“broward county is · - annual $500k marketing commitment to cvb - significant...
TRANSCRIPT
“Broward County is
ready to enter the big
leagues.”
– Sun Sentinel, Feb.
1, 1996
The BB&T Center = The Big Leagues
“…Let’s all remember: the
BB&T Center is publicly
owned, so taxpayers need
it to succeed.”
– Sun Sentinel, Feb. 16,
2014
The BB&T Center = Publically-owned
The BB&T Center is a true partner to Broward County providing significant benefits to residents, the CVB, local hotels, local businesses etc.:
- Annual $500k marketing commitment to CVB - Significant domestic/International media value- Tourism and heads-in-beds generator through world-
renowned concerts, offseason events, Panthers hockey, etc.- Source of significant economic impact, job creation, local
business support, etc.- Charity giving: Cats Foundation gives $1M in kind annually - Civic pride: Arena and Panthers hockey are part of
County’s identity; Only major sports/entertainment organization in Broward
A True Partner To Broward County
The BB&T Center has a long list of major upcoming events including the following:
- Jehovah’s Witness Convention ‘14, potentially ‘15 and ’16- NHL Entry Draft ’15- Orange Bowl Basketball Classic through ‘17- Crush Games CrossFit Games in August ’14- Justin Timberlake in March ’14- Paul Simon & Sting in March ‘14 - Bruce Springsteen in April ‘14- Lady Gaga in May ’14- Cher in May ’14- Katy Perry in July ‘14
Major Upcoming BB&T Center Events
The Arena/SSE is losing approximately $30M annually and has had five different owners/operators in the last 15 years. SSE has done the following to trim those losses:
- Cut $5M in administrative expenses- Refinanced the organization’s debt at a lower interest rate- Brought the Arena’s vendor services in-house- Invested in the on-ice product
The last bucket that is needed is assistance from our partners at Broward County.
The Arena Needs Assistance
The Operating Agreement between SSE/AOC and Broward County is nearly 18 years old and the conditions for operating a major professional entertainment and sports facility including:
- Significant increase in expenses i.e. insurance- Increased competition in the South Florida marketplace- Agreement is not competitive with comparable arena
agreements in North America
Changing Conditions
South Florida Competition In 1998
In 1998 the BB&T Center had only six other venues to compete with and the financial risk of hosting concerts and events was on the promoters and artists.
South Florida Competition In 2014
Today, there are 19 venues competing for events and the financial risk is solely on the venue.
BB&T Center
Lease Analysis
February 2014
• Founded by Mitchell Ziets in 2011
• 25 years in sports finance; background in corporate and muni finance
• TPS focuses on stadium advisory, M&A, team and venue financings, valuations
• Over $7B of transaction volume
• Advised on 45 stadium and arenas including Camden Yards, Petco Park, Lincoln
Financial Field, Dodgers Stadium, Consol Energy Center, Paul Brown Stadium
Lease negotiations
Public financing
Private financing
• Advised on 40 franchise acquisitions/LP investments including Nationals, Padres,
Sonics, Cavaliers, Dodgers, Ducks, Steelers, Red Sox
11
Tipping Point Sports, LLC Background
12
Stadium and Arena Building Boom
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# o
f N
ew
Fac
iliti
es
Op
en
ed
BB&T Center
113 new stadiums and arenas opened since 1998
Lease
Opening
13
Comparable NHL Arenas
11
C OM P S
Single T eam A renas in M id-Size M arkets
B B &T C enter (F lo rida)
SA P C enter (San Jo se)
Sco ttrade C enter (St . Lo uis)
T ampa B ay T imes F o rum (T ampa B ay)
F irst N iagara C enter (B uffalo )
B ridgesto ne A rena (N ashville)
P N C A rena (C aro lina)
Xcel Energy C enter (M inneso ta)
N at io nwide A rena (C o lumbus)
Jo bing.co m A rena (P ho enix)
C o nso l Energy C enter (P it tsburgh)
19
OTHER
