cityofvirginiabeach%% arena%proposal%evalua9on prese… · usmkey%assump9ons% •...
TRANSCRIPT
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City of Virginia Beach Arena Proposal Evalua9on
May 13, 2014
Bill Rhoda President
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Overview of Arena Proposals
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USM Team Overview
• Privately financed arena • Covers all phases of development from design, construc?on to opera?on • Mix of local, na?onal and interna?onal experience • Project team members have designed, constructed and operated
hundreds of sports and entertainment venues in the U.S. • Arena Proposal:
– Privately financed – $200 million cost – 550,000 square feet – 18,000-‐19,000 total capacity
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USM Key Assump9ons
• USM assumes financial and opera?onal risk
• SMG is arena operator
• 40 year land lease with USM for arena and ancillary development
• City provides parking, site improvements, special event ameni?es
• USM receives 1/8 of exis?ng hotel tax revenue and arena admissions/concessions tax revenue to pay debt service
• City retains excess tax revenue aRer debt is re?red
• $10 per person parking/development fee included in ?cket price
• Future enhancements to support NBA or NHL
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Cost $200,000,000Square+footage 550,000Cost/SF $364Capacity
Basketball 18,000Concerts 19,000
Potential+Tenant(s) Indoor;FootballCity+Contribution
Upfront $0Debt $0
Annual+Rent $0Annual+Events 135Annual+Attendance 684,000
Premium+SeatingAnnual+
Inventory PriceSuites 30 $35,000Club;Seats 500 $900Loge;Boxes 40 $6,000Party;Suites N/A N/A
Naming+Rights $850,000Sponsorship+Revenue $807,500
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W.M. Jordan Team Overview
• City-‐owned, Global Spectrum operated arena • W.M. Jordan – local design build experience • HKS – na?onal sports facility design experience • Global Spectrum – full service arena operator • Williams Mullen – law firm specializing in public-‐private partnerships • Arena Proposal:
– $12.5 million private contribu?on – $200 million cost – 475,000 square feet – 16,500-‐19,000 capacity
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W.M. Jordan Key Assump9ons
• 25 year lease with Comcast-‐Spectacor ($5MM annual rent)
• Comcast assumes opera?onal risk ($12.5MM upfront contribu?on)
• Will assist the City in seeking $25MM in funding from Commonwealth
• City responsible for capital repairs
• City receives all parking and hotel tax revenues
• City retains tax revenues in excess of $5MM
• Future enhancements to support NBA or NHL
4
Cost $200,000,000Square+footage 475,000Cost/SF $421Capacity
Basketball 16,50023218,000Concerts 13,50023219,000
Potential+Tenant(s) AHL2franchiseCity+Contribution
Upfront $12,500,000Debt $150,000,000
Annual+Rent $5,000,000Annual+Events 147Annual+Attendance 829,900
Premium+SeatingAnnual+
Inventory PriceSuites 39 $50,000Club2Seats 600 $1,550Loge2Boxes 40 $14,000Party2Suites 2 N/A
Naming+Rights $650,000Sponsorship+Revenue $950,000
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Arena Proposal Comparison
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Key Assump9on Comparison
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Cost $200,000,000 $200,000,000Square+footage 475,000 550,000Cost/SF $421 $364Capacity
Basketball 16,50034318,000 18,000Concerts 13,50034319,000 19,000
Potential+Tenant(s) AHL3franchise Indoor3FootballCity+Contribution
Upfront $12,500,000 $0Debt $150,000,000 $0
Annual+Rent $5,000,000 $0Annual+Events 147 135Annual+Attendance 829,900 684,000
Premium+SeatingAnnual+ Annual+
Inventory Price Inventory PriceSuites 39 $50,000 30 $35,000Club3Seats 600 $1,550 500 $900Loge3Boxes 40 $14,000 40 $6,000Party3Suites 2 N/A N/A N/A
Total+Revenue $9,476,000 $8,289,000Total+Expenses $7,652,000 $6,639,000Net+Income $1,824,000 $1,650,000
USMW.M+Jordan
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City Responsibility Comparison
W.M. Jordan USM
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• Upfront contribu?on of $12.5MM
• WM Jordan will assist the City in seeking $25MM from Commonwealth of Virginia
• Coordinate and execute debt issue of $150MM
• Capital improvement expenditures
• Parking & Arena Development Fee revenue totals $3.2MM and is dedicated to debt service
• Annual revenue generated to City:
• City to pay $10,522,621 in annual debt service
• 40 year land lease with USM for arena and ancillary development
• City provides parking, site improvements, special event ameni?es
• City to contribute the costs associated with permanent installa?on of ice-‐related infrastructure. Costs es?mated to not exceed $4.0MM.
