Kent’s ShoWare Center sets record operating losses in 2014

Despite a small profit in the fourth quarter, the city-owned ShoWare Center had record-setting operating losses in 2014.

The Kent arena lost $752,324 last year, according to the ShoWare Center’s income statement. The arena had expenses of $2.74 million and revenue of $1.98 million. That’s the biggest operating loss since the arena opened in 2009.

The financial loss includes a hit of $182,373 for unexpected repairs to the ice plant equipment, said Arletta Voter, ShoWare finance director, at a Jan. 29 meeting of the Public Facilities District board that helps oversee arena operations. Without that expense, the loss would have been $569,951.

“We did have a very successful fourth quarter,” Voter said about the revenue of $24,781 for the months of October through December.

Tim Higgins, ShoWare Center general manager, said a large number of events helped boost the revenue for the fourth quarter. The arena made $57,852 in November when Disney On Ice was in town.

“Over a 90-day period we had 60 events,” Higgins said. “We picked up a lot of activity.”

City staff is pursuing if they can get money back from the original installer of the ice plant equipment, which failed sooner than expected. The ice plant forms the ice for the arena used by the Seattle Thunderbirds junior hockey team.

“We are going to explore if there is any claim possibility there,” said Ben Wolters, city economic and community development director. “We are in the process of that with the original installers and manufacturers. But that’s a long road ahead of us through some challenging negotiating and or research and potential litigation.”

There could be more expenses this year with the ice plant equipment to improve the system, Wolters said. A consultant will help determine what might be needed after the hockey season is done in the next couple of months.

SMG, which operates the $84.5 million arena, projects an operating loss of $463,000 in 2015. The arena had its best year in 2013 when it lost $370,000.

“We create a budget and look at historically what we have done,” Higgins said about the projection. “We have moving forward this year, more than any other year, more ticketed events. It’s going to be a very good year.”

Higgins said eight concerts are confirmed and that number could go as high as 12 to 15.

“There’s more traction than I’ve ever seen,” Higgins said. “Now it’s about selling tickets. This number (projected budget) only works if we sell tickets.”

Wolters worked with Higgins to help set the 2015 budget, part of the contract between the city and SMG.

“This is a pretty reasonable income statement that kind of tracks overall history,” Wolters said. “It’s conservative and we try to be conservative from the outgo because frankly, it creates more upside as we go forward.

“We’re really hoping that with good economic times and with this building continuing to demonstrate ever stronger traction in the marketplace and increasing consumer confidence that we have a real opportunity to beat this number. But I nor the City Council have not wanted to have something that’s rosy but always the emphasis on realistic.”

The council sets aside $500,000 each year in the city’s general fund to cover operating losses at the arena. The council also agreed last year to pay $2.7 million toward the ShoWare Center operating debt with extra reserve money the city had in 2014 because of higher sales tax and other revenues.

Mike Miller, chairman of the Public Facilities District, pointed out that the city received $264,000 in an admissions tax last year, a tax of 5 percent on each ticket sale. That money goes to the city general fund rather than the arena’s income statement.

ShoWare Center operating losses

2014: $752,324

2013: $370,874

2012: $707,541

2011: $487,855

2010: $427,119

2009: $480,851

Total: $3.2 million