A NEW ARENA FINANCING OPTION

No reason to give the background on this story. We already know. We need an arena if we want professional basketball and hockey in this town. Here is a proposal in which I think could be used as a foundation.
“Live from the Bing Hardwood, Welcome to the Amazon Center!”
This facility needs to be a multi-purpose and be able to operate beyond basketball and hockey. I think a great vision was shared when B2 launched their Emerald City Center (www.emeraldcitycenter.com) scenario. Although it may seem a little too much to be realistic, it does provide some great ideas. I really think the idea of having real restaurants as part of the facility. These spots can be rented out in the arena where they can be used during events and not. The rents from these restaurants would likely be pretty expensive (in the $100,000’s as they have a premiere location and source of revenue consistently.
Another vision previously used, albeit had some issues, was the Skydome’s financing deal where they sold off sponsorship rights for $5million a pop. I think this could be an idea to embrace and alter it so it is successful for the facility. I can see Miller Coors or Coca-Cola paying $10 million each for the right to be the exclusive beverage provider for the arena for 10 years. This would bar the entire facility from sponsorships that are direct competition.
Exclusive Soda Sponsor: $10M Coca-Cola
Exclusive Beer Sponsor: $10M MillerCoors
Exclusive Auto Sponsor: $10M Ford Vehicles
Exclusive Fast-Food Restaurant: $10M McDonald’s
Exclusive Telecommunