SOUTH BEND – A recent study suggests the economic impact of the Century Center isn't as much as South Bend leaders thought. And some South Bend City Council members say they are unhappy with the company that has been managing the facility for the past 6 years.
"I personally feel there is nothing more personal to our residents than how we spend their money," says City Council member Valerie Schey, (D) 3rd District.
That is why Schey is questioning whether the city is getting a good "return on investment" when it comes to the Century Center.
The Century Center, like many convention centers across the county, loses money every year -- about $1.1 million in 2011. The benefit, some argue, is the economic impact on other businesses in the area from the events hosted at those facilities. But a recent study suggests the economic impact of the Century Center is far less than many thought.
In December, the South Bend City Council received the final report from the study done by Chicago-based AECOM Technical Services. It was commissioned by the city and paid for by the Redevelopment Commission. Among other things, the study measured the economic impact of the Century Center and compared it to 10 similar convention centers in similar cities with similar demographics. The study also looked at overall management.
The AECOM study found the Century Center had an economic impact of about $7.9 million in 2011. That number is far less than what was found in a study done in 2009.
In that 2009 economic impact study, Saint Mary's College Professor Jerry McElroy looked at the Center's impact to St. Joseph County since 1990. His study found that in 2008, the events at the Century Center generated about $26.1 million dollars in direct and indirect spending throughout the county.
That large decrease between 2008 and 2011 shocked Schey, who would like to see a greater economic impact and no yearly deficit.
"If the Center were being managed differently, could we be attracting more of the right types of events, generating more revenue and in turn have a greater economic impact on the community, which is what the Century Center is designed to do," questions Schey.
Greg Downes, the president of the Century Center Board of Managers, says the two studies cannot be compared because they use completely different sets of data. And he says a nearly $8 million economic impact in 2011 is still significant.
"We have an $8 million impact. We produce almost 10,000 (hotel) room nights a year. Over 100 jobs which amounts to over $4 million dollars in earning and it also brings in about $1.8 million in new tax revenue every year," says Downes. "So by any objective measure, the Century Center has a tremendous economic impact here in South Bend."
Schey isn't convinced.
The AECOM study also found that the Century Center holds a low number of convention and trade shows compared to the other facilities in the study. In fact, the study found that the Century Center is booking less than half the average. According to the study, "These events tend to be larger events that also bring more non-local residents to a city and therefore create more economic impacts."
"This is just one of so many examples where we as elected officials need to be good stewards of taxpayer dollars and be mindful of every dollar that we spend, and I think there is potential here for significant cost savings and ideally under better management, a better return on investment," says Schey.
Right now, a company called Global Spectrum manages the Century Center. They were hired by the city about six years ago. Downes defends the company, saying Global Spectrum has increased revenue and decreased operating expenses.
He says of the 10 facilities the study compared to the Century Center, most were newer buildings or had been renovated.
"The convention and trade show business, in general, has changed pretty significantly in recent years, partly because of the Great Recession, but also because business has changed and the need and/or demand for these types of events has decreased across the board due to technological advances," says Downes, who adds that a lot is being done to change this, "including an aggressive sales and marketing campaign, an updated state of the art website, coordinated sales calls with the Convention and Visitors Bureau as well as the sales team from the Double Tree, co-op advertising in specific trade publications, etc."
Still, for some council members, the $1.1 million deficit and decreased economic impact is too much to accept.
"I just think it is unacceptable that you continuously accept shortfalls as success," says Dr. David Varner, (R) 5th District.
Varner says the Center is operating under the "old business model" in which conventions center are not expected to make money. He says Global Spectrum needs to find a way to make money.
"I think the model needs to change. We have 65,000 square feet here. We need to find a way to use it in a productive fashion, some of which might be different than we have done in the past," says Varner.
Downes agrees. The city's contract with Global Spectrum is up in June and the Century Center Board of Managers will soon be releasing a "Request for Proposal." They are looking for competitive bids for management of the Century Center that will also include overall responsibility for food and beverage.
Schey would like to see Global Spectrum go and new management or a new management structure be introduced. She points to the AECOM study which offered several suggestions, including combining management of the Century Center, the Morris Performing Arts Center and the Palais Royale.
"Certainly, it is a little early to tell whether those recommendations are realistic, whether they are feasible, whether we can implement them and how long that will take," says Downes. "That said, I think we owe it to the citizens of South Bend to look at every possible way we can improve the performance of the Century Center."