Cedar Rapids officials look to curb McGrath Amphitheatre losses

CEDAR RAPIDS - Financial losses at the McGrath Amphitheatre and other performance spaces in Cedar Rapids highlight the cost of hosting entertainers like Nelly, Weird Al Yankovic and Willie Nelson in a mid-sized city.

Cedar Rapids taxpayers subsidize the city's main performance venues, but some contend it's the price of creating a vibrant community where people want to live.

'The concern used to be there's nothing to do in town,” said Mike Silva, associate executive director and director of booking for VenuWorks of Cedar Rapids, which has the contract to manage U.S. Cellular Center, Paramount Theatre, McGrath Amphitheatre and Cedar Rapids Ice Arena for the city. 'I am sure you don't hear that anymore. Now the challenge is to figure what to do.”

Cedar Rapids officials thought the McGrath Amphitheatre, 475 First St. SW, could break even financially - essentially a pay-for-itself amenity for taxpayers - when it opened in 2013. Instead, the venue has been running in the red to the tune of $55,000 a year on average.

Largely due to the $166,407 loss at the amphitheater, in the past three fiscal years, Cedar Rapids taxpayers have paid $189,056 to backfill the budgets at the amphitheater, the Ice Arena and Paramount. City officials have not provided finances for the U.S. Cellular Center. The city owns all four venues.

The trade off

The value of 'things to do” butted heads with costs earlier this year as city staff mapped out the fiscal 2018 budget and considered a contract extension for VenuWorks.

During a fiscal 2018 budget workshop in February, city leaders recommended budgeting $56,000 to cover amphitheater losses, projected a $123,000 deficit to operate the ice arena and disclosed plans to allocate $100,000 - $50,000 each from hotel-motel tax revenue and the Ice Arena special revenue endowment fund - to pay for facility improvements at the ice arena.

'For quality-of-life amenities, what is the trade off?” City Council member Susie Weinacht asked.

City Finance Director Casey Drew acknowledged to the City Council that the amphitheater would always struggle to break even and everything would have to 'break right” to do so. Still, Cedar Rapids City Manager Jeff Pomeranz said he had met with VenuWorks about minimizing losses.

'Mr. Drew and I had a very strong meeting and discussion with VenuWorks and they certainly understand the situation,” Pomeranz said at the February meeting. 'A variety of things occurred that caused (the losses). We informed them we expect results and we don't expect these kind of losses in the future.”

Vitality and energy

Cedar Rapids built the $8 million McGrath Amphitheatre with multiple purposes. First, the sloped amphitheater is designed as a segment of the city's eventual flood control system as protection for the west side of the river.

When not in use as an amphitheater, it is an open air park where people drop by for picnics or pass through on the bike trail. And, finally, it's an event space, which hosts a few dozen small, medium and six to 10 larger acts, as well as events like Asian Fest and the BBQ Roundup each year. Events are limited to warmer months.

'People move to communities that have vitality and have energy,” Cedar Rapids Mayor Ron Corbett said. 'Having an outdoor amphitheater gives vitality and energy. It's one of the reasons we've been successful in growing our population. ... Towns that are competitive are ones that are going to succeed in the future. These really are no longer considered amenities. They are an essential part of a community's ability to attract and retain people.”

New contract

As a new event space, it can be an iterative process to find the ideal operational system, Silva said. The site layout has changed several times, which has complicated finding the right flow for entrance and exits, food and drink vendors and merchandise, Silva said.

Meanwhile, as an outdoor venue, weather can spoil turnout, such as soggy conditions that kept the crowd to around 1,000 people for a Bret Michaels concert last year. The amphitheater has a maximum capacity of 4,000 people. The August 2016 Lindsey Stirling concert was also canceled for personal reasons.

A few bad nights can be the difference between a successful season or not, Silva said. He said as the fiscal 2017 season winds down, the amphitheater budget is in much better shape than when the venue lost a record $81,114 last year.

In February, Cedar Rapids City Council quietly renewed a three-year contract with VenuWorks to manage the amphitheater. City officials said they remain pleased with VenuWorks, but restructured the contract to emphasize financial improvement. The contract includes a $72,000 base amount and a variable of 5 percent of actual revenue generated, such as through food and drink sales.

'We said, ‘We want to renew your contract, we like the progress, and we understand the variables you don't control, but we have to get better,'” Sven Leff, Cedar Rapids parks and recreation director, told The Gazette in recounting conversations with VenuWorks.

l Comments: (319) 339-3177; brian.morelli@thegazette.com