Chris Bieri, Forum Communications, Published July 26 2012
Grand Forks Alerus Center projects $460,000 surplusGRAND FORKS - Grand Forks’ Alerus Center is $503,000 in the black at the year’s midpoint and has approved a 2013 budget that projects a small profit as well.
The Events Center Commission learned of the city-owned facility’s profit Wednesday of the profit, a positive sign for a facility that has regularly operated at a loss, including a $49,000 deficit last year.
By year’s end, the Alerus Center is projected to have a $460,000 surplus, which the commission voted to put into an operational reserve fund.
Executive Director Cheryl Swanson said a combination of favorable winter weather and an increase in events contributed to the Alerus Center’s financial success.
As of June 30, 147,225 people have attended events at the facility, a 35 percent increase from last year at this time. The facility reported revenues of $2.2 million and expenses of $2 million, and a built-in subsidy from the hospitality tax of $220,000.
Swanson said the Alerus Center has earned high marks for customer satisfaction and economic impact, and is now seeing some financial gains. “We’re just realizing the bottom line success now and hopefully we can sustain that with more marketing and efficiencies on the expense side.
The 2013 budget projects $4 million in revenue and $4.4 in expenses. That puts the operation at a $387,000 deficit, but with the hospitality tax, the Alerus Center is projected to net $50,000.
A good portion of the budget discussion at Wednesday’s commission meeting revolved around the marketing budget.
Last month, the commission approved accelerating a marketing plan, adding $100,000 to develop a new website and produce promotional materials, including a booth for trade shows.
Events center staff wants to take advantage of the 2012 surplus for fear that the 2013 marketing budget will be cut. “In leaner times, marketing was the first thing to get cut,” Swanson said.
Commissioners John Schmisek and Hal Gershman both expressed concern over a lack of proper funding for marketing, with Schmisek saying it was “sorely underfunded.”
The marketing budget in 2013 is set at $112,000. For 2012, it is projected to reach $218,000.
But 2012’s profits have to be put in context, according to Swanson. Many conferences rotate among different cities in the region, she said, and can cause a short-term spike in profit.
This year’s state Democratic convention, for example, was held in Grand Forks at the Alerus Center.
“You really have to look at a five-year trend at a facility like this,” Swanson said. “You can’t take a month or even a quarter when you’re working with an arena or convention center. Our goal is to sustain success and client satisfaction.”
Swanson said a number of other factors could affect next year’s budget figures and this year’s bottom line.
A cold, snowy winter could drive up heating and snow removal costs.
Food prices could also go up. The U.S. Department of Agriculture announced Wednesday a nationwide drought will push food prices up 3 to 4 percent in 2013.
“If we are fortunate and have more events (than currently scheduled) we’ll certainly do better,” Swanson said, “but if we have unexpected expenses or a horrible winter, all of that changes.”