When the E Center opened its doors one year ago, city officials assured taxpayers the $54.1 million sports and entertainment complex would not become a financial albatross.
City Manager John Patterson even took The Pledge: "No tax increases," he said.Twelve months, 43 hockey games, 17 concerts, 71 special events and two pro wrestling extravaganzas later, the E Center's initial 12-month revenue totals are exceeding all projections.
And Patterson is happier than a Utah Grizzlies goalie with a new set of dentures because his city's most ambitious economic venture is producing a surplus in its first full year of operation.
Revenues from parking fees, a $1-per-ticket admission surcharge, an innkeeper's tax collected from motor hotels near the E Center and taxes generated by new businesses nearby exceed the city's budget projections by $413,580.
That figure also doesn't include seating and parking revenues from E Center shows this weekend.
Patterson said when that revenue is added to the $413,580, the 12-month surplus will offset $90,000 in projected income from E Center naming rights that has not yet materialized and wipe out an anticipated $326,725 first-year operating deficit.
Any remaining money will be moved into the general fund to be used as a hedge against possible future budget shortfalls, he said.
City Finance Director Russell Sanderson reported that parking and seating revenues exceeded initial budget forecasts by $116,347 and $77,421 respectively.
Innkeeper fees and sales tax collections provided $219,812 more than the city anticipated.
Those revenues were bolstered by swifter-than-expected development of commercial properties on private land south of the E Center, Patterson explained.
Some 600 motel-hotel units are collecting the innkeeper fee, three restaurants are serving food in addition to the E Center's own Wasatch Grill, and Patterson said a fifth restaurant serving Mexican cuisine will be finished soon.
The city manager also said the future economic picture looks good with a retail shopping area and possible office space developments on the horizon.
In the latter case, West Valley is dickering with Grizzlies owners David Elmore and Donna Tuttle to carve one or two areas out of the south end of the E Center's 30-acre parking lot.
While the proposal is a controversial one at this point, Patterson said, it could give the city two pads worth $1 million each that could be developed as 100,000-square-foot office buildings.
That income would be used to retire the E Center debt, he noted.
Patterson also indicated the city is close to closing a deal to sell the E Center's naming rights to a major corporate sponsor.
City officials hope to net anywhere from $4 million to $5 million over a period of several years by selling the naming rights, and also would apply that money against the $54 million debt.
And the city also has an ace in the hole to cover its future E Center financial bets: an anticipated $1.7 million share of the $59 million expected to be paid by the Salt Lake Organizing Committee. The money is repayment of sales tax revenues diverted from state and local coffers toward construction of Winter Olympic facilities.
Inside the E Center, Grizzlies president and chief operating officer Tim Mouser said the Elmore Sports Group's hockey franchise enjoyed a solid first season despite the team's elimination in the first round of the IHL playoffs.
Putting more than 300,000 paying fans in the arena and selling three dozen of its 38 corporate suites, the team met between 80 to 85 percent of its fairly aggressive economic goals for the year.
Mouser noted the club came close to its goal of selling 2,500 season tickets, and also marketed about 900 of the 1,000 club seats it planned to market.
"Cash flow for every startup situation is not what you would hope," he said, "but the future looks very bright.
"We lost significant dollars during our first two years in the Delta Center, and it's going to take one or two years" to make that up.
Mouser said the club is planning strong marketing and advertising campaigns in the coming season to develop new hockey fans and expand its base of between 10,000 to 20,000 regular fans. He estimates about 4,000 of those people attend 90 percent of the games.
Grizzlies management also expects the National Basketball Association lockout will help increase hockey attendance by basketball fans looking for an alternative, Mouser said.
Kevin Bruder, chief financial officer for the Elmore group and manager of the facility itself, indicated a flurry of seven concerts in late summer ensured a successful first year that brought 17 concerts and 73 special events to the arena.
Providing concert and special event venues always involves a lot of uncertainty, he noted, "but we came close to where we wanted to be on the number of events."
Amusement Business, an international trade paper that covers the concert promotion industry, ranked the E Center eighth in the top 10 U.S. concert venues in the 10,001 to 15,000 capacity range between last Dec. 1 and Aug. 17.
The trade weekly reported 11 concerts at the E Center netted $1.6 million with an aggregate attendance of more than 61,000 people. That figure did not include the last six shows of the season.
However, Bruder said such numbers can create a deceiving revenue picture because about 90 percent of most concert revenues go to the entertainers, leaving only 10 percent to pay facility overhead and ticket surcharges.
He estimated Centennial Management, the Elmore Group subsidiary that runs the E Center, met between 75 and 85 percent of its financial goals in hosting various concerts and special events.
"We were extremely pleased, but we're not satisfied," Bruder said. "Some in-house things we wanted to promote didn't develop."
In addition to the success of a Polynesian festival and Hispanic music concerts, he indicated a number of the ice and specialty shows drew well the first year and will be coming back.
Bruder noted the Wasatch Grill Restaurant on the top floor of the E Center continues to build a regular lunch and dinner clientele and also doubles as a "parents room" during concerts featuring bands that appeal primarily to youths.
*****
ADDITIONAL INFORMATION
First-year E Center earnings
... Projected Actual Surplus
... Earnings* Earnings
Net parking $339,000 $455,347 $116,347
Ticket tax 409,000 486,421 77,421
Sales tax 105,000 313,415 208,415
Innkeepers fee 87,600 98,997 11,397
Totals $940,600 $1,354,180 $413,580
*Earnings for 12 months
SOURCE: West Valley City