What of other arenas?

A look a comparable events centers around the country – similar in size and scope to the nearly $60 million, 5,800-seat facility proposed for Independence and to be built and operated by Global Entertainment – show different results for different markets.

In Rio Rancho, New Mexico for example, the 6,500-seat Santa Ana Star Center, built and operated by Global Entertainment and its related subsidiaries, has not turned an overall profit since opening in October 2006. Rio Rancho is the largest city and economic hub of Sandoval County, New Mexico. It’s the third-largest city in New Mexico. According to the 2000 census, the city population was 51,765. It rose to 71,607 residents according to 2006 census estimates and is expected to reach 125,000 by 2010.

Rio Rancho city officials said the city issued more than $36 million in revenue bonds to build the $45 million facility and Rio Rancho’s county seat, Sandoval County, added $8 million toward construction cost, while the rest of the money came from Rio Rancho’s general fund and from interest on the bond money. The facility features 26 luxury suites, 500 club seats, VIP lounge, club lounge and 4 club suites.

Rio Rancho City Contracts Administrator Steve Ruger, who also serves as events center liaison for Rio Rancho, said from October 2006 to June 30, 2007, the Santa Ana Star Center lost $241,000. Prior to opening, the center was projected to generate $1.6 million in its first year toward repaying the bonds. Rio Rancho has had to pay $100,000 a month from gross receipts tax revenue to help pay off the bonds, despite receiving five percent of a 12 percent surcharge on tickets, parking and concessions sold at events at the center, Ruger said.

“Our budget projections were off,” Ruger said, adding that the city built the arena close to nowhere and far from interstate exchanges. “It’s quite a ways from the mainstream population. I think those two factors are what kind of led to the first year’s deficit.” 

Ruger said the center, whose anchor tenants include the Central Hockey League’s New Mexico Scorpions and the New Mexico Wildcats of the American Indoor Football Association, is also operating at a deficit for the second year of operation, a period that began July 1, 2007, and ends June 30. Global Entertainment subsidiary Encore Facility Management, which will manage the Independence Events Center, operates the Santa Ana Star Center.

“The second year is winding down and it is still not producing revenue as expected,” Ruger said, despite the arena booking more than 100 events. “The city has supplemented a lot of cost for the debt service out of our general fund.”

Global Properties President Steve Bielewicz said the company had a pretty good idea the Santa Ana Star Center would have trouble turning a profit in its infancy due to the adverse location and demographics.

“We knew that going in,” Bielewicz said of the potential for the center’s projected revenue to be off. “The building was to start their downtown. It is off by itself. The only two buildings there are the arena and City Hall. This is going to take awhile for this new city to develop retail and other items around the area to support the event center. Our projections for this year is that the building will more than break even.”

Overall, Ruger said, the city of Rio Rancho has not yet seen the benefit Global Entertainment projected for the area, but added “patient” would be a way to describe city officials’ view of the situation.

“(Global) is contractually obligated to meet the debt service requirements for the bond payments and obviously they are not meeting that,” Ruger said, “so that’s the outstanding contract issue right now. Otherwise, they have been getting the events in and they have responded to everything we have ask them to respond to.”

More than 232,000 people attended 98 events during the center’s first year, Ruger said, adding second year numbers for the Santa Ana Star Arena are incomplete.

“I think it’s hit or miss,” Ruger said of Global’s scheduling. “They are still trying to figure out the market. No one really knows the market out here. We have a lot of competition from Native American tribes’ casinos that draw similar acts and they sell their tickets a lot cheaper. That’s a bit of a challenge, but we have had some shows that were very, very successful.”

Friday the Examiner examines the failed partnership between Global Entertainment and the Chevy Centre in Youngstown, Ohio.

Arena facts

The Independence City Council approved in April a series of contracts related to the design, construction, site management, operation and marketing and ticket operation of the Independence Events Center, a multi-use facility that plans to house a minor league hockey team as anchor tenant.

Despite backing off and re-doing a deal with International Coliseums Company, a Global subsidiary, to oversee construction of the project last month, City Manager Robert Heacock said the project is progressing smoothly.

The nearly $60 million dollar project will be paid for by tax revenue generated from a community improvement district tax levied for the commercial area near the arena’s proposed location at Interstates 70 and 470.

Groundbreaking ceremonies are scheduled this summer, and the arena is projected to be completed by October 2009, just in time for the start of the Central Hockey League’s season. Global Entertainment, which owns the CHL, is currently in talks with prospective owners of the hockey team that will call the events center home.