The numbers sure don't look very promising to me....
Arena could thrive with proper management, study says
By Diane Dietz The Register-Guard
Published: December 19, 2007 02:00PM
Eugene is a pretty small town to support a major multipurpose university-owned arena, but with aggressive management, such a community edifice might succeed here, according to a feasibility study commissioned by the University of Oregon Athletic Department.
The arena would need aggressive sponsorships, an aggressive nonsports entertainment lineup and generous contributions from premium seat and season ticket holders to cover its costs, according to the report.
The analysis is another step along the way for the UO toward its long-held goal of building a new basketball arena along Franklin Boulevard in Eugene to replace the historic McArthur Court.
Alongside other Pac-10 cities with arenas, Eugene is comparatively puny in measures of market strength, according to the report:
The Eugene market’s population is 340,613, compared with a median population of 3.7 million in other Pac-10 markets.
Eugene residents are older, at 36.9 years, compared with a median of 35.8 in other Pac-10 cities.
Local residents have less to spend, with a median household income of $38,000, compared with $44,000 in other Pac-10 cities.
But what Eugene lacks in numbers, it makes up in enthusiasm, said Dave Sparks, UO Athletic Department accountant on the project.
“This is the major show in town,” he said, “and this community is very supportive of the University of Oregon Athletic Department. We’re probably disproportionately supportive as a community.”
The UO’s plan is to borrow $200 million to build the arena, seek to have revenue from the arena cover all operating costs and as much of the debt costs as possible, and then, if need be, use money from donors to cover the balance of annual debt service.
Under the report’s conservative scenario, the facility would need a donor subsidy of about $2 million a year to help cover the debt payments. Under the aggressive scenario, the facility would be able to cover all its operating and debt costs and would generate a surplus of about $4 million a year, the report said.
Dallas-based consultants Conventions Sports & Leisure based its break-even arena budget on the facility hosting as many as 28 concerts or family shows per year, in addition to 46 athletic events.
While McArthur Court can seat about 9,100 people, the proposed arena’s seating capacity of 12,500 would allow more than twice the ticket sales and a larger potential gross than any venue in Eugene-Springfield.
But it also offers a larger potential for loss, promoters say, and that will limit the number of shows that could be staged at a Eugene arena. Unnamed promoters interviewed by the consultants weren’t encouraging: They cited Eugene’s “relatively low population base” and lack of a track record for arena-scale events to explain their reluctance.
It’s difficult, in fact, to rally 2,500 concert-goers to fill the Hult Center’s main auditorium, said Jim Ralph, promoter and executive director of The Shedd.
Pop acts don’t draw like promoters expect, Ralph said. “The Hult Center has tried to target that audience, and they’re not doing it.”
In Ralph’s estimation, drawing an arena-sized crowd in Eugene two or three times a month all year isn’t possible. He books acts into The Shedd as well as into the Hult Center.
“In Portland, you’ve got a vastly bigger top-end potential for your concert, and generally your expenses are lower because flying in and out is so easy. Why come to Eugene when you can present in Portland?” he said.
Promoter Kit Kesey, who books the McDonald Theatre and the Cuthbert Amphitheater in Eugene, said 70 percent of the acts he narrowly loses in bidding wars he loses to Oregon’s biggest city.
“Portland is sitting up there with seven or eight times our population base when you really go into the sprawl. It’s less of a risk to put that size of show into a bigger city,” he said.
Another difficulty: Eugene audiences run out of concert dollars. Book too many similar acts in a row, Kesey said, and they compete with each other.
“You’re talking about entertainment dollars: how much there is and how far you’re going to spread it out,” Kesey said. “It gets segmented up pretty quickly.”
The Athletic Department also may have a tough time finding promoters willing to risk booking acts in such a large space, Kesey said.
“Eugene is a difficult town and a fickle town to come do concerts in,” Kesey added. “It’s borderline too small. Most of the promoters — and there’s only six in the Northwest — have been bit in Eugene.”
Kesey added that he’s a basketball fan with season tickets who supports the concept of a new arena for Eugene. “The university has all the power in the world, and they can pull anything off that they set their mind to, but from the view point of the industry, it would be a tough call,” he said.
Eugene’s most direct competitor when it comes to staging big events is the Rose Garden in Portland, which is home to the Trail Blazers, according to the feasibility study.
But a UO arena would have one advantage, said Laura Niles, city of Eugene cultural services director. The Rose Garden is a business, she said.
“It’s professional basketball; it’s not college. I see that as a very different model. My guess is if it’s a bad year, the university isn’t going to close it down. They have other ways to accommodate a low year.”
Ralph wondered if the Athletic Department was serious about attracting as many as 28 shows a year.
“I kind of suspect when they say they’re going to do shows there, it’s just a part of their prospectus,” he said. “I would be surprised if they made it an active part of what they’re going to do because it’s so hard to accomplish.”
Sparks of the UO said the concerts — although forecast to bring in as much as $1 million a year — are really negligible in terms of the financial package.
Does the university need the concert revenues?
“I’m reluctant to say ‘No’ because we want to maximize our revenue stream,” Sparks said. “That means we would have to sell more hot dogs if we don’t get that. To say we don’t need it would be an incorrect conclusion. We want to capitalize on every advantage this new arena would provide us.”
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