Big crowds, bigger profits in Chevy's 1st quarter

By DAVID SKOLNICK

CITY HALL REPORTER

YOUNGSTOWN — A Kelly Pavlik middleweight boxing match, the Harlem Globetrotters and other sold-out and nearly sold-out events at the Chevrolet Centre resulted in a $242,340 operating profit for the facility during the year’s first three months.

“This quarter is a great example that if [the center chooses] the correct events our community will support, they will come, and we will succeed,” said Eric Ryan, the center’s executive director, on Thursday, when the figures were released.

About 100,000 people attended events at the city-owned center during the first three months of the year, he said.

That includes 7,334 at the Feb. 21 boxing card headlined by Pavlik, the most attended event ever at the center. Other sell-outs [the center’s seating configurations are different for each event] included 5,815 for a Jan. 31 Harlem Globetrotters event, 4,522 for a Feb. 7 motocross show, and 4,290 for a Feb. 28 monster truck show.

The center also attracted strong crowds for four High School Musical on Ice events, two Disney Playhouse shows and seven Cirque du Soleil performances, Ryan said.

“This was an exceptional quarter,” said Mayor Jay Williams. “In this difficult economic time, we were pleased to achieve this. A lot of things worked in our favor: a good mix of events and good management keeping down our costs.”

The center’s income for the three months was $780,118, including $240,591 in rental fees paid by promoters to use the facility, $87,794 in food and beverage concession sales, $78,883 for luxury box rentals and $58,438 in fees paid by companies to advertise at the center.

Its expenses for the three months was $537,778, with $170,005 for utilities and $185,311 for salary and benefits being the most expensive costs.

Ryan points out that the profit for the quarter was achieved without any revenue from naming rights.

General Motors didn’t renew its naming rights contract for the center when it expired Sept. 30, 2008. City and center officials had wanted to finalize a naming deal before now, but discussions continue with three entities that may want to pay for naming rights.

GM paid $175,000 annually, or $43,750 a quarter, for the naming rights.

This year’s first quarter was the most profitable first three months of the year at the center since it opened in October 2005. It’s also only its second profitable January-to-March quarter. The other profitable first quarter was in 2007, that had a $27,440 profit.

Also during the first three months of this year, a 5.5 percent admission tax on each ticket sold at the center generated $96,409 for the city.

About a year ago, the center went from a $3.50 facility and parking fee paid directly to the center to the admission tax paid to the city’s general fund.

In comparison, the center lost $30,264 during the first three months of 2008 even with the fee that raised about $85,000 in that quarter. Between operating profit and the admission tax, $338,749 was generated during this year’s first three months.

“I don’t know if we’ll beat this quarter, but we’ll die trying,” Ryan said.

Ryan doesn’t expect the center to turn a profit in this current quarter, April to June, or the next quarter, July to September.

“It is a well established and accepted fact throughout the indoor venue industry that the coming months are expected to produce difficult financial results,” he said. “It would not be a surprise to experience a short-term loss during this period. We will, however, do everything within our power to mitigate this expected downturn. Furthermore, we are already working on building up a strong fourth quarter.”

Wiliams said he hopes strong first and fourth quarters will offset the weak second and third quarters of the year.

“We want to break even or do better than that,” he said.

The center is projecting a $9,000 operating profit for this year, Ryan said.

The city borrowed $11.9 million in 2005 to pay a portion of the $45 million center. The city hasn’t paid anything toward the principal of that loan since it borrowed it. It expects to pay $802,060 this year on the loan’s interest, according to the city’s 2009 budget, and has paid about $750,000 annually since it borrowed the money.

These last three months were the center’s second most profitable quarter since it opened.

The center’s most profitable quarter in its history was its first quarter. October to December 2005 had a $545,471 profit under the management of International Coliseums Co.

But that profit disappeared. During the 12-month period that began with October 2005, the center lost $23,653.

The city ended a two-year management agreement with ICC in September 2007. City officials were concerned with ICC’s incorrect financial projections for the center.

Ryan said that $545,471 profit for the center’s first three months under ICC is somewhat misleading.

That’s because ICC took all the money it received for luxury suites and club seat income and “front-loaded” it, Ryan said.

ICC counted all of that income in the first six months of the year during the two years it managed the center and didn’t include any revenue from those two major income sources during the other six months, according to records of the facility.

The center now spreads that and other steady income sources, including year-long advertising contracts, evenly over a 12-month period to paint a more accurate picture, Ryan said.

skolnick@vindy.com