Lack of concerts hits arena

November 12, 2010
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SMG Director of Finance Chris Machuta told the Convention and Arena Authority the revenue forecast for Van Andel Arena will have to be lowered because it’s unlikely the building will host enough concerts to meet the projection.

The forecast, which was made in May, projected that event income would top $2.5 million for the fiscal year. But through the first quarter of the year, only two concerts played the arena and the event income from both shows was just under $50,000. The forecast also projected a $1.2 million surplus for the building for the year. After the first three months, the arena was $153,000 in the red — which isn’t an unusual financial position for the building at that point in time.

About 20 concerts play the arena in a normal fiscal year. Those shows usually account for more than half the building’s event income and, depending on the type of concert, a solid share of the revenue from beverage, food and merchandise sales. SMG Regional General Manager Rich MacKeigan, also CAA executive director, said musicians aren’t touring as much as in past years.

“It definitely is nationwide,” he said of the concert void. “The issue is there just aren’t a lot of acts touring out there.”

Machuta said DeVos Place performed as expected through the first quarter. He said revenue to the convention center’s catering business grew a bit from the same period last year. After three months, expenses topped revenue at DeVos Place by $479,000. Machuta said DeVos Performance Hall had a good first quarter, however, with nearly $98,000 in event revenue or almost 15 percent of the building’s total event revenue of $689,000.

“From the theater side, things are going very well,” he said.

As for the theater, the CAA created a task force to review its booking policy. Broadway Grand Rapids told board members that the current policy hasn’t treated its operation fairly, saying it often has been left with having to schedule many of its touring shows during holiday weeks when tickets are tough to sell.

“The policy is quite fair for three of the four tenants,” said Mike Lloyd, BGR executive director.

Opera Grand Rapids, Grand Rapids Ballet Company and Grand Rapids Symphony are the other three tenants. The opera and ballet didn’t chime in on the booking policy, but symphony Executive Director Peter Kjome said the current policy meets the hall’s original intention.

The policy, which was created in the 1980s, prioritizes bookings on three levels. The first consideration goes to art groups with local artists. Kjome pointed out that the symphony has about 100 of those, the most of the four tenants. The symphony has traditionally booked the most dates in the theater, too.

“The Grand Rapids Symphony is DeVos Hall and DeVos Hall is the Grand Rapids Symphony,” he said.

CAA Chairman Steven Heacock said he wants the taskforce, which will include board members and the hall’s tenants, to file its report in February.

“We approach this with a certain amount of apprehension. I think there is not a silver-bullet solution. The problem is there just aren’t enough good dates to go around for everyone,” said Mayor George Heartwell, also a CAA board member.

Deloitte LLP reported that DeVos Place lost $632,644 for the 2010 fiscal year, while the arena recorded a surplus of $1.33 million. Deloitte Director of Assurance Bob Phelps said his auditing staff didn’t find any significant deficiencies or uncorrected mistakes in its review of the SMG financials. Phelps also said the board has enough oversight in place to keep tabs on the cash flow for both buildings.

The CAA agreed to make a capital investment of $180,000 to replace the five-year-old electronic point-of-sale system at the arena, which hasn’t always worked properly for credit and debit card sales. “We’ve had a couple of times when the system went down during an event,” said MacKeigan. “The system we’ve got now is no longer supported. We need to be working on (the new system) right now.”

As for the board’s finances, the CAA lost $1.4 million over the first quarter when revenue only totaled $161,000. The one revenue bright spot was parking. The CAA had income of $113,000 from the DeVos Place parking ramp and the Area 2 lot near the arena. That figure was up by 335 percent from the first quarter of last year.

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