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| NewsSaturday, April 19, 2008 7:08 PM CDT |
Bar is lowered to 'break even' on eve of Coliseum's 3rd year
Hockey team's future uncertain, and more than $1M is at stake
BLOOMINGTON -- Before it opened in April 2006, arena consultants predicted the U.S. Cellular Coliseum would turn a nifty profit of $2 million annually — enough to cover the cost of the building’s construction. That’s not going to happen. | VIDEO: Officials, management on the future | VIDEO: Backstage at the Coliseum | INTERACTIVE GRAPHIC: Attendance, revenue from Years 1 and 2 | PHOTO GALLERY: Concert night | Old foes warm up to Coliseum | How much do venue's managers make? Instead, its first year of operation cost city taxpayers about $350,000, which does not include the roughly $2 million a year the city paid toward the downtown building’s mortgage. While financial reports are not in for March and April, city and Coliseum officials say those two months likely will cover the current year’s $64,000 shortfall and push operations into the black. But looking toward the coming year, with the PrairieThunder hockey team’s future uncertain, more than $1 million — or 30 percent of the building’s income — is at stake. “This is something that has kept me up probably the last six months because we haven’t had strong local ownership” of the team, Coliseum General Manager Mike Nelson said. After two years of operating the building, Central Illinois Arena Management has settled in and has a better understanding of Coliseum operations, said Nelson, who owns the management group with business partner John Butler. Their third fiscal year of operations begins May 1. The city’s budget, approved last week by the City Council, projects a $125,000 operational profit for the third year. Generally, city officials say they have accepted the fact the building will never reach the financial projections promised when the planning started nine years ago. Keeping the building out of the red is the focus of their attention now, after the council recently decided to foot the bill for the $29.5 million in bonds used to build the Coliseum through a quarter-percent increase in the city’s sale tax that takes effect July 1. If arena managers generate an operational profit, that money will go toward paying down the bonds. How the Coliseum makes its money — through club seats and suite sales, sponsorships, concessions and ticket sales — is an area where improvement is key to succeeding in tough economic times. That means the Coliseum must put more people in those 7,500 blue seats when attendance at hockey games and club seat sales are down. With two months left to account for in its second year, 237,053 people have entered the building, attracted by 197 events, including 38 hockey games. At the end of February 2007, the Coliseum had attracted 227,580 people, so the remaining months could be a race to beat the inaugural year’s attendance number of 291,281 for 202 events. Because of changes in how the finances were reported to the city, Nelson said he did not have specific numbers to compare concession and sponsorship revenues between the first two years. But in its budget for the second year, CIAM predicted revenues from all events would generate a $700,000 profit, helping to cut into the roughly $2.3 million in bonds and building replacement. In early April, Mayor Steve Stockton called the $700,000 goal “overly aggressive.” Third-period comeback Clearly, a key to a successful third year is the Thunder, one of two anchor tenants — the other being the Extreme football team, which continues to draw well. Hockey needs to turn a big corner, Nelson said. The team has finished in last place both years; this season ended last weekend with a losing record of 31-38-7. “If you have a team that is drawing 3,000 compared to a team that is drawing 5,000, your food and beverage numbers go up, facility and ancillary revenues go up,” said Nelson, acknowledging that putting a winning hockey team on the ice is critical to club seat and suite sales. City officials and managers are hopeful they’ve found the answer in a Twin City investment group, led by Bloomington attorney Tim Leighton, that intends to buy the team. Leighton said the intense level of play by the team at the end of the season is a positive direction he hopes to build on. In an April 5 game at Flint, the Thunder gained the national sports spotlight for scoring a record-breaking four goals in 35 seconds. “We are already into our strategic planning for the third season,” Leighton said, adding he is confident the team will be able to reverse a loss in attendance. So far, sales of club seats are down nearly 10 percent over the past year. Fixing the hockey team will help that situation, Nelson said. In the first year, CIAM sold about 800 club seats, which cost $750 each. This year, sales were 725. As of last week, 658 club seats had been sold for the third year. Nelson said full-time sales staff has been assigned to bring those numbers back up. Having a strong hockey team would only help in the effort. Income from the Coliseum’s 24 suites, at $25,000 each, has remained steady because owners are in the second of a three-year contract, Nelson said. However, general ticket sales for hockey have dropped, though Nelson did not have specific figures. Using rough numbers based on average game attendance, he said the hockey team drew about 600 fewer paying customers per game. “That’s about 22,000 fewer tickets sold for the season so we are probably close to a six-figure hit,” he added. In the team’s first year, announced attendance averaged 3,775 per game, Nelson said. In the second year the average attendance per game dropped to 3,184. “Winning helps a lot,” Nelson said. “Being in last place — that’s hurt us a lot.” More effort on sales, concerts Besides fielding a strong hockey team, Nelson said, the facility needs to attract four or five concerts that draw 4,000 to 6,500 people — like the recent Sammy Hagar and Kid Rock concerts. The February 2007 John Mayer concert, with attendance of 8,134, has been the only concert to sell out the entire building. Nelson wouldn’t comment on what concert acts may be coming in the third year, but said a new round of announcements will start in the coming days. He added staff has been working to line up more events, including filling more dates in the slower warm-weather months of May, June and July. At the same time, they also have to offer a variety of events that appeal to a wide audience, such as motorcycle ice racing and family shows. Meanwhile, to Stockton, the progress CIAM has made in reducing the Coliseum’s overall operational loss between the first and second years is promising. Ward 7 Alderman Steven Purcell agreed, adding if the Coliseum only breaks even in the second year, the city will be far ahead of other communities with similar buildings. “A profit would be nice to help us pay down the bond debt,” said Purcell, a frequent Coliseum critic. “But if we look at other buildings as an indication of what is possible here, that probably won’t happen.” New managers? Going forward, Stockton thinks CIAM’s performance will be judged on three things: bringing in as much revenue as possible; entertaining as many people as possible; and doing as much community service as possible. Aldermen John Hanson, Ward 8; Jim Finnegan, Ward 5; and Karen Schmidt, Ward 6, said the management group’s overall performance also should be judged on what Coliseum events do to generate customers for local businesses, including hotels and downtown restaurants and taverns. If the building’s performance does not continue to improve and it racks up a loss after its third year, it is unclear if city officials will go shopping for new managers. The 10-year contract with CIAM provides several opportunities for the two sides to negotiate problems before either the city or the management group can terminate the contract. Stockton declined to comment whether a specific figure could trigger such a discussion, saying that is “different in everyone’s mind.” However, the mayor said there are some ambiguities in the current contract that he’d like the city to review with an independent attorney to help both sides understand them. He emphasized such a review is not a step toward getting new managers. Although operation of the building may start paying for itself, Ward 4 Alderman Judy Stearns is not willing to say the Coliseum is breaking even. She thinks the building will only reach that point after the bond debt is paid for the year. “I’m pleased (that) operationally we are near the break-even point, but let’s be honest: When the council told the taxpayers this would make money, no one was separating out the bond debt,” Stearns said. But Hanson, Finnegan and Allen Gibson, Ward 1, maintain the council will be content if the Coliseum breaks even on operations. “As long as it’s performing so that the city is not having to chip in any extra money, the council will be satisfied,” Hanson said. “I see them working as hard as they can to get the operations strong, and the fact that the performance does not meet what was projected is the past council’s issue.” |
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