Full Response by Century Center
Global Spectrum took over management of the Century Center in January of 2007. In 2007 after our first year of management we generated $3.5 million in revenue (the highest in its history) with a net loss of just over $1 million. This was followed by 2008, the beginning of the recession with revenues over $3 million with a loss of $1.2. Over the course of the last four years, Global spectrum has stabilized the deficit back to pre-recession times by managing expenses and revenues, outperformed budgets year over year and saved the Board of Managers $602,590, cumulatively against budget all during the worst economic crisis to affect the nation and travel industry since the Great Depression.
During this same time, we have worked with the Board of Managers to make incremental improvements to the venue itself such as Discovery Ballroom renovation, chiller installation, skylight safety film, Island Park renovation, new chairs, restroom renovations, Fire alarm and security system improvements and public furniture, and have implemented new marketing initiatives like the branding campaign which was just rolled out and includes website, collateral and logo redesign.
Our total fees of $134,683 in 2011 are modest in comparison to the value received in return, estimated at over $400,000 annually. These services and resources include a Network of 32 Convention Centers, Administration and Financial resources such as payroll, monthly financials, internal audits, risk management, legal assistance, human resources and union negotiations. Sales and Marketing support includes multiple monthly sales and marketing conference calls, annual Global Spectrum Sales and Marketing conferences, participation in the National Marketing Plan and lead referral. Recycling and conservation programs, oversight of Micro Main venue maintenance database, development of long-term capital replacement plans, annual Global Spectrum Operations conference and monthly conference calls are all some of the services received within the operations department. Additionally we typically assist by managing all third party contracts for the client although that is not the case with the Century Center Centerplate contract although we have recommended a much closer alliance with the F&B provider going forward.
The increase in the number of communities that have opted for private management of their convention centers has clearly increased over the past 12 years to approximately 38%, as reported by PWC in their 2011 Convention Center Report. The improved operating efficiencies, more effective revenue-generating sales and marketing strategies, and wide reaching corporate resources introduced by private managers have significantly assisted communities in reducing convention center subsidies.
The Brookings report you referenced was published in January 2005 and was based on a snap shot of unreliable data for a very brief period. It looked at a very small sample of data from 1991 through 2003, but focused primarily on 2000-2003 from the “Trade Show 200”, the largest trade shows and convention centers in the US. The BIR did not research medium and small venues nor did it include any consumer shows, meetings, conventions without exhibitions, corporate events, nor social, military, educational, fraternal, or social (SMERF) events. All of these are major components of the Century Center market base and schedule of events.
The direct and rollover-spending resulting from the events hosted in a convention center generates a value to the local community through direct spending and indirect roll-over of the dollars spent (economic impact). Trade shows and conventions that attract out of town attendance of course have the greatest impact, but all events bring incremental spending and benefit to the community.
St Mary’s College, through its Professor of Economics, Jerome L. McElroy, conducted a series of studies on the economic impact of the Century Center upon St Joseph County since 1990. The most current version was published in October 2009. In the face of the significant impact of the recession this study reported that in 2008 the events at the Century Center generated actual total economic impact in direct and indirect spending on St Joseph County of $26.1 million, also generated a total of $3.7 million in state and local taxes that are re-infused into the local community. In effect in 2008, the $1.5 million contributed by the Saint Joseph County Board of Managers for Hotel-Motel Tax to fund the operating deficits of the Century resulted in over $26 million of economic benefit to the St Joseph County economy.
Nearly all convention centers in the US were built without any expectation that they would cover their operating costs, and certainly not capital costs with direct operating revenue. Capital costs as well as operating deficits are in all cases covered by dedicated tax revenues, most commonly hotel tax revenues and justified by the economic impact generated by these venues. That is why cities throughout the US are continuing to build new and expand/renovate existing convention space. With the industry, as well as Century Center, improvements in 2011 over 2010 and the anticipated continued improvement in the industry going forward beyond 2012, it will be critical for Global Spectrum to continue the efforts and accomplishments we have made to date. It will also be critical for the City and Board of Managers to continue to invest in a long range comprehensive capital improvement program. The Century Center with the building & grounds committee has developed a comprehensive capital plan addressing improvement projects for the center over the next 5-6 years. The total dollar on those projects is $4.9million. When you consider the significant risk to the estimated Economic Impact of over $26 Million annually from Century Center, it is easy to see the positive return on investment.
Jill Scicchitano
General Manager
Century Center/Global Spectrum
