The Anatomy of an NHL Arena Deal

Discussion in 'Fugu's Business of Hockey Forum' started by MAROONSRoad, May 25, 2007.

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  1. MAROONSRoad

    MAROONSRoad f/k/a Ghost

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    Hi business of hockey fans, :)

    I thought I’d start a thread on arena deals or leases, naming rights, public tax-payer subsidies and other factors regarding NHL teams' economics.

    I found this link from the National Sports Institute at Marquette University Law School, which has some interesting information:

    http://law.marquette.edu/cgi-bin/site.pl?2130&pageID=2820

    This could be the basis for further discussion on the “business of hockey" if anyone is interested.

    If you have any information on arena deals, local government subsidies, access to non-hockey revenue for team owners, corporate sponsorships, suite revenue and how it's divided between hockey and non-hockey revenue, naming rights, privately funded arenas, parking or other revenue, etc., on your own team or other teams in the NHL, please post it here with a link (if applicable).

    GHOST
     
    Last edited: May 25, 2007
  2. Namso

    Namso Registered User

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    montreal, toronto, vancouver, columbus and boston seem like the only teams whose arenas weren't publically financed. all the other teams are damn lucky!!!

    anyways, very good link!
     
  3. AdmiralPred

    AdmiralPred Registered User

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    Those principle owners that are listed, are those soley the owners of the team or owners of the arena.
     
  4. jkrdevil

    jkrdevil UnRegistered User

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    Owners of the team.
     
  5. Sotnos

    Sotnos Registered User

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    I have a lot of stuff about the arena in my very long Bolts thread. I think that Sports Institute site is the one I looked at for the naming rights info. As you can see, the St. Pete Times Forum (which is in Tampa, not St. Pete as that link states) didn't have a name for some 6 years, and the naming rights only bring in $2 mil/year, which seems to be the case for most arenas. Naming rights aren't the be all and end all that some seem to think they are.
     
  6. John Flyers Fan

    John Flyers Fan Registered User

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    Philadelphia was done with about 95% private funds. The city did donate a wasted piece of land and paid to knock the pre-existing building down (JFK Stadium). The rest came from private financing.
     
  7. MoMiester

    MoMiester Registered User

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    MTS Center in Winnipeg was secured with $40.5M of government welfare hand-outs and without it and the land and other welfare given it, the WPeg arena would still the arena of choice in Winnipeg.
     
  8. Hawker14

    Hawker14 Registered User

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    LOL. that's one way to get your hatred of Winnipeg across.

    :handclap:
     
  9. Egil

    Egil Registered User

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    Ottawa payed for its rink as well. The only "help" was a loan to pay for a freeway interchange, which eventually got wiped out as many other businesses started using the same ramp.
     
  10. iceman64

    iceman64 Registered User

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    KC is building it's arena on hotel and rental car tax, only way it would get passed.
     
  11. DevFan-RU-

    DevFan-RU- Registered User

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    The Prudential Center, Newark NJ
    [​IMG]

    This may be pertinent to the discussion as the Prudential Center is going to be the newest arena to be built in the NHL when it opens in October.

    The New Jersey Devils are paying for 1/3rd of the planned $300million cost of the Prudential Center ($100mil) plus covering the cost overruns which inevitably occur during any construction. The naming-rights deal with Prudential Financial provides $5.265 million per year for 20 years (total: $105.3mil). The Devils have a $100million line of credit for their portion of the costs.

    The city of Newark is footing the other 2/3rds of the cost.
    1. $220 million comes from bonds sold by the Newark Housing Authority. $10 million of which goes back to community improvements. So $210mil is slated for the arena.
    2. Newark also has $200 million coming from negotiations with the Port Authority of New York and New Jersey after it was found the PA cheated the city out of $2 billion in a previous lease. It is assumed this money will go towards paying off the bond sale.

    So... The city of Newarks net loss on the Arena deal is something along the order of 20+million seeing as they need to repay the bonds with interest after a period of time.

    However, these losses can be negated by the use of the Arena in the "Downtown Core" to assist in revitalizing the entire area. The plan only begins with the construction of the new arena, and continues with the construction of hotels, corporate spaces, and commercial centers, all of which bring in funding to the city of Newark in the long run.

    I may be wrong in my analysis... but here is my source: http://www.nhi.org/online/issues/135/arena.html
    http://members.aol.com/resurgencecity/Arena.html
     
    Last edited: May 25, 2007
  12. DevFan-RU-

    DevFan-RU- Registered User

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    Nobody else here is interested in arena deals?? :(

    Can any Pens fans care to elaborate on how their new arena is being financed?
     
  13. rekrul

    rekrul Registered User

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    this is a total sweetheart deal when you figure in that the Sharks ( then owned by the Gunds ) got most of it from the taxpayers and the 20 Yr lease is fixed at $500k. Turns out that the sharks, now owed buy a group called SVEE, rake in ticket sales, concessions and everything but parking from all events there. Pretty sweet considering that the HP Pavillion in 2005 is #3 in the country and #7 in the WORLD in overall ticket sales for entertainment http://blogs.mercurynews.com/aei/2006/01/san_jose_arena_.html

    But it probably is a win-win( and I'm guessing that Newark feels the same way ) when you understand that despite being the #10 city in the country and #2 in Exports and #1 in Disposal income San Jose had very little to offer its citizens in downtown. There still is not much of a great downtown but in the late 80's is was unherd of for anyone to think of going to an event in a cental location in the valley, certainly a risk to bring a sports team/arena deal hense the 78% public funding and sweetheart deal.
     
