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May 27, 2010

Special Report: The Arena

Corbin Mayor concerned Arena management company hasn’t reeled in more events

CORBIN — By Becky Manley /Staff Writer

Corbin commissioners could discontinue the city’s agreement with the company that currently manages The Arena.

Commissioners are expected to act on the non-renewal during a special meeting set for 8:30 a.m. today.

The meeting agenda includes an item that calls for commissioners to authorize Mayor Willard McBurney to send written notice of non-renewal to the Philadelphia-based company.

SMG has managed the $28 million venue since it opened in March 2009. According to the company’s website, SMG manages more than 1.5 million seats in venues across the U.S. and internationally. 

The city pays SMG $10,000 monthly for its management services. SMG has also invoiced the city for other expenses including moving expenses for the venue’s general manager, Cliff Clinger, and travel and consulting expenses for SMG employees.

When asked about The Arena in March, McBurney expressed concerns about the venue’s schedule.

“My concern is lack of events,” McBurney said.

In a March interview, Clinger said the venue has struggled due to a tough economy and its lack of a performance history to reassure promoters that bookings at the venue will be profitable.

“The economy did play a real part in us being able to book some shows,” Clinger said. “We can’t guarantee them (promoters) that they are going to sell out and make money.”

That explanation was delivered to city officials who raised concerns about the lack of events last summer when the venue’s calendar was mostly empty.

Despite that concern, McBurney said city officials didn’t discuss the possibility of ending the city’s contract with SMG last year. That contract automatically renewed in December.

Financial reports obtained by the Times-Tribune through open records requests show that SMG reported a fiscal year-to-date shortfall of $336,570 as of January. The same report indicates the venue had a budgeted shortfall of $198,048.

Reports from 2009 and 2010 that SMG submitted to the city stated several events held at the venue underperformed.

When questioned about the venue in March, Corbin City Manager Bill Ed Cannon said The Arena was never intended to make money; instead, the facility serves to stimulate the locate economy.

The Arena was constructed using $14.5 million from the state and the General Assembly and three variable interest loans totaling $11 million from the Kentucky League of Cities.

According to repayment schedules and fixed-rate calculations included in the loan agreements between the Kentucky League of Cities and Corbin, the  total amount the city would pay over the course of the 20-year loans, including interest, is over $15 million.

In March, Clinger said he was certain The Arena — which gets its money from rent, facility and parking fees as well as concession sales, will eventually make money for the city.

“Year one isn’t bleak,” Clinger said. “It’s a very good step in the right direction.” 

Calls to McBurney, Cannon, Clinger and SMG headquarters in West Conshohocken, Pa., were unreturned Wednesday.

ARENA HISTORY

History of The Arena at the David L. Williams Southeastern KY AG& Expo Complex:

1999: The idea for a venue is sketched out on a napkin in a meeting involving Corbin City Manager Bill Ed Cannon, then-mayor Scotty Williamson, Bob Mitchell, District Administrator for U.S. Representative Hal Rogers, and Kentucky State Senator David L. Williams. The venue, meant to stimulate the local economy, was originally conceived as a 2,500 seat adjacent to the Corbin Center for Technology and Community Activities.

2005: Economics Research Associates conducts a feasibility study on the venue, concluding its overall findings were “positive” and that the venue should have 5,000 fixed seats. The report also said the venue would operate at a six-figure deficit through its third year and declining after that as more events were added.

2006: Workers began leveling the top of the hill for The Arena. Also, the General Assembly approves changing Corbin from a third- to a fourth-class city so officials could implement a restaurant tax. The bulk of that restaurant tax, or 75 percent, pays for operation, maintenance and construction of The Arena and 25 percent is given to the city’s tourism commission. Since the restaurant tax began, the city’s percentage has totalled over $2.5 million.

May 2008: It was announced that SMG would manage the new venue.

October 2008: During a special meeting, Corbin commissioners voted to name the new venue the David L. Williams Southeast Kentucky Agriculture and Exposition Center, after Kentucky State Senate leader and Whitley County Republican David Williams. Officials expressed hopes the city would eventually sell naming rights for the venue. The only nay vote came from Commissioner Bruce Farris who said Williams was a key player in getting the venue built but Farris worried whether the current political climate was right for a politician’s name to grace the center.

March 6, 2009: The venue hosts its first event, a Montgomery Gentry concert. To ensure opening night success, Corbin City Manager Bill Ed Cannon used his city credit card to buy 500 tickets.

May 30, 2009: The Arena hosted no events between May 30 and July 22. The Arena’s general manager, Cliff Clinger, told city officials a summer slow-down was normal.

July 2009: The City of Corbin raises its transient, or hotel tax, from three to four percent with the one percent increase slated for The Arena.

December 2009: Forcht Group of Corbin offers to buy a sign for The Arena. The offer falls through after it is learned Forcht Bank couldn’t put a scrolling advertisement on the sign due to city code.

April 2010: Corbin Commissioners approve a low bid of $89,500 for a sign for The Arena. They also approve improvements for the road leading to the venue and its parking lot.

May 2010: It is announced during a commissioners meeting the state will install a traffic signal at the entrance to The Arena.

June 4: The next event scheduled at The Arena is Corbin High School graduation.

SMG INVOICES

In 2008, SMG submitted invoices to the city totaling just under $108,460. In 2009, SMG invoices to the city totaled just under $262,655. Those two year’s of invoices included relocation expenses for Cliff Clinger, general manager for The Arena, totaling $22,720. Invoices for travel, consulting and relocation by other people totaled about $34,450.  

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