Shared N H L/ N B A A renas
M adison Square Garden (NY Rangers)
Staples Center (Los Angeles)
United Center (Chicago)
Wells Fargo Center (Philadelphia)
American Airlines Center (Dallas)
Air Canada Centre (Toronto)
TD Garden (Boston)
Verizon Center (Washington)
Pepsi Center (Colorado)
C anadian T eams
Bell Centre (M ontreal)
Rogers Arena (Vancouver)
Scotiabank Saddledome (Calgary)
Rexall Place (Edmonton)
Canadian Tire Centre (Ottawa)
M TS Centre (Winnipeg)
Single T eam A renas in Large M arkets
Nassau Veterans M em. Coliseum (NY Islanders)
Honda Center (Anaheim)
Joe Louis Arena (Detro it)
Prudential Center (New Jersey)
South Florida market is:
• #5 (out of 11) in terms of TV households
• #9 when we consider number of franchises in each market
14
Market Demographics
T eam
D M A
R ank (1) T V H o mes (1)
# o f T eams
in M arket (2)
T V H o mes
P er T eam
Carolina 24 1,165,120 1 1,165,120
Columbus 32 928,530 1 928,530
Tampa Bay 14 1,827,510 3 609,170
Nashville 29 1,043,440 2 521,720
Phoenix 12 1,855,310 4 463,828
M innesota 15 1,748,070 4 437,018
San Jose (3) 6 2,518,900 6 419,817
St. Louis 21 1,254,530 3 418,177
F lo rida 16 1,663,290 4 415,823
Pittsburgh 23 1,181,540 3 393,847
Buffalo 52 634,280 2 317,140
(1) Source: Neilsen (2013/14)
(2) NFL, M LB, NHL, NBA
(3) San Jose M SA represents roughly 30% of the Bay Area M SA
• Nationwide Arena (Columbus Blue Jackets) Over $15M in annual savings Highlights - Team no longer pays operating costs, rent, capex and property tax and receives
naming rights revenues from Nationwide; Nationwide invested in Team
• Jobing.com Arena (Phoenix Coyotes) Over $15M in annual savings Highlights - Team receives $15M subsidy from the City of Glendale; early termination
provision based on losses
• Bridgestone Arena (Nashville Predators) $9.5M in annual savings Highlights – Team receives mngt fee plus a subsidy to fund arena operating losses and
revenue sharing with Metro Govt is reduced; early termination provision based on losses
• First Niagara Center (Buffalo Sabres) Over $2M in annual savings on top of the elimination of a substantial Team construction
investment Highlights - Operating fees and surcharges were eliminated
• Tampa Bay Times Forum (Tampa Bay Lightning) Over $2M in annual saving Highlights - Capex, property taxes and surcharges were eliminated
15
Arena Lease Restructurings
16
BB&T Center Investment
Source: Arena Operating Company
A nnual B B &T C enter C o sts, Excluding Operat ing C o sts
Rent to support initial construction bonds $3.90
Rent to support completion bonds 0.50
Payment to CVB 0.50
Reimbursement to State for to ll o ff ramps 0.80
Capex, repairs and maintenance 2.00
Arena P&C insurance 1.70
Total $9.40
Occupancy Costs include the following, averaged over 30 years:
1. Construction investment (depreciated over 10 years)
2. Capex (standardized at $2M, adjusted for each lease)
3. Rent (based on each lease)
4. Revenue splits with the public sector and surcharges (standardized economics,
adjusted for each lease)
5. Annual and event operating costs, net of other event profit (standardized at $4M,
adjusted for each lease)
6. Insurance costs (BB&T Center’s insurance cost is $1.5M higher than that of the
Comps Group, as is that of the Tampa Bay Times Forum)
17
Arena Occupancy Costs
14.6
11.2 10.3 10.0
7.9
(1.2)
10.9
8.9
18.1
0.6
14.0
-$5
$0
$5
$10
$15
$20
BB
&T
Cente
r (F
lorida)
SA
P C
ente
r (S
an J
ose)
Scottra
de C
ente
r (S
t. L
ouis
)
Tam
pa
Bay T
imes F
oru
m (
Tam
pa
Ba
y)
First N
iagara
Cente
r (B
uffalo
)
Brid
gesto
ne A
rena (
Nashvill
e)
PN
C A
rena (
Caro
lina)
Nationw
ide A
rena (
Colu
mbus)
Xcel E
nerg
y C
ente
r (M
innesota
)
Job
ing.c
om
Are
na (
Phoenix
)
Consol E
nerg
y C
ente
r (P
itts
bu
rgh)
Average Annual Occupancy Cost ($M)
BB&T Center’s annual occupancy cost of $14.6M ranks 2nd out of the 11 arenas in the Comps
Group and is $5.5M more than the average of $9.1M for the other 10 arenas.
