Moneymakers in short supply

November 7, 2009
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Nineteen concerts played Van Andel Arena during the last fiscal year. Although those shows only accounted for 18 percent of all the events the building hosted, the concerts were responsible for 46 percent of the arena’s $2.6 million in total event income.

Three concerts were held in the arena during September of this fiscal year. Those shows accounted for 27 percent of all the events in the building that month, but were responsible for an overwhelming 82 percent of the arena’s $413,927 in total event income. Overall, those 22 concerts have been worth $1.53 million in event income to the arena. The average take from each one has been $69,370.

That’s why SMG Regional General Manager Rich MacKeigan focused on the concert industry last week when he gave the Downtown Development Authority an update on the arena’s business.

“We’ve got a lot of country coming up,” he said, adding that he was trying to get Carrie Underwood and Tim McGraw to play the building.

But at the same time, MacKeigan said not as many artists are touring this year, and that doesn’t help with the building’s bottom line. In fact, he said touring artists were down by 25 percent this quarter compared to last year.

“If they’re not out touring, we don’t get concerts,” he said.

Competition among venues makes it tough to book every act that is touring, even more so when there are fewer acts on the road. On top of that, MacKeigan said about 30 individuals control the entire industry, making about 95 percent of the decisions as to where artists and groups play.

“It’s a unique and different industry where relationships are important,” he said.

The business is also completing a transition. In the past, record labels were more active in the concert industry. Those labels would develop artists until their music made radio playlists and sold. Two keys to developing artists were sending them out on the road to play before live audiences and being interviewed live on the radio.

But MacKeigan pointed out that record label executives ended that development process when consumers began downloading tunes instead of buying compact discs. “There is no development of the touring industry currently,” he said.

Today, most record labels don’t even develop artists. In the past, someone could release three or four albums through a label before becoming popular. But now an artist is dropped if a song doesn’t sell, even if it’s a first release. So, record labels and radio stations no longer develop the touring industry, and the closest thing today to a developer is television.

“That’s what you have with “American Idol,” and you’re seeing that now with some of the cooking shows,” said MacKeigan.

To back up his TV claim, MacKeigan said the latest “Idol” tour nearly sold out the arena on a day the building seldom has any event, let alone a concert: the Sunday of Labor Day weekend.

The three concerts that played the arena during September, including the “Idol” singers, drew 28,721 paying customers to the building. Concertgoers made up 48 percent of the arena’s total attendance that month.

Even though fewer tours are making the rounds, MacKeigan said Van Andel Arena is well positioned to capture those shows because it is the right size. Most artists can’t fill a 20,000-seat house. But they can sell out a venue with 7,000 to 12,000 seats, like the arena.

At the same time, MacKeigan wondered where the next big-ticket-selling artists would come from and if anyone will ever replace the moneymakers like the Rolling Stones and Billy Joel when no one is developing touring artists.

When DDA member Cathy Mueller asked MacKeigan what was more important to him, the number of concert tickets sold or the total revenue from one, he said it was the money. He added, though, that the arena has been a good draw for concerts because it sells tickets.

Although business has been pretty good at the arena, especially considering the current economic circumstances, the building’s bottom line has seen better days. The surplus was $1.7 million in 2007 but fell to $1.28 million last year. The projection for this year is roughly $1.15 million. The building’s record surplus occurred in 1999 and it was $2.28 million.

“We’re still operating in the black,” said MacKeigan. “Last year was our worst fiscal performance due to the economy.”

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