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Independent Study Confirms Sovereign Center has Generated Over a Quarter of a Billion Dollars in Direct Economic Impact

Wednesday, September 5th
Independent Study Confirms Sovereign Center has Generated Over a Quarter of a Billion Dollars in Direct Economic Impact

Ten Year Analysis Concludes that over 4.5 Million Visitors to Reading’s Downtown Arena and TheaterHave Provided a Monumental Stimulus for Local Community

Reading, PA – The Berks County Convention Center Authority and SMG today unveiled an independent economic impact study which concludes that, in the first ten years of operation, Reading’s downtown Sovereign Center and Sovereign Performing Arts Center generated over $254 million of direct economic impact in the Greater Reading region and surrounding areas. The study was conducted and recently published by Penn State Berks Associate Professor of Business and Economics Dr. Lolita Paff, Ph.D. “This study confirms what many of us believed from the early stages of the effort to construct an arena and renovate the historic theater in downtown Reading: that, in addition to serving as an important community improvement project, these facilities would also act as an economic catalyst for businesses in and around the City of Reading,” said BCCCA Chairman P. Michael Ehlerman. “The construction of the Sovereign Center was the product of over thirty years of effort by a number of community leaders committed to the improvement of downtown Reading. There is no question that the arena facility had an immediate positive impact on the surrounding downtown area. But the construction of the arena was just the beginning of a larger process, and this study confirms that there has been a quantifiable, tangible economic benefit for those who live, work, and operate businesses in the greater Reading region as a direct result of the arena project.” “We’ve believed for some time that our facilities have had a positive impact on economic activity in our community,” said SMG Regional General Manager Zane Collings. “This study not only confirms that perception, but also provides us with valuable information that will help us increase the positive economic impact of our facilities as we continue to grow partnerships with businesses in our community.” The conclusions of this study, which accounted for the operations of the Sovereign Center and the Sovereign Performing Arts Center were based exclusively on direct spending impacts and did not utilize any economic multipliers. This statistical model was utilized in order to ensure that the figures reached accurately reflected actual business activities that were strictly generated by these facilities. In that regard, the study did not attempt to account for other indirect economic impacts that certainly spin off from activity at the downtown arena and theater. Specifically, the Sovereign Center and SPAC were shown to have spent more than $56 million directly on payroll, purchases of goods and services, tax payments, city-owned parking revenue, and charitable giving. This includes almost $3.0 million in parking revenue and over $3.6 million in City Amusement Tax payments. The study also calculated that over 4.5 million people have attended events hosted by the arena and theater facilities, and those patrons have generated almost $200 million in direct economic activity in four primary categories: (i) the purchase of meals; (2) the purchase of gasoline; (iii) shopping expenditures; and (iv) hotel revenues from overnight stays. Reading’s downtown arena project, the idea for which had its genesis as early as 1942, began to gain steam in the 1970’s when the 7th and Penn Street location was first identified as a potential construction site. By the mid-1980’s an arena task force was actively seeking funding sources for the arena project, which ultimately resulted in a commitment of almost $17 million in state funding. The arena project took a critical step toward fruition in 1996 when the Berks County Commissioners and the City of Reading officially formed the BCCCA, which was chaired by P. Michael Ehlerman and was vested with the responsibility of overseeing the $32 million arena construction project. In 1998, the BCCCA spearheaded the purchase of the old Astor Theater site on Penn Street and preserved several architectural features from the historic theater that would ultimately be utilized in the design of the Sovereign Center lobby. In 1999, as ground was broken on the arena project, Sovereign Bank purchased the naming rights for the facility, which was completed and dedicated with a gala opening in September of 2001. Around this same time, the BCCCA also purchased the old Rajah Theater located on Sixth Street in Reading and began renovations on that historic building that would result in the creation of the SPAC. Since its inception, the Sovereign Center, which can seat between 6,000 – 9,000 patrons depending on its configuration, has hosted a wide variety musical acts, theatrical performances, school commencements, and sporting events, which include serving as the home ice facility for the Reading Royals professional hockey team of the ECHL, the building’s original anchor tenant. With over 25,000 square feet of convention space, the Sovereign Center can accommodate banquets for up to 800 guests. The arena also contains a 4,500 square foot multi-purpose room, which can handle functions for up to 200. The convention center configuration has proven particularly well suited for functions such as the district conventions of the Christian Congregation of Jehovah’s Witnesses, which have generated over $110 million in direct economic activity in the greater Reading region since 2006. In 2004, a universal theater configuration was designed within the arena facility, and the naming rights were purchased by Reading’s local newspaper. This Reading Eagle Theater allows for more intimate set ups within the arena, accommodating from 2,500 to 4,000 patrons. As with the arena facility, the SPAC has also served as host to a myriad of musical and theatrical performances, which includes serving as the resident host facility for the Reading Symphony Orchestra, and has a seating capacity of over 1,800 with unique ballroom capacities that can serve between 150 to 400 guests. Prior to the completion of the arena construction, the BCCCA hired SMG to manage the Sovereign Center and its related facilities. SMG currently provides management services to more than 225 public assembly facilities including arenas, stadiums, theatres and performing arts centers, equestrian facilities and convention, congress and exhibition centers. With facilities across the globe, SMG manages more than 11 million square feet (1.1 million square meters) of exhibition space. As the recognized global industry leader, SMG provides construction and design consulting, pre-opening services, venue management, sales, marketing, event booking, and programming. SMG also offers food and beverage operations through an in house catering company, Savor, currently servicing more than 100 accounts worldwide. For more information visit www.smgworld.com. Dr. Lolita A. Paff is an Associate Professor of Business and Economics and Coordinator of the Business degree program at Penn State Berks. Her primary research interests include small business development incentives, state-level research and development tax credits, interstate tax competition, technology policy, and more recently, pedagogy and learning assessment. She has researched the characteristics of Pennsylvania's R&D tax credit recipient firms, estimated firms' sensitivity to changes in state-level R&D tax credit rates, estimated the effective after-tax price of R&D across all U.S. states, and has provided expert witness testimony to the Pennsylvania Senate Finance Committee. Paff’s teaching experience reflects her broad-based professional and academic background in public and private accounting, finance, and economics. With an enrollment of 2,800 students, Penn State Berks offers 15 baccalaureate degrees, eight associate degrees, and a wide variety of continuing education courses. Students can also take the first two years of 160 bachelor degree programs that can be completed at other Penn State campuses. The college offers the big university degree, with small class sizes and personalized attention. Students enjoy a rich campus life, with 800 students living in residence halls, a wide variety of clubs and organizations, cultural events, lectures, and many other activities. In addition, Penn State Berks is a full member of the NCAA Division III program.