Arts & Entertainment, Economic Development, and Travel & Tourism

Arena and DeVos Place on solid footing

Van Andel’s revenue covers operating losses at convention center for CAA.

December 16, 2016
| By Pat Evans |
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(As seen on WZZM TV 13) Van Andel Arena’s 20th anniversary celebration has put the Convention and Arena Authority in a good place.

The year-long celebration should help bolster two fiscal years for the CAA, which run July-June, SMG General Manager Richard MacKeigan said.

According to the 2016 fiscal year audit, the CAA finished with operating revenues of $14,620,074 and operating expenses of $13,765,758, resulting in an operating income of $854,316. The operating income is a significant increase against the $1.6 million loss in 2014 and a slight decrease from 2015, which had operating income of $955,731.

The audit noted the dramatic decrease in operating expenses from 2014 to 2015, which included heavy winter impact on utility costs and substantial scheduled maintenance.

Attendance at Van Andel Arena and DeVos Place increased by nearly 130,000 people from 2015 to 2016, according to the audit.

“I think, overall, the financial impact to the Convention and Arena Authority is very heavily weighted to concert activity,” MacKeigan said. “We were really able to capitalize on the 20th anniversary to secure additional concerts and had good luck with timing and put together a solid concert calendar.”

Van Andel Arena’s anniversary in the calendar year also has pushed the 2017 fiscal year off to a good start. Heading into the year, budget forecasts have operating revenues of $12.8 million against $12.1 million in expenses.

As of Oct. 31, the arena’s $725,891 in net proceeds is an increase of 248.2 percent against the first portion of the previous fiscal year. DeVos Place’s deficit of $116,174 is a 14.9 percent improvement against the first quarter of the previous year.

Van Andel Arena’s first half of the fiscal year was bolstered by concerts featuring Paul McCartney and Kanye West. Ten concerts in the first four months of the year generated $1,076,755 in revenue and an increase of 6,000 people in attendance.

MacKeigan said the arena’s carrying of the convention center finances is unusual, as in most cases arenas and convention centers both are loss leaders for the community meant to drive economic activity in the rest of the city.

The reported numbers also are operating numbers and don’t include debt service, MacKeigan said. Van Andel Arena’s debt expires in 2024 and DeVos Place’s in 2031, carried by the Downtown Development Authority and Kent County bonds, respectively.

MacKeigan said he did not want to speculate what the financial impact will be once those debts are retired.

Kent County Administrator Daryl Delabbio told the Business Journal in October at the time of his retirement announcement — he retires in June — when the convention center debt is paid back in 2031, the county will see additional funds.

“Book every cent we’ve contributed from the general fund as an advance,” Delabbio said. “Once the bonds are paid off, we get that money back. In 2031, we’ll start seeing revenues I have not seen.”

Heading into the 2017 calendar year, MacKeigan is confident the arena will see continued success.

“The Griffins continue to draw well and are playing well, and that’s a point of encouragement,” MacKeigan said. “Concert activity looks good with some good shows on sale and on the books, and there are more conversations going on for the coming year that we’re excited about.”

MacKeigan said Grand Rapids always has been a good draw for concerts, but the 2016 calendar year provided some firsts to West Michigan — McCartney and six shows by Garth Brooks — and shows “not known as blockbusters performing extremely well.”

Next year also should be a good year for the convention center, as the conventions generally are booked up to three years in advance, so management knows the schedule is relatively full.

MacKeigan also is encouraged by DeVos Performance Hall and the four community arts programs that call it home.

“I’m very pleased our four arts tenants seem to be in a position of strength these days,” MacKeigan said. “For a market our size to have four arts tenants is unique, for them to have success is extremely unique in markets our size, and it’s the case in markets much larger than our size.”

MacKeigan also took special interest in the Destination Asset Study commissioned by Grand Action and performed by Minneapolis-based Conventions, Sports and Leisure International. The study suggests the Grand Rapids community look at several projects to make Grand Rapids a “top-tier visitor destination,” including a possible expansion of DeVos Place.

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