Revenue for ticket sales and concessions at the city-owned Santa Ana Star Center is expected to tumble next year, causing the center to continue to be a heavy financial burden on Rio Rancho.
Budget figures show revenue from ticket and concession sales and other sources such as suite rental are projected to be $3.8 million in fiscal 2014 compared to around $5 million per year since mid-2010.
However, the total cost to the city will drop slightly – from between $3.6 and $3.8 million annually since mid-2010 to $3.4 million next year. That’s because the city has cut staff and refinanced the bond debt the city incurred to built the 7,000-seat venue.
Historically expected to be a self-sufficient operation, the city center venue is now considered a “quality of life” amenity like the Rio Rancho Aquatics Center, according to Convention and Visitors Bureau Director Matt Geisel.
The $3.4 million for the center represents about 6.5 percent of the city’s $52.6 million operating budget for the coming fiscal year.
“It’s actually been getting worse, not better,” Councilor Chuck Wilkins said in an interview this week.
Lower revenues are a reflection of the event schedule, Geisel said. At present, there are no big shows like Cirque du Soleil booked in the next fiscal year.
Typically, the big shows and concerts have been successful. Recent concerts by Carrie Underwood and Chris Tomlin made a total profit of $90,000. The profit on “Walking With Dinosaurs,” which had a nine-performance run at the center in March 2010, was $200,000.
But the center’s gamble on the opening U.S. tour of Batman Live backfired, with a $220,000 loss.
The upside, Geisel and Star Center General Manager Gunnar Fox said, is that operating, capital and debt expenses to run the center are projected to be lower in FY2014; $7.4 million compared with $9.2 million in the current fiscal year.
In an effort to reduce costs, Star Center management company Global Spectrum has cut staffing, from 13 to nine employees. The city has also negotiated a deal, set to close May 31, to refinance $35 million in bonds the city sold to build the center. That is expected to reduce the annual debt payment by $405,000, from $2.9 million to $2.5 million in the first two years and $640,000 annually from fiscal year 2016 through fiscal year 2027.
Geisel didn’t rule out the possibility of being able to book some big acts, but there haven’t been any opportunities to date. For example, Cirque du Soleil is not developing a new show at present, he said.
For now, the lineup of 109 dates contains more community events, such as school graduation ceremonies and charitable fund-raising events.
When the Star Center opened in 2006, city officials believed events at the Star Center would be profitable enough to cover debt and operating costs. However, it has consistently lost money, forcing the city, which pledged gross receipts tax revenue to back the bonds, to spend millions to support it.
City officials terminated the contract of the original management company, Global Entertainment, in early 2009 and hired Philadelphia-based Global Spectrum to manage the venue hoping it would eventually break even.
Geisel said the center would have to have a major show like Cirque du Soleil each month to achieve that goal. He said his research has shown that almost all event centers nationwide are subsidized by municipalities.
“These venues across the country are built for the purpose of generating economic impact, driving economic development and increasing quality of life,” Geisel said.
He cited the money spent at local restaurants and hotels by visitors to the Star Center.
“We base our staffing levels on events scheduled at the Star Center. It helps pick up business on slow nights,” said Kassie Guzzardi, co-owner of Joe’s Pasta House on Southern Boulevard.
Nico Ortiz, owner of Turtle Mountain Brewing Co. on Southern, said sports teams visiting Rio Rancho for events at the Star Center frequently eat at his restaurant.
“We most certainly derive significant benefit. That’s 10 percent to 15 percent additional revenue that would not otherwise be at our restaurant,” Ortiz said.