Kansas City losing money on old arena since Sprint Center has opened

Hey, every city thinking of building a new arena while also keeping your old one around — I’m looking at you, Seattle — here’s your cautionary tale, courtesy of Kansas City:

While the Sprint Center has exceeded many people’s expectations since it opened five years ago, one promise has not been fulfilled.

Kansas City leaders have not identified a new purpose for Kemper Arena.

Kemper has lost nearly all its big events, including the circus and monster truck shows, to the shinier, newer facility downtown. It now loses money every year, is kept dark for months at a time, and the city is struggling to find a solution.

“This city is not big enough to support two 20,000-seat arenas,” City Manager Troy Schulte said. “The sooner we deal with that, the better off we’ll be.”

The Kansas City Star goes on to note that Kemper has seen its annual number of events fall from more than 150 to a mere 25 this fiscal year, including “a handful of American Royal events, plus graduations, Jehovah Witness gatherings and the like.” Current plans are to either tear down Kemper and replace it with a smaller facility, or possible renovate the current building to hold fewer seats.

Kemper is currently losing $1 million a year, which eats up most of the $1.8 million a year that the city gets from the Sprint Center. Plus, of course, the city is paying $13.8 million a year in debt payments on building the Sprint Center. And another $2.2 million a year in remaining debt on Kemper. With coups like this, who needs failures?

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16 comments on “Kansas City losing money on old arena since Sprint Center has opened

  1. It would be interesting to know is how many events at Sprint, would not have come to KC had Sprint Arena not been there. In Seattle, several events go to Tacoma or Everett instead of Key Arena.

    What probably really hurts Kemper is that there is no major tenant at Sprint Center that other events need to work around and potentially find alternative sites like Kemper,

  2. That would definitely be interesting to know, yes. But given that the city is clearing a net operating profit of $800,000 a year on the two places, while spending a combined $16 million a year on construction debt, I think we have to conclude that even if the Sprint Center has been a huge success at bringing top-quality shows to K.C., residents aren’t seeing much economic benefit from it.

  3. And hence Neil why Markham, Ontario should think before allowing a 20000 seat arena to rise to further muddy the choices of concert and event promoters in the Toronto area. The Skydome (roger`s centre) can compete with the Air Canada Centre in the winter. But concert touring is really a spring summer and fall deal.

  4. The real question I have is whether the new facility should have been built at all, given that a heavily renovated Kemper might have served all the events that the new building does and at significantly lower cost.

    It doesn’t make a lot of sense for a small city (KC, Edmonton) to have two 18-20k arenas. Having said that, two facilities can work just fine if the “lesser” of the two is properly managed by a company that, you know, actually understands the event business. If Kemper were renovated reconfigured into an 8-10k concert or theatre hall, KC might find smaller touring acts go there instead. That would cost money, but then, so will demolishing it. And so would continuing to operate and maintain an empty building indefinitely. It would seem an RFP relating to future uses (and possibly ownership) of the Kemper is appropriate at this time.

    One of the reasons that the concert business tends not to be overly profitable for venue owners is that major acts extract most of the revenue from the shows, leaving little to pay for facility operation and the like. While a Rolling Stones or (insert 19yr old starlet telling her life story’s name here) may generate vast sums in gross terms, the net to the host city is often very small (or negative). I recall one venue operator complaining that, after a five night run by the Rolling Stones, after expenses the facility was unlikely to net more than $100k. That’s not peanuts, but it pales in comparison to what we are told arenas can earn for their host cities.

  5. Paul:

    As I suspect you know, the ACC is the busiest building in Canada and is located in a CMA of around 7 million. It is no accident that MLSe refused to sell Maple Leaf Gardens to anyone who might use it for even a 5,000 seat rink/concert venue. Several parties were interested in operating MLG as an arena (albeit reconfigured and modernized), but MLSe wouldn’t sell to anyone who might compete with them (while there are several venues in the GTA, MLSe controls most of them).

    Ryerson originally planned a 5-7,000 arena on the top floor of the grocery store that now resides in the old Gardens. MLSe then sued the school because they believed the 5k capacity would infringe on their “business”.

    They may even have been right. I could see the Ryerson forwards skating around Phaneuf and Komisarek just like other NHL players have done…

    A second arena in the GTA can be full 250 nights a year regardless of whether it gets hockey team as a primary tenant. I don’t know that the planned location is the “right spot” for a new arena, but certainly the GTA has enough business for “another one”.

  6. In KC, there is also the Municipal Auditorium arena, seating up to 10,000. It hosts the Big 12 womens basketball tournment.

  7. The KeyArena (Seattle’s older arena deemed unsuitable for the NBA, until Stern said as a part of the settlement that it could be renovated to be suitable for the NBA) is slated to host the Pac12 women’s volleyball tournament events soon as well as the Pac12 women’s basketball tournament from 2013-2015… which is right about the earliest time a new arena could appear.

