By Jimmy Nesbitt, Evansville Courier & Press
CORPUS CHRISTI, Texas - The American Bank Center has hosted around 140 events a year since it opened, a significant improvement over Memorial Coliseum, the entertainment venue it replaced.
The much larger arena has helped Corpus Christi attract acts that had been passing on the city when they toured Texas, said Marc Solis, the arena's general manager.
The entertainment business is extremely competitive in the state, as several cities also have built new arenas recently to attract top-tier entertainment, he said.
"What that says is other cities are doing this," Solis said. "They want to have that quality of life."
The coliseum hosted 90 events in 2003, its last full year of operation.
Corpus Christi was one of nine cities that have built new arenas since 2000 that Gateway Consultants studied. The city of Evansville hired Gateway to determine whether the city should renovate Roberts Stadium or build a new arena. Gateway recommended in May that the city build an arena Downtown.
The American Bank Center has 8,000 fixed seats and, with around 2,000 spaces, plenty of parking, Solis said. The arena has hosted events the same day as the city's minor league baseball team- whose stadium is located less than a mile away - with no major problems, he said.
Whataburger Field, home of the Houston Astros double A affiliate Corpus Christi Hooks, opened in 2005 after voters approved a one-eighth cent sales tax increase to pay for the $27.7 stadium, the same method the city used to pay for the arena. Solis said the arena is making a small profit. But Oscar Martinez, assistant city attorney, said Corpus Christi is losing around $1 million a year on the arena.
"It was projected to make money or break even," Martinez said. "... If you were to include the cost for all the insurance and everything it truly costs us to operate, it loses money."
The city subsidizes around $800,000 a year for insurance expenses, management fees and computers and other equipment used for arena operations.
Martinez said revenues have been lower than expected, and "it's becoming more costly to bring in high-quality entertainment shows. That obviously eats into the revenue generated from the ticket prices and parking revenues."
Before the first sales tax increase was approved in 2000, a consulting firm estimated the arena would run an operating revenue surplus of $618,999 in 2003, the Corpus Christi Caller-Times reported. That profit was expected to steadily increase to $867,070 by 2012.
The debt service payment on the arena is around $3.5 million a year. The money the city is using to subsidize the arena has a limited life.
"The sales tax (increase) will go away," Martinez said. "And the question is how do we continue to subsidize off our current operating budget. We don't have a mechanism to make that happen."
No account for repair costs
Martinez said the operational budget for the arena also doesn't have an account for facility maintenance and repair.
"At some point, we're going to have to replace the air-conditioning systems, seating and the kitchen facility," he said. "We have no capital replacement system set up, and that's something that we have to deal with."
Asked whether he was satisfied with the performance of arena managers SMG, Martinez said: "I think like any other contract, there's room for improvement. That's almost as much of a management question as it is a political question. ... It's as much our responsibility to communicate to them our expectations as it is for them to anticipate our expectations. So it's really a two-way street. I shouldn't put it all on SMG's shoulders. We bear a lot of the responsibility."
Jim Lago, host of Corpus Christi AM radio show "Lago in the Morning," said public opinion on the arena when the sales tax increase was approved was "pretty evenly split."
The sales tax increase for the arena was approved by a 62 percent to 38 percent margin, according to Mayor Henry Garrett's office.
Lago supported the arena and saw the expansion of the convention center, another project funded by a voter-approved sales tax increase, as a way to attract more events that would stay in town for several days.
"You pretty much know going in that the best you can hope for when you build one of those places is to break even because they're never going to make money," Lago said. "But it's a quality-of-life issue."
There are other ways to measure an arena's success that don't show up in a financial statement, said business consultant David Engel, who helped organize support for the arena's sales tax initiative.
"The one thing that you've got to take into consideration is the multiplier effect that happens when you have an event at a venue like an arena," he said. "That is you've got people coming to your city, not only buying the tickets, but they're also drinking and eating and spending an extra night in your city."
Basketball boost
The American Bank Center has been a huge asset for Texas A&M-Corpus Christi men's and women's Division I basketball teams, said Brian Teter, the school's athletic director. The facility was key in the school becoming part of the Southland Conference and has helped recruiting, Teter said.
Because of the arena, Corpus Christi was a finalist to host first- and second-round games for the women's NCAA Division I tournament in 2009-2010. Teter is optimistic that Corpus Christi will land the Southland Conference Basketball Tournament in 2010.
Like many other people at City Hall, Councilman Mike Hummel is concerned with the financial losses but said it probably isn't losing as much money as it appears.
"You have an opportunity in your town to get something in people's minds that's going to be very beneficial," Hummel said. "They don't make money. They're not designed to make money. It's not like a hotel - you build it, people come, they stay there, they pay money, it makes money. ...
"As long as people have it in their minds that it's going to be a loser financially on the ledger - the money that it makes is just not apparent. But it has a positive impact on the community, and it brings in money."