Large catering dinners have started to bring a much-needed revenue boost to the ShoWare Center in Kent, but the city-owned arena continues to lose money during its second year of operation due to low attendance and a lack of events.
The arena has a deficit of $371,355 through September, according to the income statement released last week by SMG, the arena operator. The arena had expenses of $1.71 million and revenues of $1.33 million through September.
ShoWare officials expect a strong financial fourth quarter to cut that loss to $162,000 by the end of the year.
“The good news is that in quarters two and three we started making up ground,” said Patrick McClusky, ShoWare finance director, at an Oct. 28 meeting of the Public Facilities District board. “Hopefully, we will make up more as we grow in quarter four.”
The board oversees operations of the $84.5 million events center.
The arena has made $67,000 more than budgeted so far this year from food and beverage catering. The ShoWare Center hosted two dinners of more than 1,000 people each on the arena floor for Valley Medical Center of Renton.
“We are a multi-purpose venue and are trying to find any way we can to expand business,” said Tim Higgins, ShoWare general manager. “Catering has been wonderful. We find we are getting some rave reviews. We’ll do anything people want for a catering hall. We are even looking at weddings.”
Recreational Equipment, Inc., of Kent, recently rented the arena for a 400-plate dinner. ShoWare crews set up half of the arena floor for the dinner and offered ice skating on the other half of the floor.
“We are trying to be creative,” Higgins said.
ShoWare and Kent city officials are looking for larger crowds at concerts, Seattle Thunderbird hockey games, Disney on Ice and other events over the final two months of this year to help the arena cut losses for 2010.
“We need more attendance at the events,” said John Hodgson, city administrator, in a phone interview. “That’s what drives down the operational deficit.”
The city is responsible to cover any operating losses at the arena and has set aside $300,000 within the capital budget this year to help cover a potential lack of revenue at the arena. City officials use the capital budget to help pay for improvements to city streets, facilities and other projects.
“There are no big projects in the capital budget to get delayed,” Hodgson said about the financial impact of the arena losses. “Mainly what we have in the budget this year are what we call life-cycle projects where we replace carpet or seal-coat parking lots or other similar projects.”
City officials spent $100,000 of the $300,000 ShoWare capital budget this year to improve the rigging for the concert stage so it can be moved to a different spot on the floor for a more intimate setting.
“But we still have $200,000 in place if we don’t make cost at the end of the year,” Hodgson said.
If losses are higher than projected, Hodgson said then the city might have to delay a capital project or two.
“We may not seal a parking lot or push it out another year,” Hodgson said.
The arena lost $444,792 in 2009, a loss that the city covered with funds set aside in the capital budget for lack of revenue.
Most of the project funds to build the arena come from the city issuing bonds to be paid back over the next 30 years from fees collected from events and activities at the facility. If those fees to pay the debt service fall short, city officials use funds from the capital budget.
In addition to city bonds, the state will pay nearly $21 million toward the arena through a Public Facilities District that allows Kent to keep 0.033 percent of the state’s share of the sales tax, or 3.3 cents on every $100 purchase, collected in the city.
City officials want to see arena revenues increase.
“We all know the economy is down but we still have to find ways to get people to come to events and not by giving away free tickets,” Hodgson said. “We need the Thunderbirds to get more people in the seats. I’m optimistic with what the Thunderbirds are doing. It looks like they are a better team this year and people follow winners.”
Colin Campbell, T-Birds vice president and assistant general manager, told the Public Facilities District Board that season ticket sales are even with last year. He said he expects attendance to increase by Christmas because of the popularity of the 24-flex ticket package that allows buyers to pick 24 out of the 36 home games during the Sept. 25 through March 20 season.
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