Fewer Events, No Problem

September 5, 2008
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GRAND RAPIDS — Although the total number of event days at DeVos Place was down this past fiscal year from the previous one, total event income to the convention center was up for 2008.

The event number was also down for Van Andel Arena, as was the total event income. But the 2007 fiscal year was the second best in the building's history, and 2008 finished less than $130,000 behind that sizeable surplus.

And despite the fact that both buildings had fewer event days in FY08 than in FY07, their average income for each event was higher in 2008 than in 2007. (See related chart.)

As for DeVos Place, the convention center had a total of 61 fewer booked days in FY08 than in FY07, but had income of nearly $62,000 more from the days the building was active.

"Overall, it was a successful year for DeVos Place," said SMG Director of Finance Chris Machuta, who added that the building's bottom line has improved each fiscal year

Of the five types of events held at DeVos Place, only conventions had more booked days in 2008 than in 2007 — a total of nine. Income from conventions exceeded the $2.1 million mark in 2008, almost $400,000 more than the previous year.

"At the convention center, I know we're getting more and more larger events. One event with 8,000 people is equitable to one meeting with 40 people on our event list. So as we continue to grow our client base, we are growing the size of the events," said SMG Rich MacKeigan,

"The CVB continues to sell very aggressively, and the average convention that they are selling is getting larger and larger. Because of that they're taking up more and more space and there is less space to sell for the smaller events. So the number of events will go down, and that's a good thing," he added.

Another fiscal highlight for DeVos Place was that the income from consumer shows held steady despite a 26 percent drop in the number of event days. There were 20 fewer days of these shows in 2008, but event revenue to the building was only $29,000 less than in 2007.

More than 648,000 people walked through the convention center's doors during the last fiscal year, about 11,000 fewer than in 2007. Thirty percent came to DeVos Place last year for consumer shows, while 29 percent attended conventions and trade shows.

DeVos Place lost an unaudited $463,807 for the 2008 fiscal year, roughly $90,000 less than the $550,748 operational loss the convention center had in 2007.

The arena had a dozen fewer events in 2008 than in 2007, but still managed to squeeze out slightly more than $3 million in total event income from those 118 dates.

"The event mix at the arena was awfully strong. We had a lot of really good concerts. We had a couple of months where they were one after another, and it was just a very good mix for concert activity," said MacKeigan.

The number of concerts held in the arena rose by 37 percent last year from 2007 to 26.

"Which is not a record, but it is a good number," said Machuta.

The arena hosted 37 concerts in fiscal year 1999, the year the building recorded its largest surplus of $2.1 million. Twenty-seven concerts played the arena in FY98, while 26 were also booked in FY02 and FY05.

The event income from those 26 concerts in 2008 totaled over $1.7 million or $400,000 more than the previous year. Although concerts only accounted for 22 percent of the arena's total events last year, those shows produced 53 percent of the arena's total event income. Each concert was worth an average of $63,846 to the building.

"It continues to be the driving force and will always be the driving force," said Machuta.

MacKeigan said fewer concerts have been booked over the past five months or so, largely due to a lackluster U.S. economy. But he added that artists are still touring and consumers are still attending shows.

"When things are good, our industry is good. When things are bad, our industry is OK," he said. "If it happens the way I want it to, we could have four or five concerts in February. But it's too early to tell."

Over 664,000 people went through the arena's turnstiles last year, including the building's 10 millionth customer in May. Still, that total was about 14,000 fewer than in 2007. Sporting events drew 46 percent of all patrons to the arena.

The building recorded an unaudited operational surplus of $1.62 million for the fiscal year that ended June 30, a figure only $80,000 less than the $1.7 million margin from 2007. When the figures are audited, 2008 may go down as the third-best fiscal year in arena history.

SMG estimated that it has earned a fee of $306,600 for managing both buildings. Splitting that charge between the buildings raises the DeVos Place deficit to $617,106 and lowers the arena surplus to $1.47 million. The fee will be confirmed in October after the financial statements are audited.

The arena has been projected to record an operational surplus of $1.4 million for the current fiscal year, while the convention center is expected to lose nearly $379,000 over the same period.

DeVos Place

  Events/

Days

Total Event

Income

Event Type

2007

2008

2007

2008

Conventions/Trade Shows

160

169

 $1,758,654 

$2,108,043

Consumer Shows

78

58

$1,043,190

$1,014,020

DeVos Performance Hall

154

145

$806,364

$770,145

Steelcase Ballroom

72

56

$479,577

$417,479

Other Meetings

192

167

$587,578

$427,499

Totals

656

595

$4,675,363

4,737,186

Average Income Per Event

$7,127

$7,962

 

Van Andel Arena

Events/

Days

Total Event

Income
Event Type

2007

2008

2007

2008

Family Shows

34

28

$697,630

$460,653

Sporting Events

$362,804

$245,007

Concerts

19

26

$1,363,844

$1,706,268

Team Home Games

51

49

$490,329

$452,249

Other Events

18

$239,416

$162,596

Totals

130

118

$3,154,023

$3,026,773

Average Income Per Event

$24,261

$25,650

Source: SMG Financial Statements, June 2007 & 2008

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