(b) Notwithstanding anything to the contrary in Section 50.1(a) above, HRR
shall not include the following non-exhaustive list of revenues:
...
(xvi)
Any thing of value that induced or is intended to induce a Club
either to locate or to relocate (e.g., amounts paid to enable a Club
to buy-out its lease obligations or enable it to pay any relocation
fee) or
remain in a particular geographic location such that it will
enable the Club or its Club Affiliated Entity to enhance categories
or revenue streams constituting HRR,
so long as such things of
value or other revenues are not reimbursements for operating
expenses of the Club;
Illustration #1: A Club leases the arena for its home games from a
public authority. The lease provides that the public authority will
construct or improve luxury suites in the arena. In lieu of making
the physical improvements required by the lease, the public
authority makes specific guaranteed annual payments to the Club.
Such payments would be included in HRR.
Illustration #2: In order to induce a Club to stay in its current
location, a public authority pays the Club a lump sum payment in
the form of a loan (e.g., $20 million), part of which (e.g., $10
million) is to reimburse the Club for improvements to the locker
room, construction of a practice facility and suite improvements,
and part of which (e.g., $10 million) is paid to the Club to induce it
to stay at the location over a stated period of time (e.g., twenty (20)
years). Each year 1/20th of the loan is forgiven by the public
authority so long as the Club remains in the arena and uses the
latter portion of funds loaned for operation of the Club. Should the
team relocate, any unpaid balance of the loan must be repaid to the
public authority. The $10 million portion of the loan devoted to
physical improvements of the arena and for the practice facility is
excluded from HRR. The remaining portion of the loan is included
in HRR (at $500,000 per year) because the funds are used for
operating revenues of the Club.
