Maintaining Ford Center a costly endeavor

Here’s a riddle: What number is higher than the roughly $1 million in sales profit that Ford Center manager VenuWorks annually turns over to the city of Evansville (IN)?

It’s the $1.4 million-plus in city income tax money the Evansville-Vanderburgh County Building Authority anticipates spending this year to maintain the place. “Conversions” and the personnel needed to pull them off, sometimes in a matter of hours, are the biggest chunk of it. Erecting a basketball court for University of Evansville men and women’s hoops – or an ice rink for Evansville Thunderbolts games or a concert stage – requires Teamster labor and part-time workers. “Converting” from one to another and then back again, or one after another, can be a stern challenge in a $120 million, 290,000-square foot facility.

When events are jumbled together, as they were on the weekend of Jan. 20-22, a lot of coin gets spent in a little time.

Building Authority data indicates the agency spent $10,335 for Teamster and part-time labor alone to ready the Ford Center for a Friday night hockey game, then a Sunday afternoon UE women’s basketball game – then back to ice for a Sunday night hockey game. But that wasn’t the end of it. That Sunday night, after the hockey game, workers converted to a concert stage for the opening date of country music star Miranda Lambert’s “Highway Vagabond” tour.

“(Lambert) came in early to practice, rehearse before the show,” said Dave Rector, general manager of the Building Authority. “The concert wasn’t until that Thursday next, but she was in the building all week rehearsing. You could have seen her Downtown that week, walking her dog.”

According to 2017 projections for the Ford Center, VenuWorks anticipates giving $1,050,000 to the city after paying its own labor, concert act and other operational expenses at the arena. The Ames, Iowa-based venue management company’s total operating revenue at the Ford Center was $7.6 million-plus in fiscal year 2015, according to its most recent annual report. Operating expenses came to more than $6.6 million.

The $1,050,000 that VenuWorks projects it will give to the city balances against $1,448,946 that the Building Authority projects it will spend. The expenses also include $125,000 for a reserve fund for future major capital improvements to the arena and $166,000 for liability insurance and building security.

All you need is a calculator to see the numbers don’t come up roses – they show a loss of nearly $690,000. That’s about $100,000 more than last year’s loss. In fact, the Ford Center, which opened in November 2011, has posted a profit against operating costs only once since then – in its first year, when it was open for just two months.

The Building Authority’s $1,448,946 Ford Center budget is an increase of $70,000 over last year’s figure. Union labor isn’t the reason, Rector said. The agency employs five full-time Teamsters at the arena. The Ford Center’s Teamsters are governed by city government’s contract with Teamsters Local 215 – and the city didn’t give raises this year.

“Initially, because of city budgets, we have tried to get by with less than we needed – and fortunately for 2017, the city was able to give us a little more than they had to make up some of those expenses that we haven’t been able to in the past,” Rector said.

A hard sell

Rector pointed out that the Victory Theatre and Old National Events Plaza lose money too. It’s not unusual for municipal arenas to finish in the red.

“They’re all community assets for the benefit of the taxpayers, much like the zoo, the city parks, the library,” Rector said. “It’s community lifestyle enhancements.”

City Controller Russ Lloyd Jr. ticked off a list of factors working against the arena. The novelty of it has inevitably worn off a bit. Fans of the city’s sports teams can be capricious and naturally lose some interest when won-loss records get ugly. Lloyd recalled that the Evansville IceMen, who left town last year, routinely brought in thousands of people for hockey games even when attendance declined.

The Thunderbolts would make more money if the team could build up that potent a fan base, Lloyd said. VenuWorks would make money, and that would mean more would flow to the city. It all works in tandem.

“If (VenuWorks) would exceed what’s budgeted, then that loss would go down,” the former mayor said.

There is perhaps no one reason for losses, and a host of aggravating factors to point at.

VenuWorks’ financials indicate the biggest chunk of its $7.6 million-plus in total Ford Center operating revenue in 2015 came from events. That was nearly $3.5 million of the total, which also included food and beverage proceeds and money from suites and sponsorships.

Scott Schoenike, executive director of the organization, said concerts are much stronger revenue sources than the Ford Center’s tenants, the Thunderbolts and UE men and women’s basketball.

“Really, the concerts pay for an awful lot. We definitely need the concerts in there to almost help subsidize – I don’t know if ‘subsidize’ is the right word, but they definitely help the month along because the tenants – there’s not a lot of profit in the tenant contracts,” Schoenike said. “We have to make a few thousand dollars in concessions just to pay the labor.”

In losing one tenant – UE women’s basketball, which will move its games to the on-campus Carson Center next season – the Building Authority sees an opportunity to actually save money on maintenance and operations.

In Evansville, as is the case nationally, women’s basketball is a hard sell. Some of the Lady Aces’ games have drawn fewer than 100 fans to a venue that can host more than 11,000. Ticket sales are higher, but that doesn’t help the all-important concessions balance sheet. UE officials have acknowledged the Ford Center loses money with women’s basketball games, which bring little in terms of ticket sales, parking and concessions.

The Building Authority’s per-game costs remain fixed.

Rector has estimated his agency spends as much as $8,000 in labor and overhead for a UE women’s game if it requires a conversion. That includes everything – labor, transport fees to obtain natural gas, elevator maintenance, HVAC, lights, trash removal, janitorial supplies.

But the Building Authority chief is reluctant to say his agency will save $8,000 for every Lady Aces game that isn’t played.

“We didn’t know they were leaving when we drew that ($1,448,946) budget up last May, but other things have come up that weren’t projected that we didn’t budget for at that time too – like the Downtown hotel connector bridge and connector building, which I think will benefit the Ford Center more than Old National Events Plaza,” Rector said. “We put cameras on the bridge and in the connector building coming toward the Ford Center just in the last week and that wasn’t in our budget to do, either. Those other things may eat up the difference.”

The Building Authority knows one thing for sure. It won’t be burning lights for women’s basketball games, changing out restroom toilet paper and paper towels and converting for the games – just because there won’t be any. Rector said he “hopes” that spells savings.

Always something

The Ford Center’s operating cost deficit doesn’t include the $8 million a year the city coughs up for bond payments for the construction of the $120 million arena, the largest capital project in the city of Evansville’s history. City officials said in May that they had shaved $10 million off interest payments over the next two decades by refinancing the Downtown arena bonds, which will be paid off in 2039. The bond payment money comes out of the Downtown tax district, food and beverage taxes and Riverboat funds.

Rector knows keeping his agency’s maintenance expenses under control is as important a part of improving the Ford Center’s bottom line as is VenuWorks’ charge to sell more tickets to concerts and games.

“We’ve drastically reduced our conversion expense and our labor expense from what we started out (when the Ford Center opened in 2011). Starting out, we didn’t know how to convert and how long it was going to take from hockey to basketball to concerts,” he said.

In that first year, people piling into the arena saw off-duty policemen doing traffic control at every event. There are none at hockey games now – because the Thunderbolts aren’t getting enough attendance to justify it, Rector said. There may be six for basketball games and 12 to 18 for concerts.

But something always pops up – like the hotel connector bridge and connector building and cameras – to create more expenses. Maintenance climbed in 2013 in part because warranties in effect when the arena opened expired. The line item increased from $69,528 to $115,216 just like that.

Rector said conversions, when there is adequate time to do them, can require just a couple dozen part-time laborers working for five hours. When there’s just a few hours, as many as 45 workers get the call – but they can finish in three hours.

“So a quick conversion doesn’t cost all that much more because we’re getting it done in three hours,” he said.-by Thomas B. Langhorne, Evansville Courier & Press