Kent’s ShoWare Center operating losses hit $744,191 in 2022

The city of Kent-owned accesso ShoWare Center is back to losing money just one year after it turned a profit due to a hefty federal grant.

The 6,200-seat arena had operating losses of $744,191 in 2022, according to the ShoWare income statement. The ShoWare Center had expenses of $3.91 million and revenue of $3.12 million. That revenue included $675,000 from the arena’s federal Shuttered Venue Operating Grant to help cover losses from canceled events during the pandemic.

That’s the second highest annual loss since the $84.5 million arena opened in 2009. The facility lost $752,324 in 2014.

The arena in 2021 had operating income of $2.97 million and expenses of $2.54 million for a profit of $436,456, according to the income statement. The ShoWare Center used $1.63 million in federal grant money to help turn its only annual profit since opening in 2009.

Projections by SMG staff, which operates the facility, estimate a loss of $973,576 in 2023 with expenses of $3.78 million and revenue of $2.81 million. That would be the highest loss in ShoWare’s history.

“We’re seeing expenses are increasing,” ShoWare general manager Tim Higgins said during a report April 18 to the City Council’s Operations and Public Safety Committee. “We are raising rent and watching the competition and the market. It’s the labor and expenses are increasing and that’s the challenge for us.”

Higgins said the arena has had to raise wages to attract workers and still came up short of employees needed during the year to convert the facility from an ice hockey venue to a concert venue. He said they had to hire subcontractors for the work which is more expensive.

Higgins said they have raised the rental fee to help cover those expenses but cannot raise the fee too high that promoters don’t want to book events in Kent.

In 2019, more than 400,000 people came to events at the ShoWare, Higgins said. With the pandemic and canceled events, those numbers dropped to 118,000 people in 2020. The numbers have started to increase with 160,000 in 2021, 271,000 in 2022 and an estimated 319,000 people in 2023.

ShoWare received $4.6 million from the federal grant. Higgins said the remaining $1.5 million has been set aside if needed to help offset losses in 2023 if those losses exceed the projected $973,576 deficit.

That high projected loss in 2023 surprised Councilmember Satwinder Kaur.

“You anticipate a loss close to $1 million. …wow,” Kaur said.

The arena lost $205,560 through the first three months of 2023. Higgins said a canceled show and a concert moved to later in the year impacted the first-quarter budget along with the rising labor costs. ShoWare makes most of its money when people at an event spend a lot on food and beverages.

The city helps cover the losses at the ShoWare with an annual contribution of $500,000 from the general fund to arena operating costs. The city also kicks in $300,000 a year for capital costs where needed to help keep the facility upgraded.

The city charges an admission tax of 5% on each ticket sold. That money goes into the city’s general fund but is transferred into a ShoWare operating fund to help pay for capital projects.

Despite the high operating losses, city and ShoWare staff point out that the arena brings in a lot of money to the local economy, especially in support of restaurants. No official study about the economic impact, however, has been done since 2012, which showed an estimated $25 million impact to the local economy in 2011.

A positive sign this year for the ShoWare is the success of the Seattle Thunderbirds junior hockey team, the anchor tenant of the arena. The T-Birds have advanced to the Western Hockey League Western Conference finals, which means more games at the arena. Two home playoff games during the second round drew just over 4,000 fans each night.

Another benefit city officials point to is the ability of the ShoWare to host community events, including high school and college graduations. All four Kent schools use the arena after previously using the Tacoma Dome. Higgins said 18 graduations are booked for this year starting in June.

Councilmember Les Thomas asked Higgins what the ShoWare charges the schools for a graduation.

“It’s $8,700,” Higgins said.

“That’s kind of a bargain,” Thomas replied.

“It’s a good number for us,” Higgins said.

“Any chance to raise that?” Thomas asked.

Higgins said the rental fee goes up each year based on the Consumer Price Index, so this year it went up about 10%.

The accesso ShoWare Center, 625 W. James St., has lost money in all but one year since opening in 2009. COURTESY PHOTO, ShoWare Center