A successful '06 at Albany arena

Fifth-highest profits posted by venue now known as Times Union Center

CAROL DeMARE Staff Writer
Section: Capital Region,  Page: B1

Date: Wednesday, January 24, 2007

ALBANY - The former Pepsi Arena ended 2006 with an operating profit of more than $1.3 million, and for the first time in its 17-year history the facility's annual debt service was covered, Albany County officials announced Tuesday.

In 2006, the county-owned facility, now called the Times Union Center, had the fifth-highest operating profit since it opened Jan. 30, 1990. Last year, the county signed a 10-year naming-rights contract with the Times Union. The newspaper agreed to pay $350,000 a year, as well as provide advertising and other promotional benefits. Pepsi Bottling Group previously held a 10-year agreement, paying $300,000 a year to have its name on the arena on South Pearl Street.

The $3.2 million construction debt owed in 2006 was paid for by the more than $4.1 million generated by county hotel/motel room taxes, officials said. Arena operating profits are calculated separately from bed-tax receipts.

Last year was the first time the debt service was covered by the room tax, county spokeswoman Kerri Battle said. In 2005, the tax brought in $2.3 million. In all the years that the bed tax didn't cover the debt, county property taxpayers picked up the slack.

The higher bed-tax revenue from last year resulted from a hike in the levy - from 4 percent to 5 percent in November 2005 and to 6 percent in November 2006 - in anticipation of the construction of a convention center in downtown Albany.

Of the 6 percent, 4 percent is earmarked to offset the arena debt and 1 percent goes to the county's Convention and Visitors Bureau for its operation. Another 1 percent goes to the Convention Center Authority for start-up costs.

Once the convention center begins incurring debt, it will receive an additional 2 percent, reducing the amount available to offset the arena's debt, from 4 to 2 percent.

The 17,500-seat center is managed by Philadelphia-based SMG, and it hosted 152 events last year with a total attendance of 637,255.

"When I first took office, our goal was to create a profitable venue," said County Executive Mike Breslin, whose administration began in 1995. "We continue to make physical improvements to the facility while at the same time improving operations and controlling costs - making the facility comfortable for visitors yet affordable for taxpayers. And I am certain that we will be even more successful with our new naming-rights partner, the Times Union."

In all, operating profits totaled $1,336,320, said arena General Manager Bob Belber, who is employed by SMG.

"Many arenas in the country in secondary markets are losing money operationally, before debt service is applied," he said. "We have managed to generate over $13 million dollars in net operating profits since 1995, which is a major accomplishment."

He explained that the "Capital Region market is considered perhaps the best Northeast secondary market for major concert artists, such as the Rolling Stones or U2 or Bruce Springsteen, and many others."

Contributing to the good showing last year were the Capital Region's low unemployment rate, a population base of 1.3 million within a 500-mile radius, and "most importantly, our market is centrally located between Buffalo, Boston, Montreal and New York City," Belber said. "So it's perfectly located for a tour stop that will allow only a two-and-a-half-to-three-hour drive after they leave Albany to get to the next tour date."

That makes the Albany venue a "perfect stop for family shows, for concert tours," he said.

Frank Commisso, the Democratic majority leader of the Al bany County Legislature, credited the 11th straight year of operating profits to capital improvements and innovations undertaken by the county, and the marketing success and entertainment-industry connections of SMG.

"The combination of these factors has made it possible to consistently draw large crowds to the arena to enjoy popular performers and exciting sporting events," Commisso said.

When Breslin came into office, the center was on its way to a third-straight year of operating losses. The corner was turned in 1996, when cost-efficient practices helped to reduce expenses and increase profits. That year, operating profit was $185,825. Operating profits totaled $806,116 in 2005 and $1.1 million for 2004.

The arena is home to Siena College's men's basketball team, the Albany River Rats of the American Hockey League, and the Albany Conquest arena football team.

Carol DeMare can be reached at 454-5431 or by e-mail at cdemare@timesunion.com.