When the Independent Weekly ran its gloomy scrutiny on the project last fall, their reaction was one of civic concern:
When DPAC became a reality, there were some eye-popping numbers. First and foremost was the sheer size of the venue: 2,800 seats. Then there were the numbers regarding sales expectations: The break-even point is to sell 60 percent of tickets for 100 shows a year, at $55-$60 per ticket.
It seems a tall order for a small city with significant, pressing demands on dwindling public resources, at a time of widespread consumer gloom. Still, the team assembled by general manager Bob Klaus, a veteran of Raleigh's Walnut Creek outdoor concert shed, has been booking performances all year and has much to show for its efforts….
Indeed, the faltering economy is one unfortunate hurdle that programmers have to clear. According to Gragg, the venue "expects to have over 6,000 season ticket holders by opening night of Rent in January." But come March, will there be 2,800 Triangle residents who will have spare $75-$450 for a Robin Williams show?
In these nervous times, Durham has an expensive new investment that's less than two weeks from opening.
Well, the first set of numbers are in. And, by all accounts, it looks like DPAC has exceeded expectations for its first year of operations -- by what BCR is calculating to be a sixfold improvement over full first-year projections.
Through eight months' time, the facility's shows brought in $6.5 million in ticket sales, a number that's on par with the back-of-envelope breakeven number the Indy calculated last fall ($6.4m, adjusted for 8 months of operation.)
But it's not ticket sales alone. Round up those miscellaneous numbers -- like service charges ($529k), concessions ($219k), building rental charges and other facilities fees (north of $300k) -- and you have another $1.5m in revenue to boot.
Add all that up for first fiscal year revenue of almost $8 million. After stage show production costs of $5.7 million and general and administrative costs of almost $1.3 million (almost of half of which appears to have been earmarked to advertising and promotion), and you end up with a net income of $1 million.
It's a return on the City's investment that's well north of original projections, since the City of Durham gets 40% of net operating income as a management fee from the facility. ($100k of this was loaned to PFM/Nederlander for initial marketing expenses and will be withheld from the payment.)
The City had projected $100,000 in profits on the first full year of DPAC operations. The local press (as covered by the Herald-Sun and N&O among others) have picked up on the $400,000 share earned by the City as a quadrupling of the budgeted line.
But when you note that DPAC had only been open eight months at the time of the first audit statement, it's really closer to a six-fold improvement on the budgeted line.
It's more impressive that this has happened in a down economy.
The DCVB noted in a recent news release that the DPAC's SunTrust Broadway Series is weighing in as one of the handful of best-selling season tickets for national touring programs in the country, a data point that aligns with data we've heard coming out of the facility.
And the DPAC's operators have suggested that Durham is a uniquely balanced market, in which shows across a wide range of styles, target audiences and other programmatic categories all seem to do well -- a diversity that bodes well for being able to host a wide range of show types.
The extra profits are a useful bird-in-the-hand for the City, for two reasons.
First, the positive first year -- and the good feelings that seem persistent with operators PFM and Nederlander -- are critical in maintaining a strong partnership with the operator, which is now one year in to its five-year operational agreement with the City for the facility.
Second, while the facility's profits don't directly cover debt service on the project, the additional funds help the overall bottom line for the City, which is responsible for meeting a total of about $2.5 million in debt service per year.
The facility is slated to receive a portion of county occupancy tax revenues, up to $1.4m annually. In the FY10 budget, however, the City allocated only $1.2 million, given the current recessionary climate which has hit business travel especially hard.
The debt service currently draws about $200,000 a year from the downtown revitalization fund as well.
A surcharge on every ticket sold helps to meet the debt service -- another way in which good DPAC results help to provide a positive feedback loop of more funding for the building.
Also outstanding: naming rights, which have seen mixed results to date. You'll note, for instance, that it's still the Durham Performing Arts Center -- not the GlaxoSmithKline Center for the Performing Arts, or the EMC Entertainment Pavilion, or the Merck Center, or whathaveyou.
Until more naming opportunities are sold, we wouldn't be surprised to see the City very happy to have all the profit it can get out of the facility -- directly through operations if not through signage.
After all, while the profits on-stage are fantastic, they represent one small part of the overall financial picture for the facility. But making the entire picture work off-stage depends on the numbers clicking on-stage. And as far as that's concerned, the DPAC is a home run so far.