CAA’s Business Goes On Without Budget


    GRAND RAPIDS — Although the Convention and Arena Authority didn’t meet this month to adopt the fiscal-year budgets for the board, DeVos Place and Van Andel Arena, SMG will still begin the new year on July 1 operating the buildings — but under the 2006 spending plan.

    CAA Chairman Steven Heacock gave SMG, which manages the daily operations of the convention center and arena, the power to conduct business as usual until the board meets on July 26.

    The directive from Heacock also allows SMG General Manager Rich MacKeigan to continue the capital improvement projects the board approved in this fiscal year, but that are running over into the new year, and to continue staffing at the current levels.

    SMG takes over the arena concessions and catering business next week, and Heacock also gave MacKeigan the right to spend up to $535,000 to get that changeover in motion.

    The new management and concessions agreements the board made with SMG earlier this year allow Heacock to authorize MacKeigan to continue operations on an interim basis, which will last for most of July.

    The CAA Finance Committee recently adopted all three budgets and will recommend that the board do the same at its next meeting.

    “The expectation is we will pass the budget today and the board will pass it in July,” said Birgit Klohs, Finance Committee chairwoman, prior to the committee’s vote.

    The FY07 budgets for the CAA and Van Andel Arena remain the same as reported earlier in the Business Journal. But SMG Director of Finance Chris Machuta said he made two revenue adjustments to the DeVos Place budget.

    He raised the expected income from the consumer shows, held from January through March, from $995,000 to $1.09 million. He also upped the expected revenue from events held in DeVos Performance Hall from $618,000 to $677,000.

    SMG has projected a deficit of $725,642 for DeVos Place and a $1.4 million surplus for the arena in FY07.

    As for this fiscal year, the convention center is on pace to lose nearly $790,000, and the arena should reap a surplus of almost $1.24 million. The DeVos Place shortfall is roughly $500,000 less than was forecast at the start of the year. And few thought three months ago that the arena would come close to a $1 million-plus surplus when the building was only halfway to that mark nine months into the year.

    But net income to the arena was over $242,000 in May and two Kenny Chesney concerts held in early June were worth $170,000 to the building.

    “So the last two months of the year turned out to be pretty good,” said Klohs.

    SMG is on track to earn $490,400 for managing both buildings this year. But the actual figure, which includes a base amount and an incentive fee, won’t be known until the FY06 numbers are audited.

    As for FY07, SMG estimated the fee could reach nearly $558,000 if the revenue projections hold true. That figure does not include income from concessions.

    “We are being pretty aggressive and creative in trying to find new (revenue) opportunities,” said MacKeigan.

    Kent County Fiscal Services Director Robert White, also on the Finance Committee, said revenue from the lodging-excise tax was up by nearly 15 percent so far this year compared to last year’s receipts. The 5-percent levy on a guest’s lodging bill is largely used to make the bond payments for a large share of the DeVos Place construction cost.

    White said the new JW Marriott Hotel that Alticor Inc. is building downtown may not drive the county’s hotel-occupancy rate up. But he said it could raise the average cost of an overnight stay and, in turn, send more dollars into the lodging-excise tax fund.

    CAA’s Fiscal 2007 Outlook

    Here’s a look at the fiscal year 2007 operating revenues and expenses for the Convention and Arena Authority, DeVos Place and Van Andel Arena.

    2007 Budget




    Convention &
    Arena Authority




    DeVos Place




    Van Andel Arena     $4,980,275         $3,574,232         $1,406,043     

    Sources: Convention & Arena Authority and SMG, June 2006     

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