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Kent's ShoWare Center could see $340,000 loss

ShoWare Center officials say the new arena in Kent could post a loss of as much as $343,000 this year.

Operators are predicting the deficit due to a combination of factors: four events scheduled in the last few months of 2009 that wound up being dropped, declining Seattle Thunderbirds hockey attendance and drops in advertising and private suite revenue.

"We told you in September that we would about break even," said Patrick McClusky, ShoWare finance director, at a Thursday meeting of the Public Facilities District board, the public entity overseeing the city-owned arena. "Now we project a $343,000 loss. We lost a few events, and attendance for hockey is not coming in where we projected.".

In September, ShoWare officials predicted a profit of $1,591 for the $84.5 million arena's first year of operation. That year officially ends Dec. 31.

But picture has become considerably bleaker since then.

"It's certainly disappointing," said Ben Wolters, city economic development director, in an interview after the meeting. "A lot (of revenue) we expected to come in didn't at the last minute. And the other element that is concerning is we projected an average of 4,000 fans for the T-Birds and they are averaging a little over 3,000," (for nine games in September and October).

Wolters hopes to see hockey attendance pick up soon.

"The recession plays a role, but we need to find a way to bring new fans to the building," Wolters said. "We are relying on the T-Birds to introduce the team to new fans."

Colin Campbell, T-Birds vice president and assistant general manager, told the board he also had expected higher attendance.

"We've learned a lot," Campbell said of the drop in attendees. "We won't schedule as many early games (in September) as this year. We are confident we can exceed the (projected) numbers later in the year. But early on there is too much competition from baseball, football and kids going back to school."

Tim Higgins, ShoWare general manager, told the board that two concerts, a trade show and a mixed martial arts event that were expected to be part of the schedule, also had fallen through and contributed to the drop in revenue.

"We thought those would happen," Higgins said of the four events that had not yet been announced to the public. "We had a band that pulled out in the 11th hour because they wanted their tour to go directly to Canada."

ShoWare officials estimated a loss of about $142,000 in revenue from those four events. And as regards the projected hockey budget for regular seats for this year, they estimate revenue will come up about $70,000 short.

Revenue from advertising, private suites and club seats are predicted to come up about $130,000 under projections.

Just six of the arena's 20 private suites have been sold by the T-Birds this year. The suites cost from $35,000 to $50,000 per year and can hold anywhere from 10 to 16 people.

"We had 14 suites under contract at this time last year," said Campbell. "We still have interest, but with the way the economy is now one thing that companies are not doing is (buying) suites. It's one area that's tough for companies to justify."

Wolters asked Campbell about suggestions the T-Birds lower the price of the suites in order to sell more.

"Just by lowering the price, I do not believe we would get more revenue," Campbell said. "We've got to maintain the value for the six owners who are happy. If we lowered the price $10,000 to $25,000, we would have to sell more. I do not think we would sell enough to compensate that way."

City Councilman Ron Harmon attended the board meeting and told Campbell more needs to be done to get the suites sold.

"The city would like to see those filled," Harmon said. "We're the underwriter and we purchased the building. We want to see some out-of-the-box ideas to fill those in the next three to four months. It's essential we look at that as priority No. 1."

The city must cover any operating losses at the arena, and they'll be able to do that without breaking the bank. The city had set aside $600,000 in its capital budget at the start of the year to make up any differences in lost income from the fledgling arena. The city's capital budget is used to fund improvements to city streets, facilities and other projects.

Most of the project funds to build the arena come from bonds the city issued, and which have to be paid back over the next 30 years from fees collected from events and activities at the facility. The $600,000 capital budget allotment will enable the city to pay the debt service this year on those bonds.

In addition to city bonds, the state will pay nearly $21 million toward the arena through formation of a Public Facilities District, a taxing authority that allows Kent to keep 0.033 percent of the state’s share of sales tax collected in Kent, or 3.3 cents on every $100 purchase.

The ShoWare Center had expenses of $2.08 million and receipts of $1.68 million from Jan. 2 through Oct. 31 for a loss of $402,000, according to SMG, the operator of the arena.

ShoWare officials expect to lower that loss a bit over the rest of the year from successful events such as Disney on Ice. ShoWare sold out eight of the nine Disney shows earlier this month.

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