Venue revenue beginning to slow down

November 7, 2008
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After defying bad economic conditions to record strong operational figures during the last fiscal year, the economy has apparently caught up with revenue levels at DeVos Place and Van Andel Arena during the first quarter of this fiscal year.

The convention center was slightly more than $500,000 in the red at the first-quarter mark, a deficit roughly $120,000 deeper than it was a year ago.

The arena was $71,500 in the black at the end of the first quarter. But that figure is about half of the surplus the arena had at the same time last year.

“The economy is beginning to impact our events,” said Birgit Klohs, CAA board member and chairwoman of the Finance Committee.

Klohs said the number of events held at DeVos Place was fine, but not as many attendees showed up at those events this year compared to last year. The convention center hosted 126 events during the first quarter that drew 72,872 to the building. For the first quarter last year, 87,083 attended 117 events.

Ancillary income to the building suffers when attendance drops, and that revenue pool was down by about $85,000 for the first quarter from last year.

As for the arena, Klohs said the mix of shows has changed from last year. The events that played during the first quarter didn’t deliver the same spending on concessions as the arena had last year, and ancillary income was also down at the building by about $30,000.

“The forecast is for potentially fewer shows,” said Klohs.

SMG Regional General Manager Rich MacKeigan said second-quarter activity would go a long way to determine what kind of fiscal year the buildings will have. He said the events set for DeVos Place look solid. But he added that those booked at the arena aren’t quite as strong, except for “Walking with Dinosaurs — The Live Experience” that will play eight shows in the building in December.

But MacKeigan also said he wasn’t ready to throw in the fiscal towel for the year.

“The bottom line for the entity is still positive and healthy,” said MacKeigan of the arena. “We’re always assessing new opportunities for revenue and tightening up our expenses.”

Recently released audited financial statements showed DeVos Place lost $533,539 last year, or about $120,000 less than the previous year and the smallest shortfall of its short existence. The arena posted a surplus of $1.33 million last year and had a margin of $1.55 million in FY07 — the second-highest surplus in the building’s history.

As for the lawsuit that Delta-Turner LLC filed last June in U.S. District Court against the CAA and SMG, the management firm hired by the board to oversee daily operations at both buildings, CAA counsel Dick Wendt said SMG has filed a motion to have the case dismissed, and that its brief was filed.

Wendt also said the plaintiff’s attorney has amended its complaint and that the brief from Delta-Turner would be due shortly. U.S. District Judge Janet Neff will hear the motion-to-dismiss first.

Delta-Turner, which owns the DeltaPlex Arena and Conference Center in Walker, accused the CAA and SMG in June of violating federal and state antitrust laws, the open-meetings act and the freedom-of-information act by allegedly entering into a “preferred provider agreement” with a major Michigan concert promoter.

The plaintiff claimed that contract has made it very difficult for the DeltaPlex to book popular musical acts. The CAA and SMG said the suit was without merit.

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