Same old song no concerts

April 9, 2011
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Unless Van Andel Arena has a gangbuster fourth quarter, the building’s year-ending surplus is very likely to fall below the $1 million mark for the first time since it opened in October 1996.

At the end of February, the eighth month of the fiscal year, the arena had a surplus of $336,600. A year ago, that margin was slightly more than $1 million. February, like some other months this fiscal year, didn’t bring a single concert to the building. In fact, only seven concerts had played the arena from July through February.

Concerts traditionally have been the arena’s bread-and-butter income source.

“The most significant thing is a drop-off in concerts,” said Robert White, a financial consultant to the Convention and Arena Authority, of the building’s financial state.

“The concert business is just not what it used to be,” said Birgit Klohs, CAA board member.

“If this is a trend, then we need to figure out what to do,” said CAA Chairman Steven Heacock.

The arena hosted 18 concerts during the last fiscal year that were worth $1.9 million in event income to the building. Total event income was $3.5 million, which was earned from 103 events. So in FY 2010, which ended with a $1.3 million surplus, concerts accounted for 17 percent of all events at the arena and 54 percent of its event income.

Also last year, the building hosted three concerts in the fourth quarter — including one from Elton John — that pumped up the revenue take, and that’s not likely to happen this year. But White pointed out that the arena should get off to a good start for the next fiscal year because there are three concerts on its schedule for July, the first month of FY2012. The arena’s largest surplus came in 1999 when the building cleared $2.2 million. Total income that year was $5.5 million, as 36 concerts were held at the arena.

A continued loss of concert revenue certainly wouldn’t lead to a healthy scenario for an aging building in good structural condition, but one that may be in need of a facelift soon.

“It won’t be long before it needs a roof. It won’t be long before we’ll have to refurbish the 10,800 fixed seats,” said Jim Watt, SMG assistant general manager in charge of the building’s infrastructure. “Pretty soon the video board on the south end will have to be replaced. It’s 13 years old and technology has changed.”

Less revenue is also going to the CAA. The board had a deficit of $2.8 million at the end of February, about $2.3 million higher than the same period last year. Parking revenue and interest income were down from 2010, while the electric bill for both buildings was up by almost 20 percent.

“Several years ago, we were getting 5 and 6 percent on our money,” said White of the board’s interest income, which was down by 40 percent from a year ago. Capital spending was about six times higher this fiscal year from last year.

After eight months, the city’s convention center, DeVos Place, was $426,650 in the red and in nearly the identical position it was a year ago, when it had a deficit of $426,370.

SMG Assistant General Manager for DeVos Place Eddie Tadlock said the broadband width has been increased in the building to ensure that larger groups can access the Internet by computer, phone or pad. He said the Michigan Dental Association is meeting there this week and the dentists mostly use iPhones.

Tadlock also said the convention center and arena have been registered as ArtPrize venues for this fall’s competition. It’s the first time for the arena, and Tadlock said the art pieces the building will host will be located outdoors. “It should complement The BOB and the Arena District.”

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