Arena Closing Out Year Strong
GRAND RAPIDS — A very strong fiscal showing in May could lead Van Andel Arena to its third — and possibly second — largest annual surplus in the building's 12-year history.
Four May concerts helped drive the arena to a net-income figure of $483,194, the building's fifth largest monthly margin ever.
"It was a very good month for the arena," said SMG Director of Finance Chris Machuta. "Overall, the fiscal year will be very solid."
With May in the books, the arena surplus stood at $1.66 million at the 11-month mark. Last year, the arena had a $1.73 million margin at the same point in the fiscal year, and 2007 ended up being the second most profitable year for the building. The arena's best fiscal year occurred in 1999 when net revenue topped expenses by $2.28 million.
More than 75,600 paying customers attended the 11 events held at the arena in May, a month when ancillary income to the building came close to equaling direct event income. Taken together, the two revenue sources combined for $514,000, with $292,000 of that amount coming from direct event income.
"I'm surprised, with the economy being the way it is," said Clif Charles, a member of the Convention and Arena Authority, the public board that oversees operations of the arena and DeVos Place, the convention center.
SMG Regional General Manager Rich MacKeigan said people still have discretionary income to spend and some may be canceling other events, such as vacation trips, and going to concerts and shows instead. Plus, MacKeigan said, if a show is good, they'll go.
Machuta said May was a decent month for DeVos Place too. The convention center had a $59,500 surplus for the month, largely because of the week-long Golden Gloves national boxing tournament held in the Steelcase Ballroom and a couple of catered events.
The CAA adopted four separate operating budgets last week for the upcoming fiscal year that begins July 1. Here are the highlights of those projected FY09 budgets:
- Van Andel Arena: adjusted gross income of $5.33 million with total expenses of $3.91 million for an operating surplus of $1.41 million.
- DeVos Place: adjusted gross income of $5.23 million with total expenses of $5.61 million for an operating deficit of $378,977.
- CAA: operating revenue of $11.6 million with operating expenses of $10.8 million for operating income of $808,662.
- Capitol Improvements: new expense of $1.46 million for FY09 with a carryover of $360,000 from FY08 for a total expense of $1.82 million. Money is being allocated from the CAA Capital Account, which has a balance of $22.8 million at the start of the fiscal year.
Kent County Fiscal Services director and CAA staff member Robert White said the CAA is expected to get slightly more than $1 million in parking revenue for the upcoming fiscal year from the DeVos Place underground ramp and a lot near the arena. The board's cost to operate both is expected to be $280,000, leaving the CAA with roughly $720,000 in net operating income from parking.
White pointed out that net figure was nearly double the convention center's projected shortfall of $378,977, meaning parking revenue, and not arena income, can cover the DeVos Place loss.
Nearly $2 Million Worth Of Upgrades
Nearly $2 Million Worth Of Upgrades
Here is the capital improvements budget the Convention and Arena Authority adopted for the upcoming fiscal year that starts July 1.
Van Andel Arena
Northwest concourse expansion
Upper bowl curtain system
Concourse security cameras
Variable frequency drivers
Theater fire curtain
Telecom system upgrades
Theater concrete repair
Theater fall arrest system*
Wi-Fi equipment upgrades
Theater lighting instruments
Total for both buildings
*Listed in 2008 budget but not done. Carried over into 2009 budget.
Source: SMG, June 2008