EUGENE, Ore, (KMTR) – One of the most recognizable buildings in Oregon and the most expensive in U.S. college athletics, the Matthew Knight Arena (MKA) has been open for a little more than two years now. As the arena grows older, one question lingers on the minds of many: is the arena hitting its financial goals?
The financial question has popped up as many notice plenty of empty seats inside the arena during men's basketball games. Some fans also point to a long stretch of time with a small number of outside events on the arena's calendar. The University of Oregon Athletic Department has also changed its projections a couple of times since the arena opened.
Despite the changes, the UO Athletic Department says the Matthew Knight Arena is still a growing success and one that won't run in the red.
The arena opened with a bang in January 2010 to a sellout crowd of more than 12,300 people. For the first time in Eugene, fans were exposed to an indoor athletics facility with large video boards, pyrotechnics, a one-of-a-kind court and a venue that trumps some professional sports arenas.
Craig Pintens is a Senior Associate Athletic Director of Marketing for the UO Athletic Department, who spoke with NewsSource 16 in February about the arena's performance. Pintens says the MKA has met all of the University's expectations in terms of physical performance.
“Matthew Knight Arena is a world-class facility,” said Pintens. “Anybody that comes to Matthew Knight Arena is definitely coming back for another event because of the amenities here.”
While tens of thousands of fans have certainly been impressed, two years later projected revenue for the arena has come in at less than impressive levels.
“Its performed a little bit probably below what, obviously, the projections were,” says Pintens.
Lower than expected ticket sales in some sports and outside events have forced the MKA to scale back its projected financial returns.
Before the arena opened in December 2010, the Athletic Department predicted outside event ticket sales would raise $1,020,633 in fiscal year (FY) 2012 ending June 30, 2012.
But by July 2011, weaker than projected numbers rolled in for FY 2011. That year, the arena made $385,477 in outside event ticket sales. The Athletic Department had projected it would make about $612,380.
“We went back and adjusted the numbers,” said Pintens. The Athletic Department revised numbers in virtually every category, including outside event ticket sales.
The projection for outside event ticket sales for FY 2012 was one of the revised numbers, going from $1,020,633 to $663,123, a more than thirty percent cut.
As the Athletic Department is a non-profit department, it spends all the money that it generates.
“We're not going to operate off a set of numbers that, at that point, are not realistic anymore,” said Pintens.
The latest numbers show a continued struggle in outside event ticket sales. In January, the UO Athletic Department released its latest projections, showing actual outside event tickets sales for FY 2012 was $271,563, not the projected $663,123. Back in December 2010, the UO projected outside event ticket sales would bring more than $1 million in FY 2012.
While outside events have struggled at the MKA, the venue has also had its share of successful shows. The arena has played host to concerts by musicians Elton John, Brad Paisley, Lady Antebellum and Darius Rucker. Several sports entertainment shows have also performed, including the Harlem Globetrotters, World Wrestling Entertainment, the Professional Bull Riders tour and the Monster Jam monster car show. Entertainment acts including comedian Jeff Dunham and several Cirque du Soleil performances have also played in the MKA.
Pintens says the facility is not the problem.
“Anybody who's had an event here, any promoter that's had an event here, they leave very impressed,” said Pintens.
The problem in booking outside events may be the arena's short history.
“It's tough, I mean, it's not easy when you're a new venue,” said Pintens. “It's always going to take a couple years to attract those higher profile events. It's going to take a track record.”
Before the arena opened, the original outside event revenue goal was $2.9 million by 2038. Under the latest numbers released in January 2013, the Athletic Department now estimates it will be making just $758,000 in outside event ticket sales by 2038.
More events are headed to the Matthew Knight Arena in the near future.
"Passion Pit we're very excited about. We've got the Harlem Globetrotters coming back. Wev'e got Jeff Dunham, as well as probably the most anticipated event to be held in the arena so far: the Dalai Lama coming in May,” said Pintens.
Pintens says the UO is more concerned with making sure the events it brings in are successful.
“We want to make sure we bring quality events that the community can support,” said Pintens.
While outside events are important for the MKA, men's basketball is the biggest money maker. However, even though the Oregon Ducks men's team is one of the best in the country this year, finding an open seat inside the MKA isn't difficult. Only a handful of games have sold out this season.
