CAA fiscal year is three months too long
Arena and convention center record major surpluses through three quarters.
When March ended, net proceeds to the CAA from DeVos Place, the area’s convention center, stood at $990,400 — a 77 percent increase from the previous year.
Van Andel Arena generated net proceeds of nearly $1.5 million by the same date; that figure represented an 88 percent hike from last year.
Add the two together and the board was looking at a net of $2.2 million on March 31. A year ago, that net was $963,300.
The convention center’s net number was arrived at by combining its operating surplus of $450,935 with its parking revenue, which was $567,385 through March, minus a $28,000 charge for public safety.
The arena’s net number came from its $1.4 million operating surplus and $92,000 in parking revenue, minus an expense of $51,000 for public safety.
However, March 31 isn’t the end of the fiscal year. It marks the end of the third quarter.
“(SMG Fiscal Services Director) Chris (Machuta) is expecting some drop-off in the fourth quarter from last year,” said Bob White, the board’s fiscal consultant. He added that expenditures could be higher over the year’s last three months, too.
SMG Regional General Manager Rich MacKeigan said the event load and income look pretty good for the May-through-June period, but neither is as heavy as last year.
“But if you’re looking from fiscal year to fiscal year, we’re definitely up,” he said.
In March, DeVos Place recorded a surplus of $269,229 from 52 events. That left the convention center with a nine-month surplus of $450,935. A year ago, the building was $79,000 in the black, so this year’s third-quarter figure is nothing short of phenomenal for a building that has never had an operational surplus at year’s end.
“It seems like we’re using the building better,” said CAA Chairman Steven Heacock.
“The convention center seems, over the last three years, to have hit a plateau,” added MacKeigan.
Event income was up from the building’s three key sources: conventions, consumer shows and DeVos Performance Hall. After three quarters, total event income was $4.4 million, or $400,000 higher than was projected for the year.
“The four art tenants are finding ways to do business that they didn’t have years ago,” said MacKeigan. “Plus, we’ve got a facility that is equipped to deal with a better economy.”
Despite the glowing third-quarter numbers, DeVos Place is projected to finish the fiscal year on June 30 with a $420,000 deficit.
The arena’s operating surplus was $1.42 million after three quarters, or twice the 2012 figure. Event revenue was up by nearly $300,000 from the initial forecast. Van Andel has been projected to close the fiscal year with an operational surplus of $1.2 million.
SMG is expected to earn an incentive fee this year of $330,525 for the buildings’ performances. If so, it would be the first one in three years.
Board members also got their first look at the 2014 fiscal year forecast. It shows the arena earning an operating surplus of $1 million and the convention center having an operational deficit of $446,600, which would leave the CAA with a net of $560,000.
The 2014 capital improvement budget is $3.2 million for 23 projects. A dozen are listed for DeVos Place, with 11 on tap for the arena.
The costliest project on the list for DeVos Place is $500,000 to upgrade the sound system in the performance hall. At the arena, it’s $900,000 to replace the video system on the building’s south wall.
“Now is the time to address this,” Heacock said to the board.
The CAA is expected to adopt the 2014 budgets, including a capital-improvement spending plan, at its June meeting. The next fiscal year begins July 1.