“This might become even more critical as the university adopts a new budget model,” the report stated.
The Nutter Center’s projected revenue has declined by nearly $500,000 over the past 17 years. The arena was projected to make nearly $3 million during fiscal year 2000, but it is expected to bring in about $2.5 million during fiscal year 2017, which ends next summer, according to budgets posted on Wright State’s website.
The revenue dip follows a decrease in the number of events at the Nutter Center since 2010, which makes boosting profits even more difficult.
“Frankly, no, it’s probably not feasible,” said John Siehl, former Nutter Center director who now is vice president and chief operating officer for venue management company VenuWorks.
In fiscal year 2011, the arena hosted 71 non-university events, according to the report. That number had dropped to 62 by FY 2014.
Not all of the Nutter Center’s events make money. The university had to pay $83,800 to subsidize a Jason Derulo concert in 2014, according to the report. Seven of the 71 events at the Nutter Center in FY 2011 lost an average of $1,404.
But despite some losses, concerts remain the most profitable events.
According to the report, concerts generated 73 percent of the arena’s external revenue over a recent 18-month period despite occupying the facility just 3 percent of the time, the least of any user group. Athletics, which uses the Nutter Center’s facilities the most (31 percent) brings in just 3 percent of external revenue.
It costs $5,000 a day to pay for building operations and administrative costs at the 11,500-seat arena.
The Nutter Center’s vacancy rate reflects a national trend, Siehl said: “It’s a declining scenario rather than a stable scenario.”
The Nutter Center main arena vacancy rate over the past three academic years means it went unused more than 160 days a year. The university would need to get aggressive to improve that rate, Siehl said.
“They have to have the specific drive for it, especially on a university campus, set forth by the leaders or board of trustees,” he said.
The Nutter Center’s arena vacancy rate was 23 percent on weekends from December 2011 to February 2012, and 31 percent over the same period in 2014-15.
Wright State officials refused comment for this story, but the audit report indicated that disagreements among administrators and operating problems are hindering the Nutter Center’s success.
The Nutter Center has not approved nor implemented a mission it created after an audit six years ago, the report said. Its executive director has sought guidance as to what types of events the arena should be pursuing.
“The Nutter Center Executive Director has continually asked university administration to help define the mission of the Nutter Center due to varying philosophy among university administration,” according to the report.
The Nutter Center’s booking policies have caused some distress for its leaders as they cited policies “preventing us from booking revenue-producing events.”
Low sports revenue
The “varying philosophy” of Wright State officials on how to best use the arena is not uncommon on college campuses. There has been an ongoing debate about whether college sports teams should get first claim on an arena, ahead of big-money events, Siehl said.
“It’s a juggling act from the start of your day to the end of your day,” Siehl said. “You’ve got to please many masters.”
Since Siehl left Wright State, he said it appears as though the university has started focusing more on athletics. The audit report supports Siehl’s observations. The floor of the Nutter Center was used for athletics about 45 percent of the time from December 2014 to February 2015. Even when other meeting spaces at the Nutter Center are factored in, the arena’s most frequent user is athletics.
That creates a “use versus revenue” conflict, Siehl said. Universities have “gotten very protective of practice times,” he said, meaning it was hard to bump athletes out of the Nutter Center even when a game wasn’t scheduled. Sometimes, Siehl said, the Nutter Center would pass on hosting concerts in favor of a basketball game.
Siehl said he was occasionally able to get the university to move a game if a renowned performer would mean more exposure for WSU.
“We really sold that aspect,” Siehl said. “We were the highest-profile piece of the university.”
Since the Nutter Center opened more than two decades ago, Siehl said the number of event and conference centers have increased across the country.
Not only is the Nutter Center competing with arenas in Columbus and Cincinnati, Siehl said, it is going up against places in Indianapolis.
Siehl suggested that Nutter Center officials pay attention to what acts are coming through Ohio and try to get performers who stop in Columbus or Cincinnati to stop in Dayton. It’s a strategy Siehl used when he led the Nutter Center, as the arena often was seen as a “second play date” to locations in the state’s capital.
“It was a prime stop, and it certainly was a lucrative stop for people,” Siehl said.
Fixes and upgrades
The Nutter Center turns 26 this year, and with age comes the need for repairs and upgrades. The report calls for the university to address “numerous improvements to the facility.” Locks on external doors are slated to be replaced at an estimated cost of $105,000, according to the report.
The problem, though, is that the cost to repair the locks will deplete the facility’s repair fund by more than a third. The reserve fund contains about $300,000, according to the report.
“It appears insufficient to address the ever-increasing needs to maintain the Nutter Center,” the report states.
Colleges rarely budget enough money to keep buildings in shape, so Wright State’s quandary is common, Ohio University economist Richard Vedder said.
“Buildings on college campuses are sort of given to us by God. God, in Wright State’s case, was sometimes the state legislature,” Vedder said. “Then you forget about it and say, ‘Well, it’s done.’ ”
Bolstering Nutter Center revenue may not provide Wright State the cash injection its ailing budget needs, but selling it could.
“If it’s really a cool arena, it should go for at least 15 or 20 million bucks,” Vedder said.
Vedder suggested that selling the arena would be the easiest way for Wright State to turn a profit from it. Instead of losing money on repairs and vacancies, Vedder said the university could simply lease it back for basketball games at a lower cost.
If Wright State does not want to outright sell its arena, Vedder said the university could lease out its management for several years to inject upfront cash into its budget.
Wright State already outsources its dining services by contracting Chartwells to provide food to students.
Vedder also referenced Ohio State’s lucrative parking deal as an example Wright State could copy with the Nutter Center.
Four years ago, Ohio State outsourced its parking operation, something Wright State has considered. Ohio State made $483 million in the 50-year deal.
“That’s the low-hanging fruit,” Vedder said. “That’s the quick way to make money.”
Nutter Center external revenue
73 percent comes from concerts
24 percent comes from community events
3 percent comes from athletics
Source: WSU audit