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Covelli Centre’s weak 3rd quarter continues trend for 2017
VINDICATOR EXCLUSIVE
YOUNGSTOWN
Covelli Centre officials had anticipated the facility would make a $78,599 operating surplus during the third quarter, but instead lost $18,739.
And after the first nine months of this year, the arena has only a $13,115 surplus.
The center, which opened in 2005, has had a surplus every year since 2009, Eric Ryan’s first full year as its executive director.
Ryan said the center will definitely finish the year with an operating surplus.
But this will be the first year since 2011 that the center’s surplus and money made by the city through a 5.5 percent admission tax will be less than the principal and interest payment for the facility.
“It’s been the most difficult year from an event standpoint,” Ryan said. “We didn’t have the events we hoped to have. As not good as 2017 has been, 2018 is shaping up to be really good.”
The third quarter, between July and September, is usually the most challenging for the Covelli Centre and other indoor arenas as acts prefer to play outdoors during the summer, Ryan said.
“This particular time-frame financials are volatile throughout the arena industry and in the history of our center,” he said.
But Ryan had expected the center to have a $78,599 operating surplus in the third quarter. That would have been the center’s record high for that quarter.
Instead, the center lost $18,739 during those three months.
“We were two concerts down than what we expected” for the quarter, Ryan said.
The center had only four shows – highlighted by Pitbull with about 5,800 in attendance and Stevie Nicks with about 5,700 tickets sold – in the third quarter, and rented the facility for a two-day All AmeriCon and a rally by President Donald Trump.
Overall, the center’s modest $13,115 operating surplus through Sept. 30 is better than budgeted. The center had expected a $9,379 deficit for the first nine months of the year.
The facility budgeted to make about $146,000 overall for the year, which would require the final three months to have an operating surplus of about $156,000.
That’s highly unlikely, Ryan acknowledges.
“The fourth quarter is going to be slow,” he said. “We budgeted for a strong fourth quarter and we won’t have it. But we’ll still finish the year with a surplus.”
Ryan declined to estimate how much.
Several planned events for the final three months won’t materialize, he said.
When this year’s budget was being put together in late 2016, Ryan said, the facility expected the fourth quarter to include shows by Ringling Bros. and Barnum & Bailey Circus, which announced in January that it was closing in May, as well as a concert by Trans-Siberian Orchestra, which will perform at Covelli next year but not in 2017, and another concert that fell through.
City Deputy Finance Director Kyle Miasek said: “We understand bookings have fallen this year. It’s not been the pattern of the last few years, but the facility has proven to be successful. It was a slower year. We expect next year to be better.”
The 5.5 percent admission tax for the first nine months of this year was $116,974, including $30,639 for the third quarter, Miasek said.
The city plans to make a $600,000 principal payment this year with about $171,000 in interest.
The center uses money from its operating surplus, admission tax and the carry-over fund balance it has from previous years to make the principal and interest payments. There’s about $500,000 in the center’s fund balance.
The city borrowed $11.9 million in 2005 to pay its portion of building the $45 million center. The city still owes $9.76 million in principal.