  14. DevFan-RU-

    DevFan-RU- Registered User

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    Good to hear. I hope Newark sees a great deal of success. Being the newest arena in the area, that alone may make it a competative venue from day one. It's location is key too.
     
  15. Spydey629

    Spydey629 Registered User

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    $290 million dollar arena

    The Pittsburgh Slot Casino (when it finally happens) will pay the vast majority of the costs, playing $7.5 million for 30 years to the Commonwealth of PA, who is putting up the bonds for construction.

    Then Pens pay $4 million ( I think that changed as a final number) a year for 30 years. This can be paid with naming rights, whatever they so choose.

    Another 7 million/year is coming from the governor's statewide slots 'slushfund'.

    Any overruns between 290 and 310 are split between the state and team. Anythnig over is 100% on the team.

    The arena is publicly financed only in that it will be paid for not by taxes, but by the blue hairs who are addicted to one armed bandits.
     
  16. discostu

    discostu Registered User

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    Yeah, the listing of 21% public funding is inaccurate from that site, given it was the financing of the highway infrastructure that the Sens were forced to build, and hand over to the government at a cost of $1.

    Because they argued that it was impossible for them to get any financing for an asset they didn't own, the government agreed to provide them with a loan, that was expected to be paid back in full.
     
  17. Morris Wanchuk

    Morris Wanchuk .......

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    its kinda crazy to think how much of a cheep ******* Jacobs is. he owns the bruins, paid for the new garden to be built out of pocket, his company runs the concessions, he owns the parking garage, the lot where the old garden used to be, gets the money from the celtics lease/concessions, and owns the sabres concessions.
     
  18. Sotnos

    Sotnos Registered User

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    If you're REALLY interested, there's a half hour show online about the building of the Ice Palace. They talk a bit about the fights for money, location, etc. and also about the urban renewal that came about due to the building being put downtown. I think there's even a shot at the end showing before and after.

    Inside the Lightning Shows It's the 10th Anniversary Special and is in 2 parts. (it's referring to the 10th anniversary of the building)

    MP4 format at the bottom of this page: http://www.tampabaylightning.com/tbl/podcast/index.cfm
     
  19. MAROONSRoad

    MAROONSRoad f/k/a Ghost

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    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.

    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 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
     
  20. Sotnos

    Sotnos Registered User

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    This was in one of the articles you linked, brings up an interesting question:
    This is with a tenant. I find it hard to believe they'd want to lose that tenant, it certainly won't be saving them anything. Perhaps they didn't really think this out, or perhaps the team was very mismanaged.

    Edit by Fugu: The arena lease deals have been brought up in other threads. Keep to the topic thread, please.
     
  21. MAROONSRoad

    MAROONSRoad f/k/a Ghost

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    Interesting point and that's what I guess they are discussing in Nashville at the moment with a decided inclination to keep the Predators at least short term if it's 50/50 whether the arena will do better or worse without them. AEG may be in favour of all this despite their KC links as they may end up with yet another arena to manage – Sommet Center. Can you say several conflicts of interest? I will say this: AEG is bad for the league. Do you really want one company controlling several NHL arenas and being closely associated with several NHL teams?

    GHOST
     
  22. iceman64

    iceman64 Registered User

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    Sprint Center opens today, tours to the public today and the ice is already down. Garth Brooks to cut the ribbon, he is coming out of retirement and not only doing his only show in KC at the Sprint Center but he is doing 9 shows in KC all sold out in minutes. The power of AEG...........the arena was fitted for the NHL, it's a great facility.
     
  23. hockeydadx2*

    hockeydadx2* Guest

    They have ice down? For what, the Ice Capades?
     
  24. iceman64

    iceman64 Registered User

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    nice trolling

    they put the ice down because it is an open house of the arena then later they will put down the basketball surface, just showing the public what they are paying for and what it will look like when KC gets the NHL via expansion or however.
     
  25. KevFist

    KevFist is best pony

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    Team: Atlanta Thrashers
    Owner: Atlanta Spirit LLC

    Arena: Philips Arena
    Year Opened: 1999
    Architect: HOK Sport
    Arena Owner: Atlanta Spirit LLC
    Arena Operator: Atlanta Spirit LLC

    Cost: $213.5 million
    Financing: $130.75 million from Revenue bonds to be paid from arena revenues
    $20 million from Turner Broadcasting
    $62.5 million from 3% car rental tax
    Naming Rights: $168 million for 20 year naming rights to Philips

    Luxury Suites: 96
    Party/Rental suites: 6
    Cost of luxury boxes: $135,000-$225,000 per season
    Club Level Seats: 2,893 (In a unique design of philips Arena, all club seats and luxury boxes are located on one side of the arena, being the penalty box side. Both ends and the bench side are standard seating. this unique design pushes the Upper Deck 14 feet closer to the playing surface.)
    Cost of Club Seats: $8,000-$9,000

    The actual arena cost $141 million to build. Most of the other costs came from improvements that had to be made around the site, as well as tearing down The Omni, which was not a very old arena at all.
     
    Last edited: Oct 10, 2007

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