Fewer events knock profits at SMG Europe
THE collapse of retailer Phones4U and fewer high profile events led to a fall in profits at SMG Europe Holdings, the operator of the Manchester Arena.
The Manchester-based company’s 2014 results showed revenue growth of 3.7% to £45.2m – due to the first full year of operations at the Leeds First Direct Arena.
Pre-tax profits at the company, which operates 12 venues across Europe including Manchester’s Bridgewater Hall, the York Barbican and sites in Germany and Poland, fell 22% from £6.7m to £5.2m.
Writing in a strategic review, director John Burns said: “The concert market in 2014 saw less touring and playing of live performances, particularly in the second half of the year. The mix of events was also different, which impacted overall margins.”
Burns said the Manchester Arena had been “particularly impacted” by the reduced touring programme of major artists during the year, but remains the second busiest arena in the world after London’s O2.
SMG said the Manchester arena has made a “stellar start” to 2015 after hosting concerts by Taylor Swift, Fleetwood Mac and Take That.
First quarter tickets sales of 413,449 were the highest in its 20 year history and, in official figures released this week, the arena retains its position as the second-best performing venue in the world, behind London’s O2.
According to Manchester City Council chief Sir Howard Bernstein, speaking this week at an IOD event to celebrate Manchester Arena’s 20th birthday, the initial grant for the venue rena was a total of £35m, still the largest single grant awarded outside of the London Olympics. The boost to the Manchester economy from the arena has been more £3bn.
A multi million pound investment programme begins next week with the replacement of all seating and refurbishing of corporate suites, bar areas and City Room entrance.
Referring to the consequences of the demise of Phones4u, he added: “In 2014 its naming rights partner, Phones4u , went into administration. This has impacted revenues and costs which were previously being amortised relating to securing the naming rights deal, have been written off. The business is actively looking to secure a new naming rights partner.”
The First Direct Arena, which opened in mid-2013 had an “incredible first year”, with one highlight the pre-tour event for the Tour de France.
Burns says: “This iconic indoor arena has very quickly established itself as an important venue on the touring dates of leading artists.”
In January, SMG Europe announced a deal to buy Leeds-based caterer CGC Events. The accounts refer to the business as Value Catering Ltd and reveal that the price paid was £9.48m.
Burns says this deal provides SMG Europe with an “excellent platform” to enhance the food and beverage offering.
