Arena income numbers lead to optimism

November 14, 2011
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Sometimes, first-quarter financial results accurately predict a fiscal-year’s outcome. That was the case last year when Van Andel Arena was nearly $184,000 in the red after the first 90 days of the fiscal year due to a lack of concerts. Although the building ended the year with a surplus of almost $843,000, the final figure marked the first time the arena failed to hit the $1 million mark since it opened in October 1996.

This year, the Convention and Arena Authority is hoping the first-quarter numbers again will be an indicator of the arena’s financial performance — but for a much different reason: The building had a $400,000 turnaround during the first three months of this fiscal year from last year.

In 2010, the arena held the fewest number of concerts ever in the first quarter, and revenue from the shows was down. In contrast, the arena hosted seven concerts during the period this year and ended the July-to-September quarter with a $213,000 surplus — even though the schedule lost a show by Katy Perry that would have bumped up the revenue take by as much as $60,000.

“At the arena, we’re seeing a significant increase in activities, specifically in concerts, and that’s where we’re really pleased. Maybe it’s not so much that things are that much better, but it’s that things are getting back to normal, after last year being the worst fiscal year for the arena, primarily because of concert activity,” said SMG Regional General Manager Rich MacKeigan, also CAA executive director.

“I think last year for the first five months, we only hosted three concerts during that time, and it might have only been two concerts — whereas this year, we had six concerts in July and August alone,” he added. Event income was worth $440,000 to the building in the first quarter.

At the same time, MacKeigan doesn’t think the building’s concert schedule will ever return to its pinnacle seven or eight years ago, when the shows regularly totaled 25 or more each fiscal year. Discounting last year, when 15 were held, the recent norm has ranged from 21 to 23 concerts annually, and the year is off to a good enough start to have a chance to reach that range by the end of June.

“The best thing relative to the concert industry that I can say is one of the first questions we ask when a show gets into town is how are we relative to other markets? We continue to be, for the most part, top quartile, top third, top 50 percent, and that means even if the industry might be tracking down a little bit, we, as a market, still are outperforming our market size,” he said.

MacKeigan said ticket sales for most every event, not just concerts, are up this year from last year, some by as much as 25 percent.

“Over and above that, we’re looking at a number of shows to be announced over the next couple of months, a couple of them over the next week or so. We’re very, very pleased with how the event calendar looks as it sits today,” he said.

SMG Finance Director Chris Machuta feels that when December rolls into January, he will have a better idea of what the arena’s bottom line will look like at the fiscal-year’s end.

As for the convention center, DeVos Place had its typical start by losing nearly $490,000 through the first three months — slightly higher than the $479,000 it lost for the same period last year. But when compared to previous years, the recent numbers have given those involved with managing the building a cautiously optimistic outlook.

“We’re seeing good numbers at the convention center. We’re seeing good numbers at the theater. But that is coming off one of the best fiscal years the convention center has ever had,” said MacKeigan of last year when DeVos Place recorded a deficit of $475,000, down from the $660,000 shortfall in 2010.

Anecdotal evidence sometimes provides insight into how a business, or in this case, a publicly owned entity like the convention center is progressing. Joyce Miller, director of conventions for the Amway Grand Plaza Hotel, offered such an example. She said a recent Amway-related convention at DeVos Place initially expected 2,000 guests for dinner — a figure that turned out to be tremendously underestimated. The actual count was nearly triple that at 5,660.

“We were maxed out. We were out of tables. We were out of chairs,” she said. Walls had to be moved and two exhibit halls had to be used to accommodate all the diners. Miller said 4,000 were served breakfast the next morning.

Machuta felt better days are coming for DeVos Place. He noted that the DeVos Place Performance Hall tenants have begun their seasons and the widely popular consumer show season, which dominates the third-quarter schedule, doesn’t start in earnest until January. Machuta said both event types will contribute sizable event income to the building. “That’s a big chunk of the expected revenue that we haven’t gotten to yet,” he said.

But one favorite consumer show begins Thursday when the CAA and Showspan Inc. open the Steelcase Ballroom doors to the fourth annual International Wine, Beer and Food Festival, which runs through Saturday night. The last two festivals had nearly identical surpluses that topped $31,000 and drew about 10,000. One change this year has the festival staying open until 10 p.m. on Friday and Saturday, an hour longer than in previous years.

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