Facilities Flashcards
What is the construction year and cost of Olympia?
1927 for $2.5 million
Olympia was one of the early privately financed arenas.
What percentage of gate revenue did early arena entrepreneurs typically negotiate?
Typically got 40%
This revenue sharing was common in the early years of the NHL.
List three types of events that drew more attendance than NHL games in the early years.
- Boxing
- Cycling
- Other events
What are luxury suites in modern arenas typically priced at per year?
$75-500K/year, minimum 50-75
Luxury suites are a significant revenue source for modern arenas.
What is the minimum number of preferred or club seats typically found in modern arenas?
At least 500-2500
These seats often come with an additional fee.
What did the new “state of the art” stadiums include?
- Luxury suites
- Club seats
- Stadium club or restaurant
- Novelty shops
- Hall of Fame/celebration of team history
- Concession stands
- Auxiliary developments
- Loges
They were also more user friendly, with nicer bathrooms, HD scoreboards… etc.
What era saw all arenas being publicly financed?
Public subsidy era: 1970-1984
This era marked a significant trend in arena funding.
What was the public-private funding ratio in the transitional P3 period (1985-1994)?
49% public, 51% private
What percentage of funding was public in the ‘Fully Loaded’ era (1995-2003)?
39% public, 61% private
~ 45% turnover in facilities in this era.
What is a key reason for the increase in private funding for arenas?
More evidence that arenas don’t deliver economic returns - more opportunities for team owners to make money through ancillary development; larger cities pay less
This had also led to greater resistance to corporate welfare.
Fill in the blank: The funding scheme that requires a referendum and typically burdens a large number of taxpayers is called _______.
Hard Taxes
What are soft taxes?
Borne by select group
Easier to implement
ie. hotel/motel, rental car, sin taxes
What does TIF stand for in the context of urban development?
Tax Increment Financing
What is one advantage of Tax Increment Financing (TIF)?
No tax increases required
When TIF dissolved, cities will also receive additional tax revenues.
What is a development levy?
Charging companies that decide to build on real estate close to the arena- money goes into the stadium.
What is public $$?
How debt is serviced
* Ticket tax
* Ancillary infrastructure – land,
* transportation infrastructure
* City issues debt
* Tax exempt bonds
What is one disadvantage of Tax Increment Financing (TIF)?
Incremental increases in tax base used to service debt, not address increased infrastructure demands within the district.
This can lead to challenges in community services.
What is TIF?
Incremental increase in taxes in (re)developed area used to service debt on the development
What is one source of revenue for arena operations?
- Sponsorships
- PSLs
- Club seats
- Luxury suites/ Founder’s suites
What is a notable example of naming rights revenue?
Scotiabank arena - $800,000,000
This revenue is generated from the Toronto Maple Leafs’ naming rights.
Why do companies buy naming rights?
- Cost effective way to advertise
- To get advantage over competitors - only so many facilities available
- Allows for corporations project positive community image
- Can establish a presence in a region with no previous presence
- Opportunities for cross promotion and tie-ins
What factors determine the pricing of naming rights?
- Number of events held in the facility
- Types of events held
- Presence of corporate entities in the region
- Composition of the rights package
True or False: Naming rights provide a cost-effective way to advertise for companies.
True
What are some common expenses associated with arena operations?
- Utilities
- Cleaning the facility after the game
- Game day personnel
- Insurance
- Ordinary repairs and capital expenditures
What is the estimated cost and public funding percentage for the Toronto Maple Leafs’ new arena in 2021?
$1.1B, 0% public
This reflects a trend towards private funding.
What is one issue related to team competitiveness in the context of arena operations?
Profits
This can impact the financial viability of teams.
What issues arise with naming rights and facilities?
Team competitiveness
Profits
New models: Nationwide Arena, Rogers Place, Little Caesar’s Arena
Master Developer Status
What is Master Developer Status?
Link interests of public and private sector, responsible for all areas of development.