  8. It was a small sample size, but the two people I worked with in K.C. love Sprint Center. I even pressed them a little on the cost and the lack of a tenant but they just liked having a nice arena in downtown. One person is a big college basketball fan and the other person is not into sports.

  9. While Kansas City is probably too small for two 20,000 seat arenas, it’s also a large enough metropolitan area that an older arena would still attract the same large acts that visit pretty much every major American city regardless of the venue available.

    Kemper Arena could have simply been renovated, or, if an NBA or NHL team was not in the picture (and they’re clearly not), retooled to cater to concerts or wrestling or monster trucks or clowns or whatever it is that is going to the Sprint Center today.

    Kemper is less than 40 years old and was renovated only 15 years ago anyway, so it’s not a dump. Even complete hellholes like the old New Haven Coliseum still attracted monster trucks, circuses, and wrestling because those things are all about making sure you can fill the seats, and not what those seats or the concrete box around them look like.

  10. I don’t know John Bladen. Considering you also have RICOH Coliseum with 10000 seats indoors also available a promoter would have more options to reduce costs of renting a hall. The summer you then have the Molson Amphitheatre, Roger Centre and even BMO field belonging to Maple Leaf entertainment. Anyone thinking a brand new 300 million dollar arena could survive on concerts alone only has to look to Kansas City and say the taxpayers are the losers

  11. I like that cities of two million are now considered small. Kansas City is double the population of Edmonton. And to echo and earlier comment, had Kansas City landed an NHL or NBA anchor tenant in the Sprint Center, most of the displaced events would’ve likely played in Kemper. The real cautionary tale is the mistake of building a “sports” arena or stadium “on spec.”

  12. Speaking purely from a concert perspective are there that many acts that are limited by the venue quality? Serious question – are there venues out there that are NOT kooky and weird like Calgary Saddledome that still don’t get shows because some loading dock door is too small or the upper seating is such that Christina Agulera can’t set up her stage?

    I ask because particularly here in Edmonton where to sway the non-sports fans many within the Oilers organization have used the scare tactic that in time we won’t be able to secure certain acts here in Edmonton if our arena isn’t updated.

    It’s a fair concern, albeit I don’t think the economic impact of people paying $100 to see a show spins anywhere economically other than into the performers pocket.

    Living up here I think the simple truth is that with the wealth that is generated up north and the cash people have at their disposal most acts would be stupid not to come through Canada, specifically Alberta. And in time when the oil sands developments taper off and jobs grow scarce and the amount of disposable income plummets and the Canadian dollar returns to currency levels similar to 1999 I’m sure those same acts will look elsewhere to hold their shows and not think twice about looking on a map to come to Alberta.

    World class venue or not.

  13. I like Neil, and his blog shows the farce of these subsidies of Sports Corporations reaping benefits from our public dollars, I wish he would focus on all tax-subsidies in general because we have bigger corporations taking more welfare from us than just sporting businesses.

    Right here, this is just mismanagement of government, the Sprint Center is obviously going to take money from an out-dated arena in Kemper.

    What they should’ve done with Kemper is demolish it and either lease the land or straight-up just sell it to the highest bidder, it’s retarded to have both be there.

    It still doesn’t make sense to me that in Los Angeles County, we have “The Forum” (which finally found salvation as a glorified church pretty much) and the L.A. Sports Arena still open while Staples Center and even Honda Center (though about 35 miles away from Staples) are open makes no sense to me.

    I truly wonder what kind of money pits “The Forum” and L.A. Sports Arena truly are. Neil, you do great work but at the same-time you have to know that other subsidies are just as worse or even more worse than Sports ones, but I get how you want show that these billionaires are trying to rob people blind because of “passion” for your team or city.

    College Sports in the United States still rules all over our pro-sports. If I was you Neil I would point out to the Soccer Leagues in Europe where not all teams are looking for a handout and some of the biggest clubs (Ex. Manchester United) still play in stadiums that are a couple centuries old.

  14. I totally know that sports subsidies are only a small (well, not all that small) chunk of the greater corporate subsidy scam, and I do write about non-sports subsidies on occasion. (Google my name and “FreshDirect.”) But I can barely even cover all major North American sports here in the time available, so to expand beyond sports would make my head asplode.

    For an excellent site that does cover all kinds of corporate subsidies, I’d recommend:

    http://clawback.org/

  15. On the matter of arenas needing all the latest amenities to draw acts: My sense is that it matters less if you’re in a must-visit city, but could come into play if a touring act has an open date in the Midwest and is trying to decide whether to schedule, say, Kansas City or Omaha. I don’t know enough about the Canadian concert market to say how Edmonton ranks in this regard.

  16. Ground just broke on Quebec City’s new arena. The mayor is claiming that worse case scenario, without an NHL team, the city will only lose $500,000 per year on the arena.

    Besides numerous other omissions, I don’t think his projection takes into account the money that the existing Colisee will lose. Current plans are to keep it open, in part because an unrealistic goal to land the 2026 Winter Olympics.

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