A mixed revenue bag
Halfway through the current fiscal year, the DeVos Place bottom line wasn’t quite as red as a year ago. But at the same six-month mark, the black wasn’t nearly as glossy for Van Andel Arena as last year.
The city’s convention center had lost $580,826 by the end of December, which is better than the $632,400 deficit the building had at the end of December 2008.
The arena had a surplus of $408,260 at the end of last December. A year ago, though, the building had an excess of $722,612, or about $315,000 more than the current figure.
SMG Director of Finance Chris Machuta said event income to DeVos Place was up for the first six months of this year by $148,000 from a year ago. But ancillary income to the building was down by $108,000 from the previous year because revenue from the catering service was off by that amount.
Machuta said the current economy has groups scaling down their meetings and spending less on ancillary items like meals. Also, 40 fewer events were held in the building over the first six months of this year compared to last year.
But business at the building is expected to pick up; public shows have begun to take over the convention center and will remain there for much of the third quarter. An RV show held last month drew 20,000 to the weekend event, a record attendance for the annual show that Showspan Inc. has produced for the last four years.
“We hope that is a forecaster for the rest of our public show season. As you know, public shows are to the convention center what concerts are to the arena,” said Rich MacKeigan, SMG Regional General Manager.
The Michigan International Auto Show is in the building this week.
Public shows occupied 58 days in the convention center during the previous fiscal year. Those events drew 165,000 people and were worth slightly more than $1 million to the building — 23 percent of the center’s $4.4 million in total event income last year.
As for the arena, Machuta said the number of concerts held there over the first six months was down, and the building still needs to book two or three more before the fiscal year ends on June 30.
“The shows we’re hosting are selling beyond what we expected because of the economy. We just don’t have as many shows as we want,” he said.
The difficulty in booking more before the year ends is that concerts normally require a lead time of three to six months. MacKeigan said he has already received requests from promoters for dates in July and August, which fall into the next fiscal year.
On top of that, he said touring groups have dropped by 25 percent this year due to the recession. In addition, concerts aren’t selling out nationwide this year as they were prone to do in past years.
“We’re going to have a tough time making our budget at the arena this year because concerts are down,” said MacKeigan.
The arena hosted 19 concerts during the last fiscal year that drew 167,000 and were worth $1.1 million in event revenue to the building. Concert revenue accounted for 45 percent of the arena’s $2.5 million in total event income last year.
Midway through the fiscal year, revenue was down by 51 percent from the year’s budget projection for the Convention and Arena Authority, the group responsible for operations at both buildings. Total income to the board, $425,543, was off by $408,000 from the forecast because revenue from parking and interest from investments were off by $416,000.