18
Arena Lease Comps – Occupancy Cost
Source: Tipping Point Sports research
average
BB&T Center’s Arena and Operating Investment Percentage of 75% ranks 2nd out of 11
arenas and compares to 45% for the other arenas in the Comps Group.
19
Arena Lease Comps – Investment Percentage
Source: Tipping Point Sports research
-20%
0%
20%
40%
60%
80%
100%
BB
&T
Ce
nte
r (F
lori
da
)
SA
P C
ente
r (S
an
Jose)
Sco
ttra
de
Ce
nte
r (S
t. L
ou
is)
Tam
pa
Bay T
imes F
oru
m (
Ta
mp
aB
ay)
First
Nia
gara
Ce
nte
r (B
uff
alo
)
Brid
ge
sto
ne A
ren
a (
Na
shvill
e)
PN
C A
ren
a (
Ca
rolin
a)
Na
tion
wid
e A
rena
(C
olu
mbu
s)
Xce
l E
ne
rgy C
en
ter
(Min
nesota
)
Jo
bin
g.c
om
Are
na (
Pho
en
ix)
Co
nso
l E
ne
rgy C
ente
r (P
itts
burg
h)
Investment Percentageaverage
“If the Florida Panthers were no longer the primary tenant of the
venue and the BB&T Center operated without a full time, major sports
franchise tenant, the partnership between Live Nation and the BB&T
Center would cease and the number of events that visited the venue
on a regular basis would dwindle significantly.” - Michael Evans,
President of Live Nation Arenas
Live Nation
Global Spectrum
• Global Spectrum manages 123 venues
worldwide
• Comcast-Spectacoro Global Spectrum’s Immediate Parent Company
o Philadelphia-based sports and entertainment company
• Global Spectrum
• Wells Fargo Center
• Philadelphia Flyers (NHL)
• Flyers Skate Zone
• 3601 Creative Group
• Comcast SportsNet
• Paciolan
• Ovations Food Services
• Front Row Marketing Services
• New Era Tickets
• Comcasto Global Spectrum’s Ultimate Parent Company
o Global media and technology company
• Comcast Cable is the nation's largest video, high-
speed Internet and phone provider to residential
customers under the XFINITY brand and also provides
these services to businesses.
• NBCUniversal operates 30 news, entertainment, and
sports cable networks, the NBC and Telemundo
broadcast networks, television production operations,
television station groups, Universal Pictures and
Universal Parks and Resorts
BB&T Center Financial Position
• Financial success of the BB&T Center hinges upon
the Panthers
• Revenues driven in 3 major categorieso Hockey – 23% of total revenues
o Non-Hickey – 33% of total revenues
o Suites, Sponsorships, Other – 44% of total revenues
• Relocation of Panthers will have a dramatic
negative effect on overall revenueso So much so that any expense savings cannot overcome the lost revenues
• Will result in dramatic swing to an Operating Loss of
($3.9M)
What Does Losing a Tenant Mean?• Losing a major league tenant in a highly competitive market will be devastating
financially and non-financially
• Loss of 41+, consistent dates, associated attendance, and revenues
• Devastating loss of other events, particularly concertso “Bread and butter” events for any arena
o Key to financial success through revenues and increases ability maximize premium seating, advertising and sponsorships
• Lost attendance and media exposure resulting in negotiation or termination of major revenue-generating agreementso Ticketing, food service, naming rights, other major sponsorships, and premium seating.
