The organization is burning through $232,195 a month, and to cover those losses, it is drawing on about $1 million in reserves, as the COVID-19 pandemic has forced scores of previously scheduled events and conventions to be canceled.
At the current rate, those reserves could be approaching zero by the end of the year, and Reinert estimates the DECC will face something in the neighborhood of $600,000 in startup costs when it finally is able to resume hosting large-scale events again.
He explained that serious money will be needed to cover the costs of restaffing the DECC, likely training a number of new personnel and getting the facility back in condition after months of relative inactivity.
Reinert’s assessment of the situation? “I would say the finances are concerning but not dire.”
Reinert remains confident the DECC can chart its way through these difficult times.
“We need to find ways in the short term to make sure this critical asset survives,” he said.
Toward that end, Reinert and staff have been working to find any available means of relief to trim costs and to identify new ways to make use of the 800,000 square feet of space the DECC has at its disposal.
The stakes are high, according to Anna Tanski, president of Visit Duluth.
“The DECC is the crown jewel of not just our waterfront, but of our hospitality industry, whether that’s entertainment, meetings and conventions, hockey, other team competitions and sports, or cultural experiences such as the ballet and the symphony. It really is the centerpiece of our tourism industry in so many respects,” she said.
The Arrowhead Ice Fishing and Winter Show at the Duluth Entertainment Convention Center draws over 100 exhibitors annually for the three-day event. (2017 file / News Tribune)
The DECC’s financial health relies in large part on its relationship with the University of Minnesota Dululth’s hockey program. UMD is expected to pay $650,000 annually to lease space at Amsoil Arena, but it’s not yet clear what college hockey will look like this year, or for that matter, whether there will even be a season.
If UMD’s hockey program is unable to compete, that lease payment could be jeopardized.
“It could blow a $650,000 hole in our budget at a time when we can least afford it,” Reinert said.
While UMD is paid up through the end of this year, Reinert remained nervous about betting on the coming hockey season. He brought his concerns to UMD Athletic Director Josh Berlo.
With UMD captains’ practices beginning and players already on the ice, Reinert wanted assurances that the DECC would not be left in the lurch should the season be shortened or even canceled. Even though UMD’s bill for the current calendar year is paid up, he successfully asked the school for a $105,000 good-faith advance on the pending 2021 lease to ensure the DECC would at least be made whole for the current costs of utilities and maintaining an ice sheet for the team’s ongoing practices, regardless of how the National Collegiate Athletic Association decides to proceed.
Minnesota Duluth players line up while watching a presentation prior to the unveiling of the 2019 NCAA National Championship banner on Oct. 11 at Amsoil Arena in Duluth. (2019 file / News Tribune)
“When everyone is in a tough spot, the best way to navigate that is through communication,” said Reinert, referring to UMD as “a good partner.”
Even if college hockey teams are allowed to compete, Reinert is prepared to host much smaller crowds. He said the 6,000-seat arena would be limited to 1,250 people under the current regulations on mass gatherings. And in order for Amsoil to even reach that threshold, Reinert explained that the crowd would need to be divided into six separate self-contained sections or “pods” as they’ve been called.
“The DECC usually thrives on large gatherings of people , but right now we need to focus on smaller gatherings that might be too big to occur any place else,” Reinert said.
With 8,000 square feet of space, Reinert said the DECC is able to accommodate fairly large groups while allowing people to maintain social distancing. He also noted that the facility boasts one of the most robust HVAC systems in the region. He said the air in the DECC auditorium can be turned over 2 1/4 to 2 1/2 times in the course of an hour. At a time when concerns of airborne pathogens are running high, Reinert predicts the facility’s advanced MRV10 air filtration standards also will put guests at greater ease.
The DECC’s latest marketing slogan is: “If you have something you want to do, we have the space to do it.”
The Duluth Superior Symphony Orchestra rehearses at the Duluth Entertainment Convention Center’s Symphony Hall in 2014. (File / News Tribune)
In October, the Duluth Superior Symphony Orchestra aims to return to performing at the DECC for the first time since the pandemic arrived in the Northland. But just 250 people, including musicians, will be allowed into the symphony hall, in accordance with state guidelines.
Reinert said guests will need to have their temperature taken at the door and will be required to wear face masks, spaced out in family groupings and remain in self-contained pods to avoid the audience intermixing.
“The DSSO is exploring seating options for musicians and patrons to stay 6 feet apart, to be able to rehearse and for our audience members to attend this fall,” Brandon Van Waeyenberghe, the symphony orchestra’s executive director, said.
He said symphony orchestra members have not been able to assemble together since March and the group canceled its last three concerts.
“So, we have a lot of musicians who are itching to play,” he said.
Some members of the orchestra have found outlets in smaller venues, with string quartets performing Wednesdays at Duluth Cider and Thursdays at the Great Lakes Aquarium.
“Our musicians thrive on live audiences, and it’s sad that the pandemic has taken that crux of not only our business model, but also a lot of other enterprises away. Look at what has happened with Bayfront,” Van Waeyenberghe said. “It has been quiet all summer.”
The DECC also manages Duluth’s Bayfront Park venue, which has also been idled for the most part by the pandemic.
In March, the DECC employed 470 people. Today, it has just 52 people on its payroll, including 15 in full-time jobs.
The organization has shed many jobs at a significant cost., however, paying nearly $116,700 per month toward recent unemployment claims.
Yet, Reinert believes hope could lie on the horizon. He has engaged in recent conversations with leadership at the Minnesota Department of Employment and Economic Development about possibly waiving some or all of the company’s unemployment liabilities, given the difficult economic times and extenuating circumstances that were beyond the DECC’s control.
He said those conversations appear promising, in light of the fact that the DECC was essentially forced to halt most of its activities following the pandemic.
Tanski stressed that the local tourism industry needs a healthy DECC to fully recover.
“Meetings and conventions, it just can’t be emphasized enough how critically important they are for our entire industry, not just for one venue or one hotel. It impacts our industry across the board,” she said.
Sharon Svoboda of Columbia, Missouri, grooms her standard poodle during the Duluth Kennel Club All-Breed Dog Show in Pioneer Hall at the Duluth Entertainment Convention Center in July 2019. Exhibitors from throughout the United States and Canada show 150 breeds of dogs. (File / News Tribune)