Arena and convention center both face deficits
DeVos Place and Van Andel Arena both were losing money at the halfway mark of the fiscal year. That red-ink scenario isn’t unusual for the convention center, which hasn’t turned a profit since its reincarnation in 2003. But it’s a brand-new financial position for the arena: The building has recorded a surplus of at least $1 million since it opened in 1996.
Although the arena was only $32,863 short of a balanced budget, the fiscal-year projection was for a surplus of $384,000 at the end of December, the fiscal year’s halfway point. At the end of December 2010, however, the arena posted a surplus of $124,535. So the year-to-year drop is $156,000.
“The issue here is concerts,” said SMG Director of Finance Chris Machuta. “We’ll probably be down seven to eight concerts for the year.” The building normally hosts about 20 concerts each year. Machuta said that the forecast over the last six months does show an improvement for the arena.
DeVos Place was $518,000 in the hole after six months. Still, that figure was better than the building’s projection, which gave it a deficit of $620,000 through the fiscal year’s first half. That situation prompted Machuta to say, “The building continues to do very well.”
He said the next few months would hold the key to how it will finish the fiscal year. A number of consumer shows, such as the golf and home-and-garden shows, will be in the building through March; those events typically boost the revenue take for the building.
Utility costs have played a role in the financial condition of both buildings: They were 35 percent higher compared to the same period the previous year. Halfway through 2010 that tab was $744,000. This year, the charge was slightly more than $1 million. At the same time, interest income to the Convention and Arena Authority was down this year by 40 percent from last year.
Overall, the CAA was $2.1 million in the red at the six-month mark.
At the board’s last meeting, the CAA agreed to buy four pieces of art for $12,000, to be permanently displayed in the convention center. The art works were shown in DeVos Place during last fall’s ArtPrize competition.
“These were the top vote-getters from the public, so I’d like to say the public has spoken. These are the cream that has risen to the top,” said Eddie Tadlock, SMG assistant general manager for DeVos Place.
Tadlock said the money for the purchase would come from the building’s ArtPrize budget. The building hosted entries from 58 artists during the event, and an estimated 65,000 viewed the art work.
The CAA has been planning for years to add art to DeVos Place.
“We think it’s a great opportunity to secure art for DeVos Place. All are Michigan artists and several have ties to West Michigan,” said CAA member Lew Chamberlin.
“It’s a great thing for us to do to maintain a collection,” added Mayor George Heartwell.
The CAA also agreed to give the Grand Rapids Griffins until June 30 to complete negotiations with SMG on a new five-year lease at the arena, where the AHL franchise plays its home games. The team is closing out its 15th season in the building; the target date for renewal of the lease has been set for Sept. 1. “The Griffins continue to draw good numbers at the gate,” said Machuta.
CAA Chairman Steven Heacock said the booking policy taskforce has met twice so far with the four arts tenants at DeVos Performance Hall. He said the taskforce has conducted a survey of the tenants about changes they would like to see made to the policy. “We’re ready to go forward with agreements,” said Heacock. But he didn’t outline a timetable for those agreements.
SMG Marketing Director Lynne Ike said the restaurant at the arena called the Fifth Third Bank Vault has been opened to the public. Previously, the restaurant, which is on the building’s entry level, only admitted premium seat-holders. “We had a lot of people in it (for the Kid Rock concert),” said Ike. “It’s a hidden jewel, and we’re trying to get the word out.”