Federal Way performing arts center: Half-empty or half-full?

Only one event has sold out since the facility opened in August 2017

Almost a year after opening, the Performing Arts and Event Center in Federal Way continues to draw public scrutiny over its finances and management.

The 716-seat facility officially opened Aug. 19, 2017, with the first performance taking place Sept. 9. At a cost of nearly $32 million, the PAEC is the most expensive public project in city history.

Fast forward to a year later, and a management contract was just sold to Spectra for $75,000 — effective Aug. 1 — in the hopes of attracting bigger performances and increased revenue.

The PAEC currently employs four full-time and 25 part-time employees. It is unknown how many of the PAEC’s current employees will be retained once Spectra officially takes over.

Since its opening, the PAEC has brought in just under $2.2 million in revenue, with the expenditures during that same time totaling $2 million, according to city records.

Tyler Hemstreet, the city’s communications coordinator, said previous PAEC executive director Theresa Yvonne had predicted a total of $370,000 in operations revenue, with expenses of more than $900,000. Yvonne was dismissed from her position in April.

Although revenue has been higher than expected, attendance at the facility has been hit or miss. Of the more than 30 events at the PAEC since September 2017, only one has sold out. Some events, such as the Seattle Baroque Orchestra in March 2018, only filled 21 seats out of the 60 advertised for the event.

During the event, patrons were reportedly moved on stage for a more intimate setting with the orchestra. However, at first patorns complained about moving so close to the orchestra, as well as lights flickering during the event.

The most successful events were the Korean American Day Celebration, which was attended by an estimated 808 people, almost 100 more than the total seating number, and the 2018 State of the City Address, which was attended by 689 people.

On average, the attendance rate for events and performances at the PAEC is about 50 percent since the building has been opened, according to city records.

On average in the United States, however, theater performances are much less attended than they have been in the past. According to Statista, during 2016 and prior to spring of 2017, approximately 14.6 percent of Americans attended some type of theater event at least once, much less than the PAEC’s first-year numbers.

Mayor Jim Ferrell is excited at the prospect of having Spectra manage the PAEC starting in August. Spectra has managed other similar venues including Budweiser Gardens in London, Ontario, and Budweiser Events Center in Loveland, Colorado.

According to Spectra’s management contract, the company’s compensation will be broken down into three parts:

■ First, a fixed management fee of $6,250 per month until December 2019, reduced to $5,000 per month starting January 2020.

■ Second, an incentive fee consisting of a qualitative fee of $10,000 based on the city’s evaluation of performance under the contract and a quantitative fee starting January 2020 where Spectra will receive 20 percent of the net operating income that exceeds the established net operating income/loss benchmark.

■ Third, a commercial rights fee of 15 percent on gross revenue from advertising sales, signage and naming rights.

The contract between the city and Spectra has a life of five years, with the option for the city to renew for another five years. The city can still use the PAEC for events, but must plan those events around revenue-generating events when possible.

The city will continue to manage the venue with food and beverage management from SMG until Aug. 1.

The PAEC itself had been in the works since 1989. The Federal Way Coalition of the Performing Arts was organized to raise funds toward building a large performing arts center and conference space. In 2010, the Federal Way City Council voted to purchase the former vacant Toys R’ Us property at South 316th Street and what is now Pete von Reichbauer Way using a $5 million award from the state.

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