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Covelli Centre surplus surges

Published: Fri, July 27, 2012 @ 12:01 a.m.




Two sell-out concerts and several other well-attended events led the Covelli Centre to its best second quarter in the arena’s history.

Also, the $229,740 operating surplus for April through June 2012 is the second highest of all quarters at the facility, which opened in October 2005.

The only stronger quarter was January through March 2009, which was highlighted by a boxing card headlined by then-middleweight champion Kelly Pavlik. The center’s operating surplus that quarter was $242,340.

The center had 22 events between April and June 2012, including sell-out concerts by Sugarland and Eric Church, and the arena had a total attendance of 45,445, said Eric Ryan, the facility’s executive director.

Also, concerts by Earth, Wind and Fire and the Trans Siberian Orchestra were well attended.

Though the third quarter is likely to lose money — July to September is typically the slowest period for the center and other indoor arenas — Ryan expects a strong fourth quarter.

The center’s operating surplus for the first six months of this year is $288,075.

The center should end the year with an operating surplus of between $250,000 and $300,000, Ryan said. Its best year was 2009 with a $153,950 surplus.

“This past quarter is indicative of the way we’re going,” he said. “We had a ton of great shows. Our numbers will continue to improve [over the years]. We believe that operationally, we’ll get better. This isn’t a fluke.”

The center has seen a 30-percent increase in its luxury suite and advertising revenue over the past four years.

Youngstown State University, Sweeney Chevrolet, Rollin’ Smokes, First Place Bank, PNC Bank and Farmers Insurance have either signed on as new sponsors or increased their level of sponsorship in recent months, Ryan said.

Also, the center is negotiating with Covelli Enterprises on keeping the facility’s naming rights, Ryan said.

“We had a good quarter,” said Mayor Charles Sammarone. “When you have good shows, you have good attendance. For a quarter report, it looks good. If we could do that all year, that would be great.”

But even with a strong quarter, “it’s still tough to make a go of” operating the center and make enough money to pay its debts, Sammarone said.

The city plans to finalize a deal shortly with a consultant to do an assessment of the efficiency of the center as well as prepare proposals seeking to sell or lease the facility, Sammarone said.

Selling the center will be a challenge because an owner would have to pay property taxes, Sammarone said.

The state passed a bill in May to forgive the city for $4.75 million in delinquent taxes and penalties, and agreed to give the arena tax-exempt status as long as it’s owned by the city.

Leasing the center is a better option than buying it because the facility would remain tax-exempt, Sammarone said.

“I think there’s value in leasing and believe there will be a number of companies interested in it,” he said.

In addition to the $229,740 surplus in the year’s second quarter, the city also made $69,797 from a 5.5 percent admission tax on tickets sold at the arena.

The operating surplus and admission tax, however, don’t make enough to offset the principal and interest owed on the $11.9 million the city borrowed in 2005 to help fund its share of the center’s $45 million construction cost.

The city will pay about $920,000 this year for the center, $335,000 toward the loan principal and about $585,000 in interest. The city paid principal for the first time last year, $275,000.

But Ryan expects the admission tax — $106,815 for the first six months of the year — to make about $250,000 to $300,000 in 2012 for the city.

Between the $250,000 to $300,000 expected in operating surplus for the year and similar amounts for the admission tax, the center would give $500,000 to $600,000 to the city to help offset that $920,000 expense, Ryan said.

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