Xfinity Arena at Everett Financial Loss Update

September 13, 2015

Downtown Everett, Everett Government

Xfinity Arena

Xfinity Arena in downtown Everett continues to struggle.

Last week the State Auditor’s Office released the results of its recent financial audit of the Everett Public Facilities District which owns and operates Xfinity Arena in downtown Everett. Last year the arena turned its first positive cash flow since 2010.

The Auditor’s office reported no findings in how the Public Facilities District conducted its financial affairs and reported no irregularities. There was however concern expressed in the financial position of the arena and the risk that faces the City of Everett as being the financial backer of Xfinity Arena.

Here’s a link to the accountability report which also referenced the following management letter.

Management Letter
Everett Public Facilities District
January 1, 2014 through December 31, 2014

Financial Condition

The City of Everett created the Everett Public Facilities District in 2001 to operate an arena and conference center. In the prior audit, we communicated financial condition concerns to the District in a letter to management. The Board dedicated more time to monitor and evaluate the financial condition of the District, and has taken steps to reduce its operating expenditures, however, the net position continued to decrease as it has each year since the construction of the arena in 2003. Over the past five years, the District’s ending net position is as follows:

2010 – Assets: $51,915,472 Liabilities: $56,323,139 Net Position: -$4,407,667
2011 – Assets: $49,894,815 Liabilities: $55,417,712 Net Position: -$5,522,897
2012 – Assets: $47,384,417 Liabilities: $54,227,029 Net Position: -$6,842,612
2013 – Assets: $45,313,689 Liabilities: $52,723,568 Net Position: -$7,409,879
2014 – Assets: $44,025,059 Liabilities: $51,952,231 Net Position: -$7,927,172

Relationship with the City of Everett

The District is financially reliant on the City of Everett to meet its debt obligations. In March 2014, the District’s bond rating was downgraded from “A-” to “BBB”. In October 2014, the District entered into an interlocal agreement with the City of Everett to refund one of the District’s bonds totaling $27,415,000 and place the debt in the City’s name in order to secure a better interest rate. Also, in May 2015, the District and City moved forward on a plan to replace the scoreboard in the arena. The District and City worked for two years to determine the best financing plan before the City decided to loan the District an additional $665,000 to purchase a new scoreboard.

District’s Financial Plan:

The District is aware of the concerns regarding its financial condition and has taken the following steps to address its financial condition:

• The Board appointed one member to be on-site each week to discuss arena operations with contracted management.
• The District continually seeks new revenue sources such as hosting new concerts and events, promoting annual events, and advertising their conference halls to encourage more variety in the rentals of the rooms.
• The Board and management company worked to reduce operating expenses by 12.8% over the past 4 years.

As a result of these efforts, our audit found that District income after expenses (excluding depreciation) increased from $330,000 to $879,000 over the past 4 years. However, without continued financial support from the City of Everett, the District would be unable to operate at its current service levels.

Further, the District is unable to meet its financial obligations without assistance from the City.

We recommend the District continue to monitor and evaluate its financial activities closely. In addition, we recommend the District strive to operate as a self-sustaining entity.


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