"We agree! We want to get people out here and support this team!” said Pintens.
Empty seats have meant changes for the Oregon men's basketball ticket sales projections as well. In December 2010, the Athletic Department originally projected the arena would net $3.3 million in men's basketball ticket sales in FY 2012.
The reality, while FY 2011's actual men's basketball ticket sales ($2.6 million) were above projections ($2.5 million), the UO ended up lowering FY 2012's sales from $3.3 million to $2.82 million.
At the end of FY 2012, men's basketball ticket sales beat its revised projection of $2.82 million, actually generating $2.84 million. Despite being on par with estimates, the Athletic Department has still decreased basketball ticket revenue projections in the coming years.
Instead of expecting men's basketball to make $11.3 million is 2038, now the Athletic Department says the sport will make just $6.2 million by then under new projections made in January 2013.
While the numbers might sound discouraging, Pintens says fans are still filling seats at good levels.
“Since this building has opened, we have had sixteen crowds that have been greater than 9,087 people, which was the capacity at Mac Court. In the last six years of Mac Court, there were only sixteen crowds of 9,087 or better,” said Pintens.
Matthew Knight Arena seats around 12,300 people. In an effort to get more sellout crowds, the Athletic Department dropped prices for the 2012-13 basketball season with some tickets for Pac-12 games starting at $16 a seat. The Athletic Department also hired an outside sales team to help with marketing the team. The group's work includes an aggressive advertising campaign using the phrase 'United We Ball'.
"They've made a pretty big impact in Pac-12 play and we can't wait until the summer because that's when they're really going to make an impact,” said Pintens, speaking on the outside sales team.
Even though expected revenues have changed, financially the arena is okay according to Pintens.
“We have maintained every debt payment on the building and we anticipate that we'll continue to match every debt payment,” said Pintens.
By 2038, the UO is still set to have the arena paid off. By the end of the payments, according to projections, the donor-fed Legacy Fund that helps pay the debt will still have money.
Debt payments cost the UO most than $14 million each year. The Legacy Fund was set up as a savings account to gradually help pay off the debt. The University is trying to use the Legacy Fund as sparingly as possible though, opting to use money generated by the Athletic Department more so than the Legacy Fund. That's why ticket sales are so important.
“At the end of this year, the Legacy Fund will stand at $78.6 million,” said Pintens.
“The latest projection leaves the Legacy Fund after thirty years, after the debt is paid off, at 93 and a half million dollars,” said Pintens.
As the UO tries to draw in a bigger crowd, Eugene's other major indoor venue, The Hult Center for the Performing Arts, says it hasn't lost any patrons or business as a result of the arena.
“They bring in things that we are not going to be able to house here,” said Libby Tower, Director of Marketing for the Hult Center.
In its thirtieth year, the Hult Center focuses on concerts and stage shows. Tower says if anything, the Matthew Knight Arena has helped put the Eugene market on the map.
“We're thrilled to have Matthew Knight Arena in the community and it is a benefit to everybody,” said Tower.
Much in the same manner as the MKA, the Hult says it has also dealt with difficulties over the last few years in bringing more acts to Eugene.
"Coming off an election cycle, that always compresses things. People are a lot more 'we'll wait and see what happens'," said Tower.
Like the MKA, Tower says more shows are on the horizon.
“As we're emerging from this recession, we're finding that there are promoters that are now looking more to being out on the road,” said Tower.
Pintens agrees, saying long-term he's confident that the Matthew Knight Arena will continue to be a success.
“It provides a large-scale venue for this area which is much needed,” said Pintens. "We need to find the right acts for this venue and we're going to continue to have great athletic teams that fill it.”
The University of Oregon has released three financial projections for the Matthew Knight Arena called Legacy Fund Model Updates. The first was released before the arena opened in December 2010. The second came in January 2012 and the third in January 2013.
To read all of these financial reports, visit the following website: http://www.goducks.com/ViewArticle.dbml?DB_OEM_ID=500&ATCLID=205337248.To find the Legacy Fund Model Updates, scroll down to the third section on the page titled 'Operational Assessment'. Each update is listed under the heading.