The city-owned ShoWare Center continues to lose money based on its operating budget. But a second economic impact study in two years by city-hired consultants shows the arena brings a lot of business to town.
Consultant Mark Goodman, of Seattle-based Community Attributes, Inc., presented the Public Facilities District board (that helps oversees ShoWare operations) at its July 25 meeting with a supplemental report on the economic and tax revenue impact of the 4-year-old arena. The study showed the facility has brought in an estimated $25 million per year to the city in direct, indirect and induced revenues from 2009 to 2012.
Direct revenues include ticket sales, concession sales, arena rental and event-related spending outside of the ShoWare Center. Indirect and induced revenues include business to business spending and employee spending of personal income.
Community Attributes is the same consultant the City Council hired for $36,500 last year on a controversial 5-2 vote to study the economic impact of the $84.5 million arena. That study released in November also showed an economic impact of $25 million per year in 2011, but only focused on 2011 not the other three years the arena’s been open.
Ben Wolters, city economic and community development director, said during an interview that he approved the additional $9,500 study this year because he wanted to see the impact of the arena over four years not just 2011.
“I authorized it from my consultant budget,” Wolters said. “I have that authority as a director. I wanted a complete picture of how the ShoWare has been doing economically for Kent and a clearer picture of what the overall tax revenue has been.”
The ShoWare Center brought in an estimated $2.3 million in direct tax revenue to the city, including $570,000 in 2012, according to Community Attributes. Much of that money is from a 5 percent city admissions tax on each ticket sold at the ShoWare and from sales taxes on business sales generated mainly at Kent Station restaurants.
That tax money is not counted when SMG, hired by the city to run the arena, releases its income statement each quarter based on operating revenues and expenses.
“For the first six months (of 2013) the net loss is about $132,000,” said Patrick McCluskey, ShoWare finance director, at the board meeting. “We budgeted a $191,000 loss so we are $59,000 over budget for the first six months.”
The arena had expenses of $1.218 million in the first six months and revenue of $1.086 million for the $132,000 loss.
The arena turned a rare profit with revenues of $7,048 in the first quarter this year. Three Seattle Thunderbirds hockey playoff games that were not in the budget played a big role in turning the profit.
McCluskey also issued a second page with a four-year income statement that showed the arena made money in three of the four years if the tax revenue is included.
“There was a loss from operations but with the Kent fiscal impact you get a net income,” McCluskey said about the taxes that go to the city’s general fund.
The arena has lost $480,851 in 2009; $427,119 in 2010; $487,855 in 2011; and $707,541 in 2012 based on its income statement. But if the tax impact is added each year, the arena had revenue of $150,149 in 2009; $85,881 in 2010; and $122,145 in 2011, according to the income statement. The arena still lost $134,541 in 2012 even with the tax revenue added to the total.
“When you add in the tax dollars we end up about $223,000 in the black (over the last four years) and that goes into the general fund and the general fund makes up the loss,” said Tom Brubaker, city interim chief administrative officer, at the board meeting. “That makes me feel a little bit better (about the financial losses of the arena).”
The city puts aside money each year in its capital budget to cover the arena losses, money that could be spent on improvements to city streets, facilities and other capital projects.
• ShoWare Center notes: McCluskey delivered the income statement report during his final day on the job. He has left the arena to become the finance director at the Meydenbauer (convention) Center in Bellevue. …The arena also is looking to hire a new marketing director after Beth Sylves recently took a job as director of marketing for four CBS-owned radio stations in Seattle. McCluskey and Sylves each started at the ShoWare when it opened in 2009. Both jobs are expected to be filled soon, said Tim Higgins, arena general manager.
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