Friday, August 26, 2011

Can There Be A Successful and Profitable Event Center?

The citizens of Sioux Falls are going  to the polls on November 8th to vote whether the city should build a multipurpose Event Center and associated site improvements for a project cost not to exceed $115 million. Add another $10 million to that project cost for the bond issuance.

Stu Whitney, Argus leader sports writer, recently wrote a column regarding the attendance woes of Sioux Falls pro-sports teams. The rankings in the minor league markets have gone down. Whitney says, "If you're wondering if there's a way for Sioux Falls to regain its lofty status among the national elite, the answer is right in front of you - a new event center." 

While I agree that having pro-sports teams in Sioux Falls add to the quality of life quotient in this town, I have to wonder how building the event center will move Sioux Falls up in attendance ranking for the Fighting Pheasants who certainly are not going to play in the new event center. The last I heard the Skyforce was not going to move away from the Arena. Not sure about the Stampede or the Storm. But these pro teams do not make a successful and profitable event center on their own.

What are some things that could impact whether the Event Center will be profitable in order not be subsidized by the taxpayers? Here are a few things to consider:

  • unfavorable lease agreements/management company contracts
  • increased regional competition for concerts and special events, i.e. Sioux City, Fargo, Omaha, Minneapolis, Lincoln
  • concert promoters who use other facilities as a leverage forcing the management company to guarantee much more money for a major event
  • increased competition for consumer discretionary dollars
  • no anchor tenant(s)
  • not being able to realistically hold 120 to 175 inventory days of events in the event market
  • attendance at events that are less than what was budgeted
  • a concessions contract that doesn't give away the farm in terms of revenue to the city
  • tickets priced too high considering the economic climate or economic conditions of the city
  • a debt payment of $10 million or more each year for 22 years.
  • future sales tax revenue projections that don't come to fruition.
  • lack of private partnerships to cover the operating expenses

Maybe the city needs to codify (resolutions/ordinances adopted by the City Council)  provisions to set aside certain identified funds  to cover losses if the forecasted revenue or private partnerships don't meet the operating costs of an event center. At least then, the public would have a better handle on the "what ifs" before they go vote to build the event center. 


  1. Excellent Idea. Let's look at the possible financial shortfalls and how those might be dealt with. People may want to know if the quality of their lives that the city has some say in (city services, street repairs, city maintainance, plus police and fire services etc.) may be negatively affected if the events center doesn't perform as the Mayor is sure it will.

  2. I'm confused Stu Witless. Hasn't the stated goal of the Mayor and his group been for increased flat floor space for all those conventions that are going to flock to town even though there aren't enough hotel rooms to handle large conventions? I don't think the mayor and his group just throw whatever up there and hope it sticks. Sorry, this voter doesn't buy it an my vote is a resounding NO!

  3. I meant to say I think the mayor and his group just throw whatever up there and hope it sticks.

  4. The current plan falls short of maximizing the potential return on investment to the taxpayer. Primarily because it's based solely on a smoke and mirrors sales pitch from SMG & Global Spectrum.

  5. "Can There Be A Successful and Profitable Event Center?"

    Short answer: No, not at the current site. It's a dog and it always has been.

  6. You should run for City Council