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Officials not worried about Arena control

 

 

Nearly seven months after a one-year contract was signed putting Ohio State in charge of managing both the Schottenstein Center and Nationwide Arena, no plans have been made for when the agreement expires June 30.

The deal has provisions that provide for extensions of either month-to-month or yearly after this date, said Xen Riggs, assistant vice president of OSU’s Office of Administration and Planning.

Riggs was responsible for the oversight of the Schottenstein Center, along with other major events on campus. He helped work through the details of the general goals for the partnership on a daily basis.

OSU and Nationwide aren’t taking the fast track to decide what will come next for the long-term contract between the venues.

“I don’t think anybody’s in a monstrous hurry,” Riggs told The Lantern. “We want to do it right and we want to do it well. We want to make sure the structure benefits the community and university in the most advantageous ways.”

Riggs said there are ideas being thrown around for the new contract that still need to be refined, but overall, there won’t be much difference on how the venues operate. No ideas were disclosed to The Lantern, since they are still in the works.

“It’s really just structure that will be put in place,” Riggs said. “One nice thing about being into this (seven) months is we’ve got (seven) months of experience and history. Now that we know each other better, we know what works best.”

Karen Davis, director of business communications for the Columbus Blue Jackets, said the focus on the contract is now on leveraging combined resources to provide the best entertainment and event experience for customers.

However, she reiterated there are no immediate timetables dictating discussions regarding the future of the agreement.

OSU and Nationwide joined forces for financial and marketing reasons. Officials felt it was also the right thing to do for the community.

“The synergies between the two venues is better than it was when we were competing against each other,” Riggs said.

When the arenas were competing against each other before the contract on non-sporting events, they often undercut each other’s efforts to land events, causing the winning venue to actually lose money, said Stephen Buser, an OSU professor emeritus of finance who conducted a report on the financial viability of the National Hockey League franchise in 2009.

OSU President E. Gordon Gee agreed that “having two competing arenas in which each are undercutting each other creates a level of competition that is unhealthy.”

OSU now handles booking for concerts and other non-athletic events for both arenas. Tickets for events can be purchased at both venues.

Instead of duplicating efforts on marketing, the venues have combined all marketing tactics. More time and money can now be spent on cross-promotion and gaining larger audiences for events.

“The co-management relationship offers us more opportunities at reaching our core audience in the Columbus area by being able to now market our shows across both venues and their customer bases,” said Donna Larkin Lake, public relations manager of Feld Entertainment, a production company that brought “Disney on Ice” to Nationwide last week.

Riggs said the vision of joint marketing tactics is to enhance Columbus as a destination for concerts and live events by providing marketing and other tools that might not be available in other cities.

Financially, combined marketing tools have brought the venues big savings and revenue. According to Riggs, the collaboration was hitting and exceeding the expected financial and programmatic outcomes they anticipated. However, there are no specific target numbers in the contract.

Before the contract, Nationwide was in contract with SMG, a Pennsylvania-based management corporation that handles booking for events.

Eliminating this management fee has also helped save money between the two venues. The estimated cost savings for both arenas from consolidation in terms of management will be close to $1 million for both arenas, Gee said.

“From the Blue Jackets’ perspective, we’ve been very pleased with the partnerships,” Davis said. “The consolidation of duties in some areas and sharing of best practices has been mutually beneficial, as we had hoped it would.”

Gee credits the success of the contract to Riggs.

“He’s a magician,” Gee said. “He’s one of the best in the business in managing these large arenas. In fact, that’s why we have someone like him here who can escalate the use of both of those arenas in good ways so that we all benefit from it, as a community and as a university.”

Another agreement benefit for OSU is the use of Nationwide Arena for its hockey team.

“I think that would be a great place for them to play,” Gee said. “I don’t want to move them entirely off campus, but the more we can integrate ourselves in the city, I would welcome that.”

 

In Buser’s NHL report, he found the Blue Jackets lose between $4 and $5 million a year in management fees. According to his study, the team has been losing an estimated $12 million annually.

Despite this money loss, the level of tax revenues generated by the Blue Jackets in terms of accelerated growth of business in the Arena District is more impressive than is the case of the typical city hosting an NHL team, Buser said.

“I discovered that other cities now look to Columbus as a new model for development in and around a hockey arena,” Buser told The Lantern. “The visiting cities were stunned to see that strong business development continued in the Arena (District) even during the worst of the recent recession.”

Buser also said other cities have concluded the Blue Jackets, Nationwide and the Arena District provide a virtual money machine for the generation of business development and local tax revenues.

The only financial fear Buser has is if Columbus loses the Blue Jackets.

“Development of the Arena District could easily stagnate or even reverse the current trend and Columbus, Franklin County and the state of Ohio would suffer tremendous losses in current and future tax revenues,” he said.

The only struggle the venues have faced so far deals with the economy of the concert business.

“The number of tours out on the road has been a little lower than it has in past years, but that seems like it might be coming back,” Riggs said.

Riggs estimated the number of major tours through Columbus has been down by as much as 20 to 25 percent.

Earlier reports of the initial contract speculated ticket prices for events would be cheaper with this contract. Riggs said the concert business doesn’t work this way.

“We’ve said that from the beginning,” he said. “It really wouldn’t have any impact on ticket prices. The market is the market regardless of those factors.”

Venue officials don’t know where the decision making process on the long-term contract will be in the next six months, but said they have good ideas in the works.

“I don’t think anybody wants to put a hard timeline on it because that’s not our intent,” he said. “We’ve got a long way to go and (five) months sounds like a long time, but it’s really not for a project like this.”

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