Hi, the below comments came from another thread where, if I'm not mistaken, GSC claimed that the Nashville Predators’ lease agreement with the Metro was not particularly great.
See here for ealier correspondence between Bleed_Oil, GSC and then myself:
http://hfboards.com/showthread.php?t=425924
I thought it would be better to discuss the matter here, and my responses to GSC’s comments are below.
As an avid collector of information myself, GHOST, I would be happy to read any article that you have to that effect.
Well, let’s start with the study commissioned by the Nashville Metro in 2003 and carried out by the KPMG, one of the ‘Big 6’ or whatever the number is now of the world-wide accounting, tax and business advisory firms. See link below for anyone not familiar with KPMG (which will not likely apply to GSC and most of the posters here):
http://www.kpmg.com/About/
KPMG’s independent audit compared the Predators’ lease to certain ‘peer’ arenas in six other cities in the USA -- Anaheim, Charlotte, Orlando, Tampa, Buffalo and Sunrise, Fla.
The independent study concluded that the Nashville Predators' arrangement with Metro government was more favorable than agreements sports teams have in ''peer arenas'' in other cities and as a result had cost the metro’s taxpayers millions of dollars more each year than the comparable ‘peer’ cities. The audit found that the Predators had the best terms. And these are cities that built arenas with a large amount of taxpayers’ money and handed them over to professional sports franchises and their related arena management companies in most cases. I highly doubt anyone of those cities contributed to the expansion fee costs of acquiring a franchise, but correct me if I’m wrong.
See one report on the audit here:
http://www.tennessean.com/local/archives/03/03/30516804.shtml?Element_ID=30516804
In terms of the public financing of the NHL buildings in the study versus Nashville’s building, see details below:
Nashville: 100% public financing of arena (plus 30% or so of financing of franchise cost)
Tampa Bay: 62% public financing of arena
Buffalo: 44% public financing of arena
Sunrise, Fl.: 87% public financing of arena
See here:
http://law.marquette.edu/cgi-bin/site.pl?2130&pageID=2820
I know that you are undoubtedly interested in accuracy, so I will say this: the idea that "Nashville has the best lease in hockey" implies that they get all kinds of revenue (I daresay it implies they get ALL revenue) such as concessions, seat licences, etc. that other teams do not get. There is - to me - the implication that they would be swimming in money in comparison to other NHL teams. One thing we do not know is what leases other NHL teams have, other than the teams who own their own building. As such, it is probably impossible to say how the Preds lease compares to other teams. What I CAN say, however, is that the lease is not particuarly attractive to me. We are not talking about who built the place or who put up the expansion fee, since neitehr of those points have anything - ANYTHING - to do with the lease, which is the ongoing operational document (there are two of them, actually). The impression that I mentioned above as being created by that "best lease ever" type of comment is not supported by the documents.
I can’t respond to this in detail right now, although I will make one or two comments. First, it all depends on who pays for the arena. If a city has issued bonds on an arena and owes several million each year (as does Nashville) they either make that money from taxes and other fees associated with the arena deal or they lose money each year. Nashville metro has been losing money each year, along with the Predators – a public and private 'financial failure' if you will.
You can not compare apples to oranges. Most of the Canadian NHL teams and a number of the more ‘traditional’ USA based NHL teams’ arenas were mainly or totally privately financed. Obviously, to the extent that they are privately financed by the NHL team, there is no ‘lease’ agreement with a public entity, but they still have the cost of capital or opportunity costs or interest payments to add to the equation.
Please post your comment here.
GHOST