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Arena comparisons provide hints but no perfect parallel to Fort Wayne

February 11th, 2016


News Coverage:

February 9, 2016

Arena comparisons provide hints but no perfect parallel to Fort Wayne

Bob Caylor | News-Sentinel


As elected officials and city leaders in Fort Wayne consider whether to build a $63 million arena downtown, the experience of other cities offers some insight into the potential challenges and benefits.

The closest comparison is likely in Grand Rapids, Mich. Less than a three-hour drive away, that city has public venues similar in size to those in Fort Wayne, plus a smaller, privately owned arena. The four venues host a wide range of events:

THE PUBLICLY OWNED VENUES

  • Van Andel Arena, with seating for up to about 12,000 (compared with about 13,000 at Memorial Coliseum), is home to the Grand Rapids Griffins hockey team and hosts other sporting events and concerts. In the next two months, Elton John, Lil’ Wayne, Disney on Ice and Marvel Universe are among the shows on its calendar. 
  • DeVos Place Convention Center, at 160,000 square feet, is somewhat smaller than Grand Wayne Center, which covers 225,000 square feet. It hosts similar conventions and trade shows, and it’s also a favored site for the kind of seasonal consumer shows that are more often found in Fort Wayne at Memorial Coliseum. In the next couple of months, for example, a golf show, a boat show, a home-and-garden show, a bridal expo and a women’s expo all will take place at DeVos Place. 
  • DeVos Performance Hall, with 2,404 seats, is only slightly smaller than the Embassy Theatre, with 2,471 seats. Over the next couple of months, the DeVos schedule includes concerts by the Grand Rapids Symphony, comedy concerts, a Pink Floyd tribute band, Red Green and Neil DeGrasse Tyson. Jethro Tull and Peppa Pig Live are scheduled in both the Embassy and DeVos Hall this spring.

THE SPENDING AND IMPACT


These three venues are controlled by an convention and arena authority established by Grand Rapids and Kent County. The authority, in turn, contracts with SMG, a Philadelphia firm, to manage all three venues. Combined revenues for these three operations has ranged from about $10 million to $12 million over the last nine years. According to financial statements provided by SMG and the state of Michigan, the net operating income has ranged from a surplus of more than $500,000 in good years to a deficit of more than $1 million in bad years.

At least part of the reason Grand Rapids weathers the ups and downs of these facilities is explained in a 2012 analysis of the economic impact of the convention center, performance hall and Van Andel Arena. That analysis, commissioned by the convention and arena authority and performed by the Anderson Economic Group of East Lansing, estimated a total impact of $58.4 million from these venues in fiscal year 2011. The analysts estimated that the activity of the three venues generated almost 700 jobs and $16.6 million in new earnings for households in Kent County. Almost half the tickets purchased for events at these venues are bought by people who live outside Kent County. In other words, the convention center, arena and performance hall lure economic activity into Grand Rapids.
 
THE SMALLER ARENA


The smaller arena in Grand Rapids is the DeltaPlex, which seats about 7,000 – comparable to the roughly 6,000 seats recommended for downtown arena in Fort Wayne. DeltaPlex, less than 10 minutes from downtown Grand Rapids, is home to the Grand Rapids Drive minor-league basketball team. The Drive plays the Fort Wayne Mad Ants, likely tenants of a new arena downtown, if one is constructed.

Although owner Joel Langlois did not respond to interview requests for this story, the DeltaPlex website said it was built in 1952, when it was known as Stadium Arena. Langlois bought the building and renovated it, reopening in 1998. Besides the Drive basketball games, DeltaPlex also has a circus, cheerleading competitions, a job fair, a pet expo and Golden Gloves boxing on its schedule through this spring. In December, all the DeltaPlex’s roughly 7,000 seats were taken, with many people left standing, in a rally for Republican presidential contender Donald Trump, according to a report in the Detroit Free Press.

NOT A PERFECT MATCH


Although two arenas appear to coexist viably in Grand Rapids, it’s not a perfect parallel to Fort Wayne. The most important difference: No one suggests that a new arena in Fort Wayne would be a private-sector operation, as the comparably sized DeltaPlex is.

Another important difference in financing public projects in Grand Rapids is the presence and deep civic involvement of three billionaire families. Two of those three – the Van Andel and DeVos families, whose patriarchs founded Amway – contributed millions to the construction or enhancement of the three premier venues in downtown Grand Rapids.

As an example, the Grand Rapids convention center, which opened in 2005 and cost $215 million, received $33.2 million in private contributions, led by the DeVos family, according to the Anderson Economics report. It also received $65 million in a grant from the state of Michigan.

Yet another difference lies in the nearby populations that an attraction in Grand Rapids can draw on. Its four-county metro area has a population of about 1 million, compared with about 425,000 in Fort Wayne’s three-county metro area. Kalamazoo and Portage, with a combined population of about 120,000, and Lansing and East Lansing, with a combined population of about 160,000, both lie within about an hour’s drive of Grand Rapids.

THREE OTHER COMPARISONS


Hunden Strategic Partners, the consulting firm that analyzed the feasibility of a downtown arena in Fort Wayne, included the most recent balance sheets available from three arenas the consultants pegged as comparable to the proposed arena in downtown Fort Wayne. A lesson to draw from those revenue-and-expense reports is that communities that build arenas shouldn’t count making lots of money from them.

  • The Independence Events Center, in Independence, Mo., about 25 minutes from Kansas City, Mo., lost about $240,000 with operating income of $3.9 million in 2013. The Kansas City metro area has a population of more than 2 million, according to the Census Bureau. 
  • The Budweiser Events Center in Loveland, Colo., about an hour from Denver, reported clearing about $530,000 on operating income of about $3.1 million in 2013. The Denver metro area has a population of more than 2.7 million. 
  • Operating income of about $1.3 million in 2014 at Santa Ana Star Center fell more than $600,000 short of expenses. The Star Center is about 40 minutes from Albuquerque, N.M., the hub of a metro area of more than 900,000 people.
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