Kent's ShoWare Center loses $1 million, but officials remain hopeful
The newest arena in the region, Kent's ShoWare Center, has lost more than $1 million in its first three years. But city leaders remain optimistic about ShoWare, a key to downtown revitalization and Kent's identity as the "capital of South King County."
Seattle Times staff reporter
After three years in business, Kent's ShoWare Center has welcomed more than 1 million visitors. It's also lost more than $1 million of taxpayers' money — with consequences for the city.
Street repairs and new ballfields have been postponed. Kent's bond rating was downgraded last month by Moody's Investor Services. Mayor Suzette Cooke is considering asking city voters to help by approving the city's first property-tax levy.
If that's not sobering enough, there's talk of a National Hockey League team coming to a proposed arena in Seattle. You wouldn't think major-league competition would be good for ShoWare's anchor tenant, the Seattle Thunderbirds minor-league hockey team, though officials are optimistic.
It seems as if almost no one wants to say anything critical about the arena — with reason. ShoWare is a clean, green venue with good seats all around and nice concessions.
And the region's newest arena already is a major source of civic pride, standing near Kent Station shopping center and the Regional Justice Center in a revitalized downtown.
High-school graduations that used to be held outside the city limits are now at ShoWare; you could turn on NBC last month and see Olympic figure skaters gliding on ShoWare's ice; and Kelly Clarkson — she sang the national anthem at the Super Bowl! — will be belting it out in Kent later this month.
"It has been a unifying factor in a fragmenting city," Cooke said of Kent's changing population, pushed by annexations and immigration to 118,000. Racial minorities now account for a majority of Kent residents, who are more blue collar and less college educated than King County as a whole.
ShoWare is key to Kent growing into its newfound identity as the third-biggest city in the county — "the capital of South King County," as City Council President Dennis Higgins calls it.
Though losses are expected again this year, city officials are hopeful.
Kent's arena was built at a bad time, they say, when construction costs were at a pre-recession peak. The $84.5 million venue opened at an even worse time, when the economy face-planted, and arena events — T-bird games, concerts and other draws — have failed to reach attendance projections on which the 6,000-seat venue was built.
Give it a little time, the mayor says. Once the economy and T-birds improve, ShoWare will be looking really good.
But former City Councilmember Ron Harmon, like some others, is increasingly concerned about ShoWare's impact on city finances.
"There's no doubt about the pride issue, no doubt that downtown businesses are benefiting from events there," said Harmon, who voted to build the arena. "But the city cannot continue to lose money based on an old plan we had when times were good."
Wishful thinking about Kent's arena has never been in short supply, says Harmon.
Amid balloons and cheery chants in 2007, Cooke announced the arena's initial naming-rights deal with Amiga, a technology company. Cooke said the $10 million, 20-year deal would help make Kent a "technology hub."
But Amiga had a troubled history and failed even to make a down payment that year, killing the naming-rights deal.
ShoWare, an online ticketing company based in Fresno, Calif., stepped up the following year, paying $3.175 million in a 10-year deal.
Looking to escape an uncertain future at Seattle's KeyArena, the T-birds signed a 30-year lease with Kent that made them ShoWare's chief tenant. The hockey team would get choice dates and also a cut of concessions — which they didn't get in Seattle. Fans would even enjoy free parking at ShoWare.
Kent hired a prominent national company, SMG, to manage the arena. Even skeptics, such as Harmon, praise the work of SMG, which cut its management fee this year by about half — from $250,000 to $120,000 — to help ShoWare's bottom line.
Still a losing battle
SMG recently closed the books on ShoWare's 2011 performance.
The number of events increased for the third year in a row. But ShoWare still lost $457,000 — a touch more than in previous years.
Luxury-box income was down, with just six of the 20 suites leased for the year. Income from primo club seats decreased. Advertising revenue dipped slightly. A new electronic marquee increased the electric bill more than expected.
SMG General Manager Tim Higgins said ShoWare's problem is simple.
"We need to put butts in seats," Higgins said. About 700 more butts per event, he said.
Cooke pointed to the T-birds, stuck near the bottom of league standings, and said: "They need to win."
Attendance has averaged about 4,200, close to what the team drew in its last year in Seattle — but about 1,000 less than Kent projected. The T-birds are scrambling to make the Western Hockey League (WHL) playoffs, as are their rivals to the north, the Everett Silvertips.
Kent and T-bird officials say an NHL team in Seattle likely would help ShoWare. A major-league team would stimulate interest in all-things hockey, they reason.
The NHL could be "very positive" for Kent and Everett, agrees WHL Commissioner Ron Robison. He points to Calgary, Edmonton and Vancouver, where healthy NHL and WHL teams coexist within city limits.
True, those are Canadians, rabid about hockey, says Kim Bedier, general manager of the Comcast Arena in Everett.
But Bedier — a Canadian who used to work for the Toronto Maple Leafs — doesn't see the NHL hurting the Silvertips' season-ticket base or sponsorships.
Since opening in 2003, Everett's $87 million arena-conference center-community rink has made money every year but one. Comcast Arena is bigger than ShoWare, allowing it to attract bigger stars such as Justin Bieber and Carrie Underwood; recent headliners at ShoWare have included Megadeath and the Backstreet Boys. Adding a professional lacrosse team, Bedier says, has helped Comcast Arena's bottom line.
Ben Wolters, Kent's director of economic and community development, said ShoWare's shortfall is split "roughly half and half" between hockey and other events.
Maybe by next year
Mike Miller, a local banker and chairman of Kent's oversight board, expects the arena to lose about $380,000 this year. "I don't see things improving until maybe the end of the year," Miller said. "I look for better things in 2013."
On top of annual loses, the city is making about $3.8 million in yearly debt payments for building ShoWare. That's money the city can't spend on other projects.
"ShoWare is a nice facility, but with the roads in Kent in such disrepair, traveling to ShoWare is a pain in the neck, literally," Kent business owner Delores Christianson said in a recent letter to Cooke.
ShoWare's construction also displaced 10 soccer fields, which the city promised at the time to replace. "Four years later the city has not replaced the fields and is not capable of doing it without asking voters for more money," said Wayne Jensen, president of the Kent Youth Soccer Association.
Cooke is convinced the city — which hasn't given employees a cost-of-living raise in three years — needs more revenue. She has been trying to gauge public interest in a property-tax increase dedicated to parks and transportation, or some other mechanism.
The Moody's downgrade isn't as grim as it sounds, she says. The city's bond-rating slipped one notch.
Kent still has a large tax base, Moody's noted, with companies such as REI headquartered there; and it's well-situated, halfway between Tacoma and Seattle, near Sea-Tac International Airport. Kent's debt is "still manageable," according to Moody's.
Miller, the oversight chairman, suggests one partial fix. ShoWare's annual losses could be cut by nearly half if the city started charging $5 for event parking.
But Council President Higgins worries about its impact on nearby Kent Station. The shopping center already has a problem with ShoWare patrons eating there before events and leaving cars there for the evening.
For now, hope still reigns in downtown Kent, with the latest boost coming from a five-story, 164-apartment, mixed-use building that's supposed to break ground in the fall, just two blocks from ShoWare.
"If we continue to see losses then we all have to do something different, whether it's a change in management, marketing or parking," Higgins said. "I have to admit I'm of the opinion it's going to be all right in the end."
Times researcher Gene Balk contributed to this report.
Bob Young: 206-464-2174 or firstname.lastname@example.org