Virginia Beach Sports Center is falling behind on bills, needs over $1 million

The Virginia Beach Sports Center is behind on its bills, and if it doesn’t get an influx of cash soon — to the tune of $1.16 million — future events could be canceled, according to the city.

An audit presented to the City Council in February revealed the facility was losing money, and it seems the situation has only gotten worse.

Eastern Sports Management, which operates the venue, is falling behind on payments to event promotors for ticket sales.

The City Council will vote Tuesday on whether to shore up the center with tourism tax funds.

The $68 million facility opened in 2020 near the convention center on 19th Street. It’s one of the largest multipurpose indoor sports venues on the East Coast and has hosted nearly a half-million athletes and spectators, many of whom stay in local hotels, eat in restaurants and shop in stores.

But since opening, the venue has been in the red.

Eastern Sports Management has used $750,000 from a reserve account to pay unanticipated operating costs and asked to borrow $260,000 more from the city earlier this year, according to the audit.

The problem is not enough money coming in from events, said Eastern Sports Management President John Wack.

“The prices being charged tournament operators are not sufficient to cover operating costs,” Wack wrote in a text Friday.

The city’s Convention & Visitor Bureau sets the pricing.

And while the sports center stays busy with large-scale tournaments most of the year, it relies on local camps and leagues in the summer when high hotel occupancies make it difficult to book large events, according to the city.

City Auditor Lyndon Remias recommended in February that the sports center host more events during the summer, charge more for big events and limit discounts to close the gap.

The venue houses 12 basketball courts that can be converted into 24 volleyball courts. It also features a 200-meter hydraulically banked indoor track, capable of hosting NCAA and international track and field meets. The building can host wrestling, gymnastics, field hockey, cheerleading, pickleball, cornhole and more.

The city pays the management company a monthly fee of $30,000 as well as a revenue-based monthly incentive for the operation and maintenance of the center. The city also pays $6 million a year in the debt services from the construction of the facility.

Wack said his management company owes event promoters $259,000 and that the company is requesting $1,164,299. The money would be used to pay the promotors and replenish the reserve account, according to the city.

If the funds are approved by the City Council, the management company will be required to provide a six-month plan on increasing revenues or decreasing expenses in order to return the money to the city, or it will be in default of the operating agreement.

Wack will meet with the city next week to map out a plan, he said.

Also, Eastern Sports Management’s incentive fee will be suspended until the funds are paid back, and it will have 10 days to show that event promotors have been paid or that the money has been placed in an escrow account for that purpose, according to the city.

Wack’s hopeful the situation will improve soon.

“The Sports Center has been wonderfully successful in terms of its primary mission, attracting sports tourists to Virginia Beach,” Wack wrote in his text. “Opening in the pandemic, operating in a tight labor market, and meshing local programming with sports tourism events have all challenged the balancing of revenue with expenses.”

Stacy Parker, 757-222-5125, stacy.parker@pilotonline.com