• Reimbursement of annual admission and concessions taxes to USM
• Parking & Arena Development Fee revenue totals $6.8MM and is dedicated to debt service
• Contribu?on of 1/8 of exis?ng hotel tax revenue
TotalRevenue+Source Revenue
Hotel&Tax&Revenue $3,010,000Admissions&Tax 2,851,000Arena&Development&Fee 1,404,000Parking&Revenue 1,840,000City&F&B&Sales&Tax 414,000State&F&B&Sales&Tax 378,000Merchandise&Sales&Tax 129,000
Total $10,026,000
Note:&Tax&revenues&depict&a&first&year&estimate.
TotalRevenue+Source Revenue
Admissions(Tax( $3,155,000Hotel(Tax(Revenue 3,126,000Food(&(Beverage(Tax 602,000Merchandise(Tax( 143,000
Total $7,026,000
Note:(Tax(revenues(depict(a(first(year(estimate.
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Future Enhancements Comparison
W.M. Jordan USM
• Expandable ameni?es capable of suppor?ng NBA or NHL opera?ons
• Addi?onal 36,000 sq. R. for locker rooms and prac?ce facility
• Addi?onal 8 bunker suites and 24 luxury suites for total suite inventory of 64
• Poten?a l mezzan ine l eve l premium space
• Other poten?al improvements including lobby expansion, more retail/restaurant/club space and addi?onal office space
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Comparable Arena Benchmarking
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Comparable Facili9es Summary
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Total Total 2016Building Historical Inflated 2016
Year Square: Project Historical Project InflatedFacility City Opened Capacity Footage Costs Cost/SF Costs Cost/SF
Jacksonville,Vet.,Mem.,Arena Jacksonville 2003 14,091 440,000 $130,000,000 $295 $216,460,000 $492BOK,Center Tulsa 2008 17,839 565,000 $198,000,000 $350 $270,977,000 $480Bon,Secours,Wellness,Arena Greenville 1998 14,897 300,000 $68,000,000 $227 $137,756,000 $459W.M.:Jordan:Proposed:Arena Virginia:Beach 2016 18,000 475,000 $200,000,000 $421 $200,000,000 $421Wells,Fargo,Arena Des,Moines 2005 16,980 430,000 $117,000,000 $272 $180,116,000 $419Pinnacle,Bank,Arena Lincoln, 2013 15,147 471,000 $172,348,000 $366 $193,868,000 $412USM:Proposed:Arena Virginia:Beach 2016 18,000 550,000 $200,000,000 $364 $200,000,000 $364AVERAGE::(excluding:proposals) 2005 15,791 441,200 $137,070,000 $302 $199,835,000 $452MEDIAN:(excluding:proposals) 2005 15,147 440,000 $130,000,000 $295 $193,868,000 $459
(1),Total,construction,costs,for,Pinnacle,Bank,Arena,were,$157,million.,The,additional,$15,million,in,soft,costs,were,estimated,based,on,the,percentage,of,soft,costs,at,other,comparable,arenas.Note:,Sorted,by,2016,inflated,cost,per,square,foot
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NBA/NHL Arena Square Footage
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NBA/NHL Arena Square Footage
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Comparable Facili9es Event Load
OtherFamily Sporting Tenant Other Total TotalShows Concerts Events Events Events Graduations Events Attendance
BOK$Center 16 22 18 56 58 0 170 675,683Wells$Fargo$Arena 22 10 32 32 17 0 113 476,602W.M.$Jordan$Proposed$Arena 33 24 23 38 23 6 147 849,900USM$Proposed$Arena 22 26 29 6 36 16 135 684,000Bon$Secours$Wellness$Arena 22 20 14 37 14 0 107 411,000Jacksonville$Vet.$Mem.$Arena 16 15 12 36 13 14 106 480,528
AVERAGEE(excludingEproposals) 19 17 19 40 26 4 124 510,953
11
16# 22#
33#
22# 22# 16#
22# 10#
24#
26#
20#
15#
675,683#
476,602#
849,900#
684,000#
411,000#
480,528#
0"
100,000"
200,000"
300,000"
400,000"
500,000"
600,000"
700,000"
800,000"
900,000"
0"
10"
20"
30"
40"
50"
60"
70"
BOK"Center" Wells"Fargo"Arena" W.M."Jordan"Proposed"Arena"
USM"Proposed"Arena" Bon"Secours"Wellness"Arena" Jacksonville"Vet."Mem."Arena"
Family"Shows" Concerts" Total"APendance"
42#
32#
38#
31#
57#
48#
Capacity #17,839#Metro#Popula;on: #947k#
Capacity #16,980#Metro#Popula;on: #567k#
Capacity #18,000#Metro#Popula;on: #1.7M#
Capacity #18,000#Metro#Popula;on: #1.7M#
Capacity #14,897#Metro#Popula;on: #851k#
Capacity #14,091#Metro#Popula;on: #1.3M#
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Comparable Facili9es Funding
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Public'88%'
Private'12%'
Funding
Financing
W.M Jordan
W.M Jordan
USM
USM
Public'57%'
Private'43%'
Public'94%'
Private'6%'
Public'0%'
Private'100%'
Facility Public Private
BOK$Center 91% 9%Pinnacle$Bank$Arena 58% 42%Jacksonville$Vet.$Mem.$Arena 100% 0%Wells$Fargo$Arena 91% 9%Bon$Secours$Wellness$Arena 100% 0%W.M.$Jordan$Proposed$Arena 67% 33%USM$Proposed$Arena 57% 43%
AVERAGE3(excluding3proposals) 88% 12%
Note:$Public$funding$of$USM$arena$includes$$7.0$million$in$annual$admissions,$sales$and$hotel/motel$tax$revenue.Note:$Both$arena$proposals$do$not$include$the$funding$of$land$acquisition.
