Barclays Center's First Year Operating Income Well Below Original Projections
Barclays Center has "attracted widespread attention in its first year of operation," but its financial performance has been "far from a show-stopper," according to Eliot Brown of the WALL STREET JOURNAL. The "most expensive" arena in the U.S. is "lagging tens of millions of dollars behind projections for operating income." Developing firm Forest City Ratner projected that Barclays Center would have more than $76M of operating income "in its first year of operation." But securities filings show that the number was $19M "in the nine months ended in July." That puts the arena on pace to produce $25M for the year, which would "be two-thirds less than projections." It would also be less than the arena's $29M in "annual debt service" on the $511M the development "borrowed by selling tax-exempt bonds." Forest City execs said that the shortfall is "largely the result of their spending more than expected to make a big splash in the first year, investing heavily in marketing, customer service and securing top acts." They also noted that the arena ranked No. 1 in the U.S. and No. 2 globally for ticket sales among concert venues in the first nine months of '13, and that the arrival of the Islanders in '15 "should help." The execs added that Q4 operating income is "expected to be stronger." Forest City Ratner President & CEO MaryAnne Gilmartin "predicts annual operating income will be" $70M by '16. She said, "Now, we turn our efforts toward calibrating the operating expenses." However, arena experts said that "boosting income by that amount will be difficult." Not only are margins in the concert business "tight," but the arena faces "a competitive marketplace, particularly from Madison Square Garden, which has been closed since the early summer for a renovation" (WALL STREET JOURNAL, 10/19).