Greensboro Coliseum: Erasing The $1.6M Deficit
February 24, 2010 – 12:59 amConceiving ways to put money back into taxpayers pockets is sort of a hobby to me. People sometimes describe me as being conservative.
Some simple math on the Greensboro Coliseum and it’s $1.6M yearly deficit.
The four venues on the coliseum grounds average 850 events, 1.3M visitors, and 200K parked cars annually.
If you applied a $1 surcharge, or “user fee”, to each ticket sold and to each parked car the coliseum would be nearly self sufficient. That would equal $1.5M. Add a quarter or fifty cents to popcorn and you’re closer.
It’s been mentioned that security is billed at about $1175 per hour on big nights. $47 per hour for 25 security folks. I’ve confirmed with Sheriff BJ Barnes that county personnel can offer the same security for $25 per hour. That’s a savings of $550 per hour. I was told it could be a political hot button to mention this. It should be a political hot button not to mention it. The city could easily schedule security at regular pay instead of time and a half for a city facility operating at a loss of taxpayer dollars.
All of a sudden the coliseum is a money maker.
And that couple in their 80’s on a fixed income aren’t paying for me to go see The Eagles. And the animal rights activists aren’t subsidizing circus patrons. And members of one religion aren’t supporting a religious event they may be opposed to with their city taxes, etc., etc.
Of course if it was this simple someone a lot smarter than me would have come up with a solution long ago. The numbers seem to work. With additional revenue needed for the Canada Dry Building and expected losses for the Aquatic Center I would hope we’d be open for suggestions.
My recent proposal to discuss parking discounts for coliseum investors was shot down by the Coliseum Commission and math guru Dave Ribar.
I’m braced for you Dave. What say you on erasing the deficit? And Dave, please don’t go into that return on investment thing. That only affects a very small number of industries like food and lodging.
Disclosure: My high regards for the excellent coliseum staff is not related to my desire to see the coliseum be self sufficient. It’s all about the money.
Update: Amanda Lehmert posts a related story at about the same time.
Update2: Ryan Shell, “it is true that the coliseum has a huge impact on our local economy and that is appreciated, but that does not mean it should be omitted from budget discussions such as this.
Update3: Ed Cone, “The see-through Coliseum“.
Update4: Dr. Joe Guarino posts on the subject.
10 Responses to “Greensboro Coliseum: Erasing The $1.6M Deficit”
Great post….
FYI, in Amanda’s post, she mentions that Mayor Knight is thinking about privatizing. That would be amazing. I think the stumbling point would be what value would be fair compensation for the city’s investment in the coliseum.
I suspect that Matt Brown could run the coliseum at a profit if given the correct incentives. (Like $15K salary and % of profits - like a salesman: base plus commissions.)
Anyway, a taxpaying coliseum might be value enough to go private. Plus a private facility has more reasons to bring events and fans. They have a reason to make the customer happy.
By Don Moore on Feb 24, 2010
Tony:
Moving toward privatization (or at least break-even financing) is a great idea, assuming that the Coliseum can make a go of it.
The security idea sounds good, if the numbers are correct. A question, though, it whether the county’s real cost is $25 per hour. That hourly figure is consistent with an annual salary of about $40K plus benefits. If the city is not going to pay overtime, extra personnel would need to be hired or taken from other responsibilities. You mention that it would be possible to hire and schedule county personnel on a regular basis, but it seems that the security needs occur irregularly. Alternative security arrangements should be investigated, but the numbers need to be worked out more carefully.
The other (and more serious) complication in the analysis is that there would likely be some demand response to proposed price increases. If you make something more expensive, people will generally buy less of it. The surcharge would have to be higher than you’ve mentioned, but maybe not too much higher.
Also, we’d have to look at what the $1.6 million deficit represents. Is this the full deficit or just the operating deficit (i.e., does it account for capital costs)? Also, is this the typical deficit or the deficit for an especially good year?
I have never met or spoken with Matt Brown, but everything that I’ve read suggests that he is a sharp and capable manager. Your post and Don’s response suggest that he is operating the Coliseum inefficiently (i.e., that he could price things better to generate more revenue).
Suppose that someone came to you and said, “Tony, you could make more profit on the furniture that you sell if only you raised your prices.” What would your response be?
By Dave Ribar on Feb 24, 2010
Over the holidays, my son and I went to the Coliseum to catch the game between the Northern Guiford and NW Guilford girls’ teams. I can honestly tell you that I came very close to turning around and going back home when I saw the parking fee. And, I clearly told my son that we wouldn’t be buying any drinks, popcorn, etc.
The cost of those items already border on the rediculous. I believe that any surcharges could have a significant impact on demand.
By Steve on Feb 24, 2010
Tony:
Steve raises a good point that different events at the Coliseum complex are priced differently. There are lots of community events with very modest prices where an extra couple of dollars could deter attendance.
By Dave Ribar on Feb 24, 2010
Note to Dave Ribar: If Tony was operating his business to the best of his abilities and losing money, he would raise prices. He could not lose money every year.
By ddr on Feb 25, 2010
Does the CVM complex host community events that lose money? Dont know? Dances, Super Flea. Graduations, etc.
By Mick on Feb 25, 2010
DR: “Suppose that someone came to you and said, “Tony, you could make more profit on the furniture that you sell if only you raised your prices.” What would your response be?”
I don’t have the luxury of that option Dave. If I continued to lose my own money I’d have to close. Now, if you’d like to see fit to get me a little som’n som’n from the government trough…naw, never mind. I’d rather not.
By Tony Wilkins on Feb 25, 2010
Unknown on those specifics Mick.
By Tony Wilkins on Feb 25, 2010
Without knowing how much the CVM Complex generates in tax money to the City we cannot really have an honest and accurate conversation on the this subject. We dont have all the info or numbers. Also, w/o knowing if community related events are part of the “losing money” equation then how do we proceed. The CVM isnt all about money in my opinion. I have nothing against striving to have the CVM pull its own weight. But we have to be realistic and honest.
Ignoring the tax implications and the community service aspects of the CVM just doesnt work.
By Mick on Feb 26, 2010
Tony:
The point is that Matt Brown may already be at the revenue-maximizing point. Like your business, he may already be doing the best that he can do under the constraints that he faces. If so, an increase in prices (or a decrease as you proposed earlier) would result in larger losses for the Coliseum and possibly more subsidies from taxpayers.
By Dave Ribar on Feb 26, 2010