BANGOR, Maine — Bangor’s $65 million arena is making money and surpassing expectations, according to city officials, which is why they decided to extend the city’s relationship with the management company that runs the Cross Insurance Center.
The Bangor City Council voted Monday night to extend the city’s contract with Spectra Venue Management, formerly called Global Spectrum, until 2021, with an option to extend it for an additional five years.
The amended contract sets a $125,000 annual management fee paid by the city, which matches the fee in the original contract, but adds the option for annual increases based on the consumer price index.
The Philadelphia-based firm has been running the Cross Insurance Center since the arena opened in 2013. The original contract was set to expire in 2018.
“It is the consensus that this was a wise investment and that we have a solid partner,” Council Chairman Sean Faircloth said Thursday. “Much of the credit also goes to [the general manager], but we see significant return on investment.”
“All these acts we’re seeing [coming to Bangor] are really telling the story,” Faircloth added.
In the 30-month period between September 2013 and February 2016, the Cross Insurance Center has hosted 646 events, ranging from high school basketball games and bull riding competitions to community galas and regional conferences. Those events drew more than 745,000 attendees, according to facility reports.
While the figure may seem small considering the facility’s operating expenses of $6.8 million during that 30-month stretch, the results are significantly better than expected.
After accepting the new contract, Bangor’s city councilors praised Spectra’s performance, referencing a 6-year-old study that indicated things shouldn’t be going as well as they are.
When Bangor explored the economic potential of building a new venue to replace the deteriorating Bangor Auditorium in 2009, it hired ERA/AECOM to draft an economic feasibility study.
The firm projected a net operating loss for the venue every year, something that isn’t uncommon at arenas and civic centers. Most facilities are built because of the revenue and traffic they drive throughout the city, not because the venues themselves are significant moneymakers, according to City Manager Cathy Conlow.
Two years after that study came out, Bangor voters approved the construction of the new arena that later would be named the Cross Insurance Center. Supporters of the new arena and convention center promised it would allow Bangor to attract performances, meetings and events that the existing auditorium couldn’t handle.
At that time, Bangor taxpayers were contributing $500,000 or more each year to subsidize the Bangor Auditorium, a figure expected to grow because of significant renovations required at the aging facility.
The feasibility study projected a $228,000 operating loss for a newly constructed arena in 2015. In reality, the Cross Insurance Center netted $42,000 that fiscal year, according to facility reports.
“I think the success has come from being able to find things, events, combinations of the right economic conditions,” said Cross Insurance Center General Manager Joe Imbriaco, who Spectra transferred to Bangor from an arena in Columbia, South Carolina in 2014. “There’s a lot of things that have been fortunate.”
After its first fiscal year, when the facility saw an operating loss of $26,500 between September 2013 and July 2014, Cross Insurance Center officials found ways to “maximize efficiencies,” Imbriaco said, tinkering with staff size, hours, energy use and more.
In its study, ERA/AECOM also projected attendance figures, expecting annual event attendance to reach nearly 320,000 after three full years of operation. The Cross Center hasn’t yet reached that threshold.
In fiscal year 2015 (July 2014-June 2015), the last full fiscal year, 291,000 people attended 283 events at Cross Insurance Center, according to Imbriaco. Data are only available for eight months of this fiscal year, but between July 2015 and February, the venue netted $6,000 through 148 events that drew 167,000 attendees.
Of the people who buy tickets for Cross Insurance Center events providing zip code information, 37 percent are from outside the Greater Bangor market. About 17 percent of attendees come from the Portland-Auburn market and 6 percent from the Presque Isle market. The rest are scattered across New England and the Canadian provinces.
Spectra officials Hank Abate, the company’s senior vice president, and Mike Scanlon, regional vice president, joined Imbriaco for this week’s council meeting and thanked city councilors for extending their contract.
“It’s a tremendous asset for us, as it is for you,” Abate said of the Cross Insurance Center, adding that Spectra cites Bangor’s arena as a success story in presentations across the country.
As part of negotiations for Spectra’s new contract, the firm offered to give the city $285,000 to cover the costs of installing new LED lights over the arena floor, and create an event development and marketing fund. If the city were to end the contract with Spectra and go with a different venue management firm when it comes up for renewal in 2021, Bangor would have to repay half that amount.
The lights could help the venue save tens of thousands of dollars per year, according to Imbriaco.
The city continues to pay $3 million in debt service per year to cover the construction costs of the site, drawing from Hollywood Casino revenues and tax increment financing funds.
The venue has been grappling with criticism over accessibility, usually related to parking and the deteriorating condition of the Bass Park parking lot. The city is weighing whether to invest in repairs to that lot.
Imbriaco said there may be years in which the facility doesn’t end up in the black, but that he hopes to keep that to a minimum. Spectra will continue to learn about the market, popular events and efficiencies as it gets more years under its belt in Bangor, in hopes that the city has to subsidize it as little as possible, he said.
“I think there will be an ebb and flow,” Imbriaco said. “We’ll have ups and downs like any business.”
Follow Nick McCrea on Twitter at @nmccrea213.