Simmons Bank Arena officials have tapped into a reserve fund during the pandemic, but GM Michael Marion would prefer to be eligible for federal funds under the CARES Act. (Courtesy Simmons Bank Arena)
TRADE GROUP WORKING WITH MEMBERS OF CONGRESS TO COVER MORE VENUES UNDER PAYCHECK PROTECTION PROGRAM
The International Association of Venue Managers is pushing Congress for a change that would make arenas, stadiums, amphitheaters and convention centers eligible for federal funds during the pandemic.
The CARES Act, the federal government’s economic assistance program to help Americans during the COVID-19 crisis, has distributed billions of dollars to states and municipalities. But as the legislation is written now, hundreds of publicly owned facilities are shut out of the program, according to officials with IAVM and TwinLogic Strategies, the trade group’s Washington lobbyist building the campaign to draft the amendment.
Together, they’re proposing a change in language for the Paycheck Protection Program, which under CARES Act legislation provides money to help small businesses keep their workers employed. Publicly owned venues have the same functions and roles as privately owned facilities but are not eligible to apply for the program, officials said. The new phrasing would broaden the definition of nonprofits exempt from taxation under the Internal Revenue Code. It would amend the code’s section on 501(c)(3) organizations to include “an entity created by a state or local government that derives the majority of its operating budget from the production of live events.”
IAVM and TwinLogic are working closely with the House of Representatives and the Senate to include the amendment as part of a new bill drafted for the fifth edition of the massive CARES Act, which could be approved by Congress by early August. Venue managers have participated in conference calls with congressional staffers in their respective states.
Overall, IAVM research shows that less than 10% of member venues have received financial assistance and that those are 501(c)(3) entities or qualified as small businesses with under 500 employees, said Tammy Koolbeck, executive director of the Iowa State Center and the association’s board chair in charge of the effort. There are 7,000 individual members of IAVM and arenas make up the largest sector with about 1,000 industry professionals, said Brad Mayne, IAVM’s president and CEO.
Some venues have received financial assistance, mostly performing arts centers operating as 501(c)(3) nonprofits, as listed in a database released by the Small Business Association and published online. Carnegie Hall, Atlanta’s Fox Theatre and Ruth Eckerd Hall in Clearwater, Fla., among others, received between $1 million and $2 million in PPP money. The Chicago Theatre and Wolf Trap National Park for the Performing Arts both received between $2 million and $5 million.
Dickies Arena, which opened in November in Fort Worth, Texas, and is run by the nonprofit Trail Drive Management Corp., also received federal funds.
The program helps stem the tide of layoffs and furloughs, which have affected thousands in public assembly. The applications are filed through banks. The change in tax designation would aid venues in the short term and also reimburse them for the cost to purchase masks, sanitizers and other expenses related to COVID-19, said Michael Marion, general manager of Simmons Bank Arena in North Little Rock, Ark, and a former IAVM chairman.
For the industry as a whole, a key piece of the issue is educating Congress on its business model, Koolbeck said. Many politicians are under the impression that publicly owned venues received PPP funding already distributed to states and cities, but that money is not trickling down to venues, in part because they’re not eligible under the current parameters. Cities are funneling those dollars to support schools and hospitals and set up COVID testing sites, things typically covered under their budgets, she said.
Federal lawmakers “make an assumption that because these venues are publicly owned, they’re going to be part of local and state budgets and they aren’t,” said Elizabeth Frazee, TwinLogic Strategies’ co-founder and CEO. “We’ve identified the problem. While those staff that have been furloughed and laid off have been able to get unemployment insurance, a better choice for them would have been to continue working and doing all the things venues need over the next few months to be ready to open their doors when the time comes that they can.”
It’s a daunting time for the industry. About 70% of IAVM members work at publicly owned facilities, and without events, those buildings are bleeding red ink. In addition to staff, the cuts extend across the board to their service providers in concessions, parking and security, among other lines of business. The situation has made it tough on operators as they employ new security protocols and technology to protect patrons and employees post-COVID. On the concert side, it doesn’t help that live music venues were the first to close and, as gathering places for thousands of patrons, will be the last to reopen for business.
“What we’ve tried to explain to those in Congress is the vast majority of our venues rely on ‘enterprise funds,’ which means they get less revenue from taxes, and those taxes are different for every venue,” Mayne said. “The rest of the money comes from hosting events.”
In June, a bipartisan group of 18 senators signed a letter that was sent to Senate Majority Leader Mitch McConnell and Senate Minority Leader Chuck Schumer, urging their support for publicly owned venues. The letter explains the issue and points out the economic benefit for communities from sporting events, concerts, conferences and county fairs. Arkansas Sen. John Boozman led that particular effort and Iowa Sen. Joni Ernst has been instrumental in helping draft the language, Koolbeck said.
IAVM is promoting the campaign through all social media platforms with the hashtag #SavePublicVenuesNow.
Separate from the letter, a one-page summary of the proposed amendment provided by TwinLogic has a sampling of financial losses incurred by IAVM members during the shutdown. The list includes $2.2 million at TaxSlayer Center in Moline, Ill. to potentially $3.4 million by year’s end at Allen County War Memorial Coliseum in Fort Wayne, Ind. In the convention center space, the Washington State Convention Center in Seattle has lost $16 million in revenue since March and 116 employees have been laid off. The Reno-Sparks (Nev.) Convention Center, plus two other venues in town, have lost a total of $3.4 million.
Simmons Bank Arena, a 14,000-capacity facility, is another building “caught in the wedge,” Marion said.
The county-owned arena was built 20 years ago through a combination of public and private money, but no tax dollars were used to pay for construction or to fund operations. The arena does not have a sports tenant, but it’s a strong concert venue and to this point, it’s been able to pay the bills without dipping into public funds, he said.
Over the past two decades, the arena has built up a $1 million reserve fund, which has helped support the facility over the past four months. Still, Marion had to lay off or furlough 15 of the arena’s 25 full-time staff.
“It’s a rainy day fund, but this is a tsunami,” he said. “We’re trying to cut everywhere we can to stretch it. We watch the federal government give the states a decent chunk of money, and we’re not able to participate in any of it.”
The state of Arkansas has formed a task force to see what it can do to assist Simmons Bank Arena and other public venues, but nothing has been determined, Marion said. Plus, some money may be left over from the pool of cash Arkansas received during the first trillion-dollar stimulus package.
“We’re not just getting the cold shoulder, but on the federal level, I’m like everyone else. You’d like the definition to include buildings like ours,” he said. “When they passed the first phase of the CARES Act, we had the Army Corps of Engineers looking at our building as a possible hospital. It didn’t happen, but nobody knew at the time. The upside is (the federal government) is looking at giving states a little more flexibility in the use of that money.”
Editor’s Note: This story has been updated since it was first posted.