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Carnival Center is $3 million in red

MiamiMarlins13

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PERFORMING ARTS
Miami arts center is $3 million in red
The Carnival Center for the Performing Arts costs more to operate than administrators expected, while ticket revenues have been below budget.
BY LAWRENCE A. JOHNSON AND DANIEL CHANG
dchang@MiamiHerald.com

'Avenue Q' stars in new season
Despite its artistic successes, Miami's Carnival Center for the Performing Arts has rung up a $3 million deficit in the five months since it opened -- a period when the center was expected to be only $150,000 in the red.

Center administrators blame budget miscalculations and weak ticket sales. Security, maintenance and utilities are running at twice the budgeted amount, they said, while ticket revenues have fallen below expectations by about 40 percent, leading Miami-Dade County officials to question the basis for the center's budget assumptions.

''Quite honestly, they budgeted it wrong,'' said Alex Muoz, assistant county manager overseeing the Carnival Center through February. The county owns the Carnival Center and will contribute $3.75 million to operations this year, but the center is operated by an independent trust and its budget does not require county approval.

Carnival Center CEO Michael Hardy said the projections were based on early drafts of the center's budget and costs at 30 performing arts centers across the country, which averaged $7.66 per square foot. The Carnival Center's costs have been $15.40 per square foot.

Hardy questions whether anyone could have accurately predicted the expense of running a center unlike any Miami has ever had.

'We said . . . to our board and to the county financial analysts, . . . `We're not going to know what the building costs until we know what the building costs,' '' he said.

The $7.66 target was derived from data collected by AMS Planning and Research, a consulting firm that tracks operating cost data from performing arts centers. Todd Bentjen, vice president of marketing and communications for the Orange County Performing Arts Center in Southern California, said AMS' data are among the most reliable.

''I would imagine that's probably one of the best ways one could budget if you're starting from scratch,'' he said.

At the Orange County center's 2,000-seat Renee and Henry Segerstrom Concert Hall, which opened in September, administrators relied on their 20 years of running the original 3,000-seat Segerstrom Hall to calculate operating costs for the new venue.

Like the Carnival Center, the new Segerstrom Hall was designed by Cesar Pelli, and its acoustics were refined by Artec Associates. Unlike the Carnival Center, the Orange County hall's occupancy costs have met projections, coming in at $7.60 per square foot, Bentjen said.

UNMET EXPECTATIONS

When the Carnival Center opened in October, administrators projected first-year costs at $22.5 million, with a deficit of $550,000.

In actuality, utilities, maintenance and security costs -- budgeted at $1.5 million through February -- have come in at $3.3 million. Ticket sales, expected to bring in $5 million, have netted $2.8 million. With about $1 million saved in programming costs, Hardy said, the deficit stands at $3 million.

Hardy said he is working to cut costs at the complex, which houses the 2,200-seat John S. and James L. Knight Concert Hall, the 2,400-seat Sanford and Dolores Ziff Ballet Opera House, and the 200-seat Studio Theater.

''My goal is to get it down to about $12 [per square foot],'' Hardy said.

That's higher than Fort Lauderdale's Broward Center for the Performing Arts ($11.13 per square foot), West Palm Beach's Raymond F. Kravis Center for the Performing Arts ($11.07 per square foot), and the Tampa Bay Performing Arts Center ($10.40 per square foot).

Hardy said that, in hindsight, those centers should have been considered more closely. But the Carnival Center is larger, and its state-of-the-art acoustics and other amenities are more expensive to maintain than administrators expected, he said.

Police services also have been a drain: The center has spent $175,000 on county and city police officers, who only work during shows. ''We didn't budget anything for that,'' Hardy said. ``Nobody told us we were going to have to pay for that. So it's $500,000 a year.''

Even expected costs, such as the center's need for private security guards, have far exceeded projections: $522,000, compared with a budgeted $125,000.

But the Carnival Center has made a cultural impact, hosting multiple performances by the Cleveland Orchestra and Merce Cunningham Dance Company. And the center has provided sophisticated venues -- including the only dedicated concert hall in South Florida -- for its four resident companies.

Still, attendance is lagging, with an overall average of 61 percent of all available tickets sold. Though the Cleveland Orchestra sold 93 percent of available tickets, Carnival Center-sponsored shows sold just 40 percent. For next year, Hardy said he will book half the number of Carnival Center presentations and rent the halls to more commercial acts, an area in which the center has exceeded its budget, bringing in $1.6 million, $630,000 more than expected.

Programming less and renting more is a plan that echoes, to some degree, the experience of the Broward Center, which opened in 1992 as the first stop on the national road tour of the Broadway musical Phantom of the Opera. It ran for eight weeks, with 96 performances -- 95 of which sold out.

