Anchorage to pay $300,000 for Sullivan shortfall

Posted: Thursday, October 09, 2003

ANCHORAGE (AP) Anchorage must pay the contractor operating Sullivan Arena more than $300,000 because the facility lost money last year, Mayor Mark Begich said.

The city's contract with SMG of Alaska, which also operates the Egan Civic and Convention Center and other municipal facilities, says that the company is to be reimbursed in the event of an operating deficit, Begich said Tuesday in a memorandum to the Anchorage Assembly.

The Assembly tabled the issue at its meeting Tuesday evening and scheduled it for a work session on Oct. 17 and a public hearing on Oct. 21.

SMG lost money in 2002 because attendance at hockey games has declined, and tourism has been weak since the Sept. 11, 2001, terrorist attacks and the economic downturn, the city said.

''It was a rolling scenario,'' said John Rodda, acting director of the city's Department of Cultural and Recreational Services. ''There was just decreased interest in major events.''

No one from SMG was immediately available for comment Wednesday morning.

SMG has been under contract to operate the Sullivan since June 2001.

Begich told the Anchorage Daily News that the operating loss was probably the Sullivan's first in many years, but he could not be sure.

Rodda said he too was uncertain whether the arena had losing years prior to 2002.

The Alaska Aces, the professional hockey team known until recently as the Anchorage Aces, plays its home games at the arena. The Aces have seen steady declines in attendance over the last five years because of their losing record, team spokesperson Jack Michael said.

The team's average home-game attendance fell from 5,211 in 1997-98 and 5,152 in 1998-99 the last season in which the Aces had a winning record to 3,772 in 2001-02 and 3,049 last season, he said.

''Here fans want to see winning hockey and a winning team,'' he said.

The University of Alaska Anchorage Seawolves, who also play their home hockey games at the arena, have experienced a sharp decline from their peak average attendance of 6,406 per game in 1995, said Steve Cobb, UAA athletic director.

But in the last few years, the numbers have risen. Average Seawolves attendance was 4,083 per game in 1998-99 but 4,432 in 2001-02, Cobb said.

''It stayed basically the same, not a dramatic (change) either way,'' he said. ''We have not had winning seasons and had some bad years, and that's how it is in the entertainment business.''

Tourism in 2002 suffered because of the Sept. 11 terrorist, but also because of the steep stock-market decline and the soft economy, said Bruce Bustamante, chief executive of the Anchorage Convention and Visitors Bureau.

The contract with SMG is one of many that will be reviewed, Begich said. Since taking office in July, he's found several peculiarities in the way the city handles its buildings and other facilities, he said.

A contract that allows a private company to bill the government for its losses is one, he said.

''What's the incentive'' to operate a business soundly? Begich said.

SMG submits financial statements to the city every month, said Valerie Barkley, the city's contract manager for the Sullivan Arena.

''We make them accountable for everything they do over there,'' Barkley said.

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