Arena Has Strong Year
GRAND RAPIDS — The preliminary year-end numbers show Van Andel Arena with an operating surplus of $1.7 million for the just-completed fiscal year, the second-best bottom-line performance in the building’s 11-year history.
The surplus the arena recorded this year was $300,000 above what was expected. SMG Director of Finance Chris Machuta said concerts and last fall’s 10th anniversary celebration were the driving forces behind the financial success the building had.
Ten events marked the building’s 10 years. Highlights were concerts from Eric Clapton and the Red Hot Chili Peppers. A skating show, a couple of sporting events, a circus stop, and a public open house were other noteworthy events held during the anniversary.
But the revenue run really took off in November when the building hosted eight events in the month’s first 12 days that were underscored by two sold-out performances from Bob Seger and the Silver Bullet Band. The arena registered a surplus of $496,000 that month from only 13 events.
“November had the Red Hot Chili Peppers, Michigan State basketball and the two Bob Seger dates, and that gave us a pretty good start for November,” said Machuta.
As for concerts, the arena hosted 19 this past year, three fewer than the desired number. But those shows were worth $1.36 million in event income to the building, for an average of $71,871 per concert. Concert revenue accounted for 43 percent of the building’s total event income of $3.15 million, even though those performances were only 15 percent of the 130 events held at the arena during the fiscal year.
Machuta said two shows on two nights in May from Kenny Chesney grossed $1.6 million to become the arena’s highest-grossing two-day concert. On the second night the arena sold $108,000 worth of food and beverages, which became the highest-grossing concession sales night at the arena. More than 179,600 paying customers attended the 19 concerts, which gave the arena an average attendance of 9,500 per show.
The all-time record surplus for the arena was recorded in fiscal year 1999. Net revenue to the building that year topped expenses by $2.28 million.
“I’d never say ‘never’ but I would dare say we’ll never hit that again. I’d love to think that we could, but that was a pretty spectacular year. I think we had 42 or 43 concerts that year. It was kind of a crazy year,” said Machuta.
“But you never know. I didn’t think a year ago that we would have two Bob Seger dates. So you never know what is going to happen.”
DeVos Place had a good fiscal year, too. The city’s convention center had its smallest loss since it “opened” in 2005, losing $467,534. Based on previous fiscal-year performances, the building was projected to have a deficit of $725,000. Machuta said much of the unexpected gain was due to DeVos Performance Hall having an outstanding year.
The performance hall had over $800,000 in event income, about $125,000 over budget. The hall’s four arts tenants did well but so did the shows SMG booked for the space. One was an event in June that was promoted by the Convention and Arena Authority, a first for the board that oversees operations at the arena and DeVos Place.
“We had a strong non-arts tenant schedule, including the ‘Thomas the Tank Engine’ event that we bought and ended up making more money on than we would have, had there been the promoter relationship that we normally have. We gambled a little bit on that one and we came out ahead,” said Machuta.
Net income to the CAA from both buildings should total about $930,000 for the fiscal year, after the SMG incentive fee is taken into account. The preliminary numbers will be audited, and final fiscal year figures will be released this fall.
FY07 ended on June 30, and the arena got FY08 off to a good start. The building had a surplus of $200,000 in July, largely due to four concerts held there in the month’s first 19 days.
“Last year, it took us until November 1st to get our fourth concert in the fiscal year. This year we did it on July 19th. So it’s all a function of timing,” said Machuta.
“November is certainly not going to be as it was last year, but we should be ahead of last year heading into November.”
Van Andel Arena has been projected to record a surplus of $1.3 million in the 2008 fiscal year, while the convention center is looking at a deficit of $675,000 this year. The arena had a surplus of $1.2 million for the 2006 fiscal year, while DeVos Place had a deficit of $547,000 that year.