- change ups
CAA absorbs ‘intimidating’ financial statements
Convention center gets off to horrible start during first quarter.
It’s a little too late to put the corks back into the champagne bottles, but it still was a good year — for the building, not the bubbly.
When the last fiscal year ended June 30, the preliminary and unaudited figures submitted by SMG showed that DeVos Place finished with an operating surplus of $95,725, the first surplus in its 10-year history.
An audit of the SMG financials by Deloitte lowered that operational surplus to $78,035, however. And when the Deloitte auditing team added in the $234,505 management fee SMG earned for operating the building last year, the long-awaited and much-welcomed surplus turned into a deficit of $156,471.
Still, that deficit was much smaller than the $382,093 the convention center had in 2012.
However, that wasn’t the main financial news regarding DeVos Place that was discussed at the last Convention and Arena Authority meeting.
“DeVos Place is well behind where we were last year,” said SMG Director of Finance Chris Machuta of the building’s standing after the first quarter.
Figures supplied by CAA financial consultant Robert White showed there was a significant drop in business revenue for the first quarter of the current fiscal year, which ended Sept. 30, when the recent numbers are compared to the first three months of FY13.
At the end of the latest three-month mark, DeVos Place had a deficit of $595,094. A year earlier the building finished the first quarter with a surplus of $79,747. White said the difference between the two figures marked a negative 846 percent change in the building’s bottom-line from the previous year.
“Frankly, these are intimidating financial statements,” said CAA Chairman Steven Heacock.
SMG Regional General Manager Rich MacKeigan, also CAA executive director, pointed out these numbers are cyclical. He said the building has gotten off to a slow start in past years and things are looking better further into this fiscal year.
“I think there is a strong opportunity for us to pick up some of that (shortfall) over the course of the year. I think the convention center will right the ship,” said MacKeigan. “We should all have reasons for optimism for the convention center.”
The Deloitte audit of the SMG 2013 financials for Van Andel Arena showed the arena finished the year with a surplus of $1.64 million, roughly twice the profit it had in 2012. The audit matched the unaudited $1.64 million surplus that SMG attributed to the building in July.
But the first quarter numbers for the arena showed a deficit of $279,798, which is 20 percent higher than a year earlier. The higher shortfall was due to a 6.5 percent increase in expenditures rather than to a loss of revenue during the first quarter.
MacKeigan told the CAA the arena’s revenue tally relies heavily on hosting concerts, and there weren’t any during July, August and September. Over the recently completed fiscal year, the arena hosted 20 concerts that were worth $1.77 million, or 53 percent of the building’s total event income.
“I’m happy how things are looking going forward,” he said.
Deloitte audits the SMG financials for the buildings, while BDO USA does the same for the CAA. The board’s financial statements include revenues and expenditures that don’t go through SMG, such as the parking revenue the CAA receives from the DeVos Place ramp and a lot behind the arena.
The CAA extended SMG’s contract to oversee daily operations at both buildings for two more years. “We all know our relationship is incredible,” said CAA board member Lew Chamberlin.
“They’ve done an outstanding job and they are responsible,” said Floyd Wilson, also a board member.
The new agreement, which maintains the current terms, runs through June 30, 2016.