''We started off with a big bang,'' said Bill Farkas, the Broward Center's former executive director. ``But . . . we ended the first . . . 12 months in the red . . . somewhere between $100,000 and $200,000.''

The Broward Center's deficit, though, was driven more by over-optimistic programming than unforeseen costs.

''What we were doing is, we were programming too much and we couldn't sell enough tickets,'' Farkas said.

WHO WILL PAY

While Carnival Center administrators and county officials work to find a solution to the deficit, Muoz, the assistant county manager, declined to say whether the county would cover the shortfall. Commissioners won't decide until September.

''We would expect a higher level of private-sector participation,'' he said.

The county committed $3.74 million in tourist taxes for the center's first year. If commissioners vote to increase the subsidy with tourist tax dollars, then they will have to decide between the dozen or so projects competing for the same funds.

The Performing Arts Center Foundation, the private fundraising arm of the Carnival Center, has committed $2.2 million. Next year, the foundation will raise its contribution to $3.5 million. County officials expected to reduce the subsidy to $1.7 million. But that may change, said Jennifer Glazer-Moon, the county's budget director.

Center administrators submitted a $27 million preliminary budget to the county -- a 20 percent increase over this year's budget.

If the center does need more private dollars, then the foundation will be ready, said Sherwood ''Woody'' Weiser, the board chairman. But the foundation still needs to pay $14 million towards the $48 million it promised to pay for the $472.97 million constructions costs. County commissioners voted Tuesday to back a bank loan for the $14 million.

Judy Mitchell, CEO of the Kravis Center, said first years are tough. The Kravis Center's opening in 1992 ''was so horrible that I tried to block it.'' The center finished the year $500,000 below budget.

''You don't just open a building like this and have everything perfect or have everything run the way it's going to run 10 years from now,'' she said.




***This just comes to show how our politicians know what they are doing. Its amazing how a couple of good lobbyists and a bunch of corrupt politicians (that I am sure pocketed some money off of this) can build and run something so expensive that at the end of the day, never should have been built and they can't even plan it correctly. A new stadium for the Marlins would have generated a lot more money from the begining than this project has and would have been a better venue long term than what the Carnival Center will ever generate for the city. Great job guys, GRRREAT JOB!***

:banghead :thumbdown :blink: :banghead :thumbdown :blink:
 

Out of the Past

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Unfortunately the PAC crowd, not the baseball crowd, calls the shots in Miami-Dade so we spend $500 million (and counting...) on a building that a miniscule number of people will ever use. It's ridiculous.
 

prinmemito

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This is expected. Most businesses and centers lose money the first few years. Let me know whether it's in the red in 10 years and then we'll be able to say whether it was a waste of money. :thumbup
 

TarHeel324

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This is expected. Most businesses and centers lose money the first few years. Let me know whether it's in the red in 10 years and then we'll be able to say whether it was a waste of money. :thumbup
Honestly, because of the amount that taxpayers spent on it and the small number of people actually interested in going there, I dont think I'll ever consider it worthwhile
 

EricWiener

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It is unlikely to make money, things like the Carnival Center (which is a fantastic venue BTW) are also for municipal prestige. World-class cities have world-class cultural events and facilities, and there are certain busniesses and people that will want to live in a world-class city.
 

CapeFish

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It needs reform already, no doubt. But the Carnival Center was needed badly and needed to be built. The Jackie Gleason Theatre was in need of some assistance in terms of another venue to handle some events.

However, the Carnival Center is a little big in one shot for my tastes.

The Broward Center for the Performing Arts is similar and had similar issues when it opened until it got an established schedule of shows and a Broadway Roadshow Season.

It will be fine. The AmericanAirlines Arena lost money big time for the HEAT Group until the HEAT finally jumped on their pony and started making smart moves on the court.

The BankAtlantic Center has been the only facility in SoFla that has not had major issues financially but they have a tremendous amount of events the roll through that facility which helps keep it profitable.

http://www.browardcenter.org/
http://www.bbmannpah.com/
http://www.bankatlanticcenter.com/
http://www.aaarena.com/
 

Beinfest4Prez

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I'm biased but its greatly appreciated on my part that it was built. It is absolutely wonderful acoustically. It is a fascinating place to go hear a concert. Don't blame the art form, it was sorely needed in this city. Blame the lack of planning that was put into it in the first place.
 

FutureGM

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No surprise here. The thing has always been overbudget, and you aren't going to make up for the huge price tag for awhile if you are only doing theater shows.

I can't believe this was built before a new Marlins stadium, but whatever....
 

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