Universities seek to break even on arenas

Springfield is home to two new collegiate arenas in recent years, and their respective operators are charged with ensuring the spaces generate enough revenue to keep them running long into the future.

However, that doesn’t mean officials at Missouri State and Drury universities are fixed on profitability. In the case of MSU, the goal right now is digging itself out of a loss to the tune of hundreds of thousands of dollars.

Following a state audit that found JQH Arena lost $328,890 during its first two years of operation, Missouri State University formed a nine-member task force to shore up the arena’s finances.

This month, the task force unveiled four key findings and 16 initiatives to President James Cofer. Among its suggestions was that the university hire a director of ticket sales responsible for growing sales at the arena.

Task force Chairman Brent Dunn, vice president of university advancement, said increasing ticket sales to Missouri State men’s and women’s basketball games is key to making the arena solvent.

“From a budget standpoint, we found that the arena is working out just fine. But the shortfall stemmed from athletics,” Dunn said. “The area that could bring in the most money is to bring in more people to purchase seats.”

He said the opening of the arena in fall 2008 came just as people were deciding to spend less on nonessential items, such as college basketball games. Through fiscal 2011, the arena has lost $324,251, including a transfer of nearly $600,000 from the Intercollegiate Athletics Fund from fiscal years 2009–11, according to Montee’s report.

Dunn said the university already is advertising the director of ticket sales position that would concentrate on increasing athletic ticket sales.

Other possibilities for generating revenue include charging for parking during nonathletic events; paying utilities annually, which could save $100,000 a year; maximizing arena sponsorships; and selling alcohol at games.

Of course, Dunn said securing concerts, such as Elton John in April, is always top of mind.

While the university is pressing to make more money with its $67 million arena that was funded in part by private donors, the facility is more than just a business opportunity, according to Dunn.

“Our arena is for the university, but it is here for the community, as well. You do have to balance those needs,” he said. “You’ve got to pay the bills. It’s nice to make money, but if we break even, that’s not bad, either.”

It appears that profitability is tough for many collegiate institutions.

A 2010 study that examined data from 217 college basketball programs conducted by Neil Terry, Rex Pjesky and Robin Patterson at West Texas A&M University found there was a correlation between the size of a school’s undergraduate population and the financial health of its basketball program.

“Large state universities like the University of Texas, University of Michigan and University of Florida might have an innate advantage with respect to athletic program profitability based on their dominant size,” the report said. It also found a correlation between the school’s rankings on the ratings percentage index and the profitability of basketball programs.

Dunn said the men’s and women’s basketball programs at Missouri State have not produced “stellar years” recently, and the task force believed better play would improve ticket sales.

Matt Miller, director of the O’Reilly Family Event Center at Drury University, echoed Dunn’s sentiments that breaking even is held above profitability.

“When I say break even, I’m talking about paying all of the utilities in the winter months, salaries for staff, paying basketball officials that come here – all the costs to run the facility,” Miller said. “Our goal is to be self-sufficient.”

Miller, a former Drury basketball standout, said the university is trying to strike a balance between meeting the needs of its student athletes and making money with concerts and events.

“There’s a really fine line and a delicate balance that has to be maintained. Between Oct. 15 and the end of March, this is primarily an athletics facility,” Miller said. “When we start taking a look at the number of concerts that we feel like we need to have and the number of special events that are revenue-generating, there are a limited amount of times available for those because our teams have to practice and, obviously, we have to have games in here.”

Matt Miller took over the position as director of the arena in March from Myra Miller, who was named director of Drury’s Rolla campus.

Miller declined to disclose revenues since opening in October, but he said Aretha Franklin’s cancellation in the opening month might cause the university to take a hit on its bottom line during the first year. He hopes a Sheryl Crow concert in July will put the 3,100-seat arena back on track and provide a revenue benchmark.  

“We’re not going to make nearly as much on a basketball game as we would by having a big, national act in here like Sheryl Crow,” Miller said.

Then again, that’s not the point. He said a portion of basketball season ticket sales support other Drury’s athletic programs. By bringing in national acts, those revenues serve to support facility operations, and, in turn, the basketball program.[[In-content Ad]]