 54 percent of all the income the arena generates, and each show is worth roughly $65,000 to the building. This year SMG was looking to get $1.51 million of the arena’s total revenue of $2.81 million from concerts, and Chris Machuta, SMG director of finance, thinks whether or not they will hit that figure will go right down to the wire.

“That is still a little bit in question. A lot is going to depend on ticket sales for Tom Petty and how that one ends up doing. He is here the end of June, more than likely the last event we will host before the end of the fiscal year,” said Machuta.

“Right now, the number (of concerts) will probably be 25. That is what we will have for the fiscal year,” he added.

But just because the arena reaches its concert goal doesn’t mean that the building will hit its revenue mark. How much concertgoers spend at a show is almost as fiscally important as how many show up for one. Thirty-two percent of the total concert revenue, or $483,000, is expected to come from concession sales. Based on 184,000 concert tickets being sold for the fiscal year, that means each attendee has to spend $2.62 on food and beverages.

But, believe it or not, not all concerts manage to even reach that conservative figure.

Machuta said the arena had a run of four concerts this winter that sold plenty of tickets but didn’t deliver much in the way of concession spending. The Yanni show, in fact, only averaged 98 cents worth of food-and-beverage sales from each ticket-holder.

“These are great events but we don’t necessarily see a huge boon to the bottom line like you might expect from a sold-out concert vs. a Motley Crue, which is coming at the end of April and will have maybe 8,500 to 9,000 people here. But the food and beverage will be significantly stronger for that one,” said Machuta.

Compare the Yanni concessions take to the near $8-per-person that people spent at the Kenny Chesney shows and it becomes apparent that for SMG, it’s not just about booking a show but more about booking the right show.

Early in the fiscal year, though, it didn’t look like SMG would come close to holding 23 concerts at the arena, and Machuta said a couple of events helped turn that tide.

Getting the second Chesney concert was one. That only happened because the Grand Rapids Griffins moved one of its home games, allowing the arena to sign the popular country crooner to a second show. Booking the very first arena performance of Sting was the second. His Broken Music Tour, which hits the arena April 24, is mostly only stopping at college campuses.

“We’re probably only one of maybe two venues that are not college buildings. He is doing a college tour and we worked rather hard in trying to convince his agent. Finally, he relented. It wasn’t like it was going to be his third trip here. Sunday is the first time he is ever going to be in town,” said Machuta.

“The combination (of Chesney and Sting) kind of bailed us out here for the fiscal year. So the big thing now will be how well Tom Petty and the Black Crowes do, because that date will be a good food and beverage night for us. If we miss the $1.5 million, it won’t be by much.”  

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