Wednesday, October 19, 2011

One Month Record Revenue for Convention Center

Global Spectrum released a press announcement yesterday stating they recorded the second largest month of revenue since taking over in 2007. I guess one needs to toot one's horn even if it is only the 2nd largest revenue month in the last 4 years, especially with the Event Center vote coming up on November 8th.

I decided to take a look at the 2010 SFCC Annual Report. The report shows the event mix for 2010 as follows:
  • 4% Trade Shows
  • 5% Consumer Shows
  • 7% Conventions
  • 8% Special Events
  • 28% Banquets
  • 48% Meetings
It's an interesting mix of events considering conventions, trade shows and consumer shows only represent 16% of the event mix in 2010. The mayor says the the primary tenant of the event center will be the conventions, the conferences, the big events, trade shows. The power of that investment is going to need a big effort by Global Spectrum once it is built in 2014 to increase that 16% event mix.

But back to record revenues. The 2010 SFCC Annual Report illustrates 2010 Revenues and Expenses as follows:

2010 Total Actual Revenue: $3,055,936
2010 Total Actual Expenses:  $3,592,047
Net Operating Income (Loss):  ($536,111)

With adjustments (not sure what that means) their adjusted 2010 net operating income loss was reduced to ($509,513).

With losses in capital of $61,132 and a loss in other operating items of $460,225, the total 2010 SFCC expenditures was a loss of ($1,030,870).

The Convention Center's source of revenue from the city is the Entertainment Tax, concert ticket sales, and miscellaneous. In 2010 these revenue sources actually totaled $1,056,552 which was down $419,206 from the 2010 Budgeted amount.

They are going to need to up the revenues they produce because the entertainment tax is intended to be used as a contingency for operating subsidy to the new event center which would mean less money for the Convention Center, Washington Pavilion and the Great Plains Zoo and Delbridge Museum in the future.

Let's hope this record month means the convention center will operate in the black in 2011. The convention center needs more than one month of record revenues to pay for itself.


    1. Comparing their earnings can only be valid if compared to the previous operator. Comparing ones self to ones self is rather meaningless .

    2. ***This is material that was handed out at a 2009 Events Center Task Force meeting.***

      It is taken from an article called...

      "Building Boom - Event Center Growth Continues In The Region," (Prairie Business, July 2009).

      Expansions Increase Competition

      The nation's supply of available convention space has increased by nearly 8 percent since 2004 and has grown by nearly 70 percent since 1990. Nationwide the current supply of exhibit and meeting space exceeds demand, creating a buyer's market.

      At the same time a number of factors including the national recession, advances in technology allowing for alternatives like webinars, and video conferencing and a contraction in the concert business have increased competition for events centers.

      "Supply has continued to grow and more space will be coming," says Heywood Sanders, a professor at the University of Texas, San Antonio. "It's a very competitive situation. It is essentially what economists call a ZERO SUM MARKET. You only get new convention business by taking it away from someone else. The other facility is not likely to stand around while that happens. They are likely to do a great many things to compete."


      Besides the fact that Sioux Falls has not prepared for expanded convention business by committing to a second ON-SITE hotel that would be physically connected to a new EC OR been able to attract a low-cost carrier like Southwest Airlines........

      does anyone really believe that Fargo, Grand Forks, Sioux City, Omaha, Des Moines, and Rapid City are going to just "sit still" and watch as Sioux Falls tries to take convention business away from them??!!

      Remember.......ZERO SUM MARKET......

      Vote "NO" on a 22 year commitment of 173 million dollars!!

    3. 48% of the revenue is generated by "meetings"?? Really? THAT'S the cash cow?

      Does the Mayor want to let the "good people of Sioux Falls" know that the top money maker for the convention center will be severely jeopardized when several meeting rooms will BE REMOVED to adjoin the new events center to the existing facility? He also might want to inform them that there's absolutely no way to replace those rooms since there will no longer be any space for expansion at that location (10 pounds of s#!t in a 5 lb bag, anyone?).

      Is any of this on the PowerPoint presentation? No? Well, I suppose that's just 'business acumen' coming into play.

      This plan keeps getting better all the time.