Global Entertainment's Decade Of Bad Business: Part 5 Goes To Independence, Missouri

Over the past few weeks, OSG Sports has investigated the history of Global Entertainment as a vertically-integrated vision to medium-sized markets to build arenas- to varying degrees of success (and mostly varying degrees of failure). The reason for the attention: They've been consulting with the folks in Glendale, Arizona (home of the Phoenix Coyotes--for now).

Global comes to each proposed city with an idea and the idea of controlling every aspect of operation- from construction to ticketing and food complete with anchor tenants and promises of big-name acts brought in from other arenas booked in the Global chain...

In the ten arenas Global Entertainment was part and parcel to, in only one do they have a lasting relationship to date...

Part 1 introduces you to Prescott Valley

Part 2 introduces you to Allen, Texas

Part 3 introduces you to Dodge City, Kansas

Part 4 introduces you to Rio Rancho, New Mexico

The Independence (MO) Events Center (pictured, thanks Missouri Comets)

opened in November of 2009 at a price tag of $68-million. It was the eighth of ten buildings that Global Entertainment was party in developing. Sink Combs was involved as the architect for the fifth time in a row. Two anchor tenants are in place at present- the CHL's Missouri Mavericks (in keeping with the Global model of bringing in anchors) and the Major Indoor Soccer League's Missouri Comets.

The idea for the purpose of the Events Center is different than the previous cities that OSG Sports has investigated to date. While other arenas in Global's portfolio were meant to be integral to encouraging city development, the Independence Events Center was meant to be only a part of the core development at the intersection of Interstates 70 and 470.

"We already had significant development there with a regional mall and a Bass Pro Shops retail store outlet," Independence City Manager Robert Heacock said.

"We wanted the building to be the cherry on the sundae."

Independence had done due diligence through feasibility studies that reinforced the idea an arena should be in the market, but their funding would be different from the other cities that were studied.

"Our situation was unique in that we had seen other cities try to fund the arena through debt service and operations, but that didn't seem to be a tenable goal for us. What we could do through Missouri state law was include it as part of a Community Improvement District. We could, then, charge a sales tax in that District of anywhere from a half-cent to one-cent (depending on the economy) to help pay for it."

Since the Events Center would only be one of four corners of a "trade area" the city could use the sales tax funds to cover the cost of constructing the arena and nothing else. Independence wanted the Center to pay for its operating cost and be a not-for-profit venture.

"And that was critical to our thinking for the building to be a success. We wanted it to be a nice 'family room' for the community," Heacock continues. "We didn't want it to be intimidating as a structure. We wanted it to be, as our mayor puts it, a 'memory-maker.'"

Independence thought, in their initial investigation, that Global could fill a need with the arena idea as they marketed it- especially bringing in, what would eventually be, the Mavericks franchise. Global's role, initially, would include constructing the building. But the city of Independence would re-tool that into more of an advisory capacity over time. It was originally set for Global to manage the arena once it was completed, but after ten months the two parted ways.

The "GetTix" ticketing arm of Global was not proving to be successful in its function, either. The city took over control and handed it to Ticketmaster, which has proven to be more to the city's liking. That was only one conversion of Independence's role as they went on to form an LLC to run the Center and, eventually, the non-profit.

"The team Global hired to run the arena is still there," Heacock said. "We didn't want to try and develop that kind of expertise in-house or bring it over from the Parks Department."

After seeing the issues that Global had in the Youngstown, Broomfield, and Prescott Valley (more on those cities in later installments of the series), Independence thought they should have a reserve of $500,000 in place to off-set any kind of loss during the first years of operation.

"They admitted that managing buildings wasn't in their wheelhouse," Heacock says. "They were getting away from the day-to-day operations of arenas. There just wasn't any clear value to continue the relationship. While we were building the Events Center, we educated ourselves and identified some potential concerns. At the end of the day, it was best to part ways. There really wasn't a need for what they were providing."

Independence also felt it was awkward to have an Arizona-based company trying to run a Missouri-based arena. They felt it needed to be run locally. There was also a concern that arose in the marketing of concerts to the venue which- as part of Global's pitch- was that with all of the arenas they managed, the acts that were booked into one could be booked across the board.

That wasn't always the case...

"There was not enough return on investment to continue the partnership. But it was an amicable split."

Since the takeover of the Events Center by the city, Independence feels like the building has been managed effectively on their own. All the money the building makes stays with the building- to the point that this year, the city is projecting a $100,000 profit. The revenue streams are structured so that revenue goes into capital improvements if there is a profit on the books.

The advice from Heacock: "Know what you're trying to accomplish with the facility and do your due diligence. Some view projects like this as a catalyst for development. For it to be successful, the building should have a role in economic development. There should be some synergy and support. It should broaden the viability of the trade area you're looking to have it in.

"It's critical to be clear on the economic expectations on the debt service and operations of the building. Without figuring out how we would handle the debt service here the way we did, it wouldn't have worked. It's a struggle when debt service and operations are intertwined.

"And you have to have a reserve in place especially for the first few years knowing it's going to be tough when you start."

Here's a story on when the Comets returned to life indoors to be client number two at the Events Center...
((HT: KSHB-TV))