Regional Report Triangle August 2010
Even in good times, downtown theaters and sports arenas can run in the red their first few years, and the Durham Performing Arts Center had no warm economic wind at its back. It opened in November 2008 amid the chill of a nationwide economic crisis with home foreclosures rising, the stock market plunging and the statewide unemployment rate nearing double digits.
Yet DPAC, which boasts 2,800 seats and claims to be the largest indoor theatrical venue in the state, earned $1 million in the seven months that made up its first fiscal year. Its owner, the city, received more than $400,000 of the profit — more than four times what was expected. The numbers for the latest fiscal year, which ended in June, aren’t final yet, but DPAC continues to bring in tax revenue to the city and leisure dollars to nearby merchants.
In the 12 months ended May 30, the $1 city tax paid on each ticket added up to $303,770, according to the Durham Convention & Visitors Bureau. Local tax revenue generated, including sales and occupancy taxes, topped $1 million. Counting visitor spending in hotels, restaurants and other places, the bureau estimates that DPAC added $23.2 million to the local economy. In May, 85,000 people — a 96% occupancy rate — attended the 32 evening and matinee performances of the musical Wicked. “There was a need in our community for the type of programming that DPAC offers — a mixture of Broadway plays, concerts, comedies, musicals,” says Reginald Johnson, senior assistant to the city manager.
Why so successful in such a bleak economy? It doesn’t hurt that Durham County has the highest average weekly wage in the state and sits between the counties ranked third and fourth (page 18). Triangle residents tend to be better educated than most — the region has one of the highest concentrations of Ph.D.s in the country — and the local economy is buffered from economic shock by a hefty number of jobs in government and health care. While the unemployment rate in the finance-heavy Charlotte region rose above 13% earlier this year, the Triangle’s rate has stayed below 10% since DPAC opened.
But credit the city with knowing its limitations: It farmed out theater management and bookings to a partnership of Professional Facilities Management Inc. of Providence, R.I., and the Nederlander Organization, which is based in New York and owns or operates nine Broadway theaters. “They have buying power for many, many theaters,” says Shelly Green, CEO of the CVB. “A lot of the shows we’re getting in Durham have played on Broadway in one of the Nederlander theaters, so we’re getting them early and we’re getting some of the best shows.”
Smithfield Foods Inc. isn’t happy with its minority stake in turkey processor Butterball LLC, and the Virginia-based meat packer either wants the 51% it doesn’t own or wants out of its joint venture with Goldsboro-based Maxwell Farms LLC. In June, it offered Maxwell Farms $200 million to go away and demanded an answer by mid-September. “We have been unhappy with the margins that we have achieved in that end of the business,” CEO Larry Pope told analysts. He says Garner-based Butterball needs an owner that will invest more, particularly in marketing. “We believe this is a tremendous household brand that has not been adequately supported.” Smithfield hasn’t produced great results itself. It lost $101.4 million in the fiscal year that ended in May, mainly because of losses in its hog-production segment. Maxwell Farms released a statement saying that it, too, wants to buy Butterball. Meanwhile, a rumor circulated that a Brazilian company, JBS SA, plans to buy Smithfield. A Smithfield spokesman wouldn’t comment.