• Complete loss of leverage to negotiate favorable deals with promoters
• Loss of economic impact from taxes
• Loss of full-time and part-time jobs in Broward County
• Negative impact on the quality of life in Broward County
• Decreased local, regional and national exposure for Broward County tourism
“Here Comes Broward
County!”The Economic Impacts of
The BB&T Arena
February 18, 2014Hank Fishkind Ph.D., President
Fishkind & Associates, Inc.
12051 Corporate Boulevard
Orlando, Florida 32817
Measuring Benefits Impacts measured by new money
brought into the local community
• 40% of attendees from outside Broward County
• Visiting Teams
Arena Spending and Operations
• Concessions, Food Service, Parking
• Players and employee salaries spent locally
• Other locally spent arena operations & maint.
Includes NHL games, non-sports
concerts and eventsFishkind & Associates, Inc.1/14/2014 25
Direct SpendingLocal Infusion of Money
Organizational Spending – Sunrise Sports & Entertainment $137,991,000
Less 60% of ticket, parking, concessions, etc. $36,346,000
Less Portions of Player Salary $46,750,000
Less Portions of Arena Operations and Staffing $12,633,000
Net Direct, Non-Local sourced, Organizational Spending $42,262,000
Game Attendance,Non-Local /Non-Arena; Visiting Teams $3,045,000
Other BB&T Events, Non-Local Patrons/Non-Arena Spending $1,728,000
Direct Annual Economic Impact $47,035,000
Fishkind & Associates, Inc.1/14/2014 26
Source: SS&E,LLLP Organizational Spending, Audited Consolidated Statement of Operations as of June 30, 2012; BDO June 14, 2013. All else: Fishkind & Associates, Inc.
Direct Jobs Supported
Type of Employment Employment
Team Full Time Employment 217
Team Seasonal Employment 343
Game Day Vendor & Hotel Employment 896
Event Day Vendor Employment 952
Support Staff, Security, Medical 35
Total F/T and P/T Positions 2,443
Annual FTE Employment 990
Fishkind & Associates, Inc.1/14/2014 27
Annual Economic Impact
BB&T Arena
Impact Type Employment Labor Income Output
Direct Effect 990 $27,560,600 $47,035,000
Indirect Effect 330 $12,097,205 $26,827,072
Induced Effect 229 $9,631,601 $28,514,320
Total Effect 1,549 $49,289,406 $102,376,392
Fishkind & Associates, Inc.1/14/2014 28
Summary of Economic Impacts
Total Jobs supported – 1,549
Annual Economic Impact - $102,400,000
$1.4 billion since 1998-99 season at BB&T
Cultural and Sports Venue – BB&T amenity
Community Involvement, Leagues, Instruction
at Spectacular Ice
Hockey Season coincides with Tourist Season
– away game media broadcasts reinforce
tourism brand awareness
“HERE COMES BROWARD COUNTY!”
Fishkind & Associates, Inc.1/14/2014 29
The BB&T Center’s exclusive Club RED was built with a $7.7M loan from Broward County and included significant participation from the County Minority Builders Coalition
Brian Johnson, Exec. Dir., Minority Builders Coalition
Tourist Development Tax
FUNDS RAISED BY THE 2 PERCENT
TAX MAY ONLY BE LEGALLY SPENT
FOR THE SPECIFIC PURPOSES
AUTHORIZED IN AN ORDINANCE
PASSED BY THE COUNTY
COMMISSION
STATED USE OF 2 PERCENT TAX REVENUE IN ORDINANCES
[T]o assist in the payment of the debt service on bonds issued
to finance the construction, reconstruction, or renovation of a
professional sports franchise facility.