Funding
Public'67%'
Private'33%'
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Comparable Facili9es Premium Comparison
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Annual Annual AnnualFacility City Inventory Price Inventory Price Inventory Price
Loge4BoxesSuites Club4Seats TotalPremiumRevenue
BOK$Center Tulsa 38 (1) $73,000 20 $17,500 680 $1,500
Pinnacle$Bank$Arena Lincoln$ 36 $55,000 20 $20,000 900 $1,250
W.M.$Jordan$Proposed$Arena Virginia$Beach 39 $50,000 40 $14,000 600 $1,550
Jacksonville$Vet.$Mem.$Arena Jacksonville 36 $60,000 OO OO 1,834 $355
Wells$Fargo$Arena Des$Moines 36 $50,000 OO OO 600 $1,600
Bon$Secours$Wellness$Arena Greenville 30 $65,000 OO OO 1,000 $400
USM$Proposed$Arena Virginia$Beach 30 $35,000 40 $6,000 500 $900
AVERAGE44(excluding4proposals) 35 $60,600 20 $18,750 1,003 $1,021MEDIAN4(excluding4proposals) 36 $60,000 20 $18,750 900 $1,250
Note:$Sorted$by$cost$per$square$foot
$4,144,000
$3,505,000
$3,440,000
$2,811,000
$2,760,000
$2,350,000
$1,740,000
$3,114,000$2,811,000
(1)$BOK$Center$also$has$10$Sky$Lofts$sold$per$event$in$addition$to$the$38$suites
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Comparable Facili9es Financial Opera9ons
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($MM) ($MM) ($MM)Net(Direct Operating Operating Operating
Facility Revenues Expenses Profit((Loss) Margin
Wells%Fargo%Arena $5.6 $3.7 $1.9 33.6%Bon%Secours%Wellness%Arena $7.0 $5.2 $1.8 25.7%BOK%Center $8.1 $6.4 $1.7 21.3%W.M%Jordan%Proposed%Arena $9.5 $7.7 $1.8 19.2%Jacksonville%Vet.%Mem.%Arena $4.6 $4.1 $0.5 11.9%USM%%Proposed%Arena $8.3 $6.6 $1.6 19.9%Pinnacle%Bank%Arena $5.4 $5.8 M$0.5 M8.7%AVERAGE((excluding(proposals) $6.1 $5.0 $1.1 16.8%
MEDIAN((excluding(proposals) $5.6 $5.2 $1.7 21.3%
FINANCIAL(OPERATION(COMPARISONSComparable(Venues
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Chesapeake Energy Arena Case Study
• Hosts approximately 115 events a year
• 45 Thunder games
• 20 to 25 concerts • 8 to 10 family shows
• 25 to 30 other sports events. • 15-‐year lease agreement which began in 2010
• Thunder retain majority of revenues except for parking, a concession split and revenues from other arena events.
• Thunder pays rent of $1.6 million plus an annual naming rights fee, office expenses, facility fees and arena conversion fees
Notes: *Includes $89.2 million in original development costs and $103.5 million in renova?on costs to bring the facility up to NBA standards.