Section 1(3) of Ordinance No. 96-9 and Section 1(4) of Ordinance No. 96-10 (Emphasis added).
The word “facility” is omitted from Ordinance No. 96-10.
PUBLISHED TITLE OF ORDINANCES
AN ORDINANCE OF THE BOARD OF COUNTY COMMISSIONERS OF
BROWARD COUNTY, FLORIDA RELATING TO TAXATION; AMENDING
SECTION 31½-16, “TOURIST DEVELOPMENT TAX,” BY LEVYING AN
ADDITIONAL ONE PERCENT LOCAL OPTION TOURIST DEVELOPMENT
TAX TO ASSIST IN THE PAYMENT OF BONDS ISSUED TO FINANCE THE
CONSTRUCTION OF A PROFESSIONAL SPORTS FRANCHISE FACILITY;
PROVIDING FOR SEVERABILITY; PROVIDING FOR A CERTIFIED COPY TO
BE SENT TO THE DEPARTMENT OF REVENUE; PROVIDING FOR INCLUSION
IN CODE; PROVIDING FOR CONDITIONS PRECEDENT; AND PROVIDING
FOR AN EFFECTIVE DATE.
Ordinance No. 96-9 at p. 1; Ordinance No. 96-10 at p. 1. (Emphasis added).
Ordinance No. 96-10 references “A NEW PROFESSIONAL SPORTS FRANCHISE AS DEFINED IN STATE
LAW.”
Each Ordinance imposed a 1% tax for a combined total of 2%.
STATED PURPOSE OF ORDINANCES
PURPOSE: To amend Section 31½-16, Broward County Code,
relating to collection of the tourist development tax revenues by
Broward County to authorize the levy and imposition of an
additional one percent (1%) tax to assist in the payment of
the debt service on bonds issued to finance the construction of
a professional sports franchise facility.
Ordinance No. 96-9 at p. 11; Ordinance No. 96-10 at p. 13. (Emphasis added).
Each Ordinance imposed a 1% tax for a combined total of 2%.
2 PERCENT TAX REVENUE IN EXCESS OF $8 MILLION
TOTAL: $103,238,777Figures for 2014 are Estimated
1997 1,056,000 2006 8,054,000
1998 1,440,000 2007 8,576,000
1999 2,188,000 2008 9,109,000
2000 2,949,000 2009 6,203,000
2001 3,415,000 2010 6,987,000
2002 2,552,000 2011 8,278,000
2003 3,576,000 2012 9,799,000
2004 5,109,000 2013 8,158,666
2005 7,700,000 2014 8,089,111
-
20,000,000.00
40,000,000.00
60,000,000.00
80,000,000.00
100,000,000.00
120,000,000.00
140,000,000.00
160,000,000.00
180,000,000.00
200,000,000.00
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Estimated Broward County Arena Debt BalanceWith Application of Excess TDT
Since Inception
Arena Debt Balance
To secure the future of the County-owned arena and create a sustainable business model that will drive growing economic impact, tourism and heads in beds, SSE/BB&T Center request the following:
- $4.5M reduction in annual Arena debt payment- $500k annual County contribution to Arena capital
improvements and maintenance- Cap of $1M in annual SSE/BB&T Center insurance
obligation
SSE/BB&T Center Request
If this request is approved, we commit to the following for Broward County and this community:
- Immediate payback of the $10.6M in outstanding County loans
- Fund a Panthers hockey team at or near the NHL salary cap
- Continue the $500k annual contribution to the CVB- Continue to book concerts, shows and events that drive
tourism and heads in beds including the 2015 NHL Draft, Jehovah’s Witness Conventions (’14 and potentially ‘15 and’16), NHL All Star Game, Orange Bowl Basketball Classic, and more
- Develop a parcel of land around the BB&T Center as part of a western Broward economic engine
SSE/BB&T Center Commitments