• Year Opened: 2002
• Capacity: 18,200
• Total Cost: $192.7MM*
• Tenant: Oklahoma City Thunder
• Owner: City of Oklahoma City
• Operator: SMG
• Suites: 48
• Loge Boxes: 48
• Club Seats: 2,838
City%Sales%Tax%$192.7MM%
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Chesapeake Energy Arena Case Study
• 1 cent sales tax passed in 1993 • Funded nine (9) capital projects including arena construc?on • 1 cent sales tax extension approved in 2008 to fund arena
improvements for relocated Thunder
• $103.5 million renova?on began in 2009:
• 48 new terrace boxes • Two terrace lounges • Upgraded retractable sea?ng in the lower bowl • Refinished upper level concourse. • Renovated locker rooms
• $3.9 million scoreboard
• New Grand Entrance in the southwest of the building added
in 2012
Courtside club
Grand Entrance
• Year of Renova?on: • Cost of renova?on:
• Areas Renovated:
2009
$103.5 MM
Took out 20 suites and replaced with terrace boxes in both ends. Renovated event level by adding 7 bunker suites and courtside club.
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Smoothie King Center Case Study
• 91 percent ($101.5M) public sector funding:
• $85M in hotel/motel tax revenue
• $16.5M from other public funds.
• 9 percent ($10.5M) private sector funding
• $9M from the arena concessionaire
• $1M from the former ECHL tenant.
• Lease extension in 2012 (through 2024)
• Guaranteed NBA All-‐Star Game
• $50M in improvements to the arena over the following two off-‐seasons (funded by state bond issue)
• $10M in available funding at the op?on of the team in 2013 for addi?onal upgrades to the arena or construc?on of a prac?ce facility
Notes: *The arena is currently undergoing the second phase of a $54M renova?on that is an?cipated to be completed prior to the Pelicans’ 2014-‐15 season. The funding of the $54M renova?on is not included in the chart below.
• Year Opened: 1999
• Capacity: 18,500
• Total Cost: $112MM*
• Tenant: New Orleans Pelicans
• Owner: State of Louisiana
• Operator: SMG
• Suites: 56
• Loge Boxes: 16
• Club Seats: 2,450
Concessionaire*$9.5MM* Hockey*Tenant*
$1MM*
Superdome*Refinancing*$12.9MM*
Hotel/Motel*Tax*Revenue*$85MM**
Economic*Development*Fund*
$3.6MM**
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Smoothie King Center Case Study
• Currently undergoing a $54M renova?on • Interior & exterior improvements • Funded through a state bond issue, as agreed upon
in the lease extension • Phase I (Complete)
• 16 new loge boxes located on the 100 Level • Renova?ons to all exis?ng 56 luxury suites • New Whitney Bank Party Deck on the Terrace Level • New 360 degree Halo Board • Renovated and expanded Pelicans team locker room, • New Chairman’s Club located adjacent to the team’s
locker room • Phase II (TBC Prior to 2014-‐15 Season)
• New front office entrance and lobby (20,000 square feet of new space)
• New box office • New 2,000-‐square foot sports lounge • Expanded team store • New LED ligh?ng system
Chairman’s Club
Loge Box
• Years of Renova?on: • Cost of renova?on:
• Areas Renovated:
2013-‐15
$54 MM
Added 16 new loge boxes, upgraded all 56 suites, concession upgrades, new club lounges/party areas, exterior upgrades, team store, box office, lobby, new ligh?ng system.
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Pinnacle Bank Arena Total Project Costs
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Designer(Assist(Procurement $85,817,000Bid(Package(1 18,294,000Bid(Package(2 4,022,000Bid(Package(3 11,084,000Bid(Package(4 9,720,000Bid(Package(5 10,856,000Bid(Package(@(Total(Cost $139,793,000
Building(Permit $250,000Impact(Fee Exempt
Project(Contingency $4,984,000Subtotal $144,777,000
CM(Performance(&(Payment(Bond $967,000Builders(Risk(Insurance 258,000Railroad(Protective(Liability(Insurance 85,000Liability(Insurances 1,302,000
$147,389,000
Contractor's(Fee $2,869,000Preconstruction(Fee 140,000
Furnishings,(Fixtures(&(Equipment((By(Owner) $6,950,000
TOTAL%CONSTRUCTION%COSTS $157,348,000%%%%%(Pinnacle%Bank%Arena%and%Garage)
Total(Soft(Costs((1) $15,000,000
TOTAL%PROJECT%COSTS $172,348,000
(1)(Soft(costs(include(marketing,(project(management(and(architectural(fees.(Total(soft(
costs(have(been(estimated(based(on(the(percentage(of(soft(costs(to(overall(construction(
costs(at(comparbale(arenas(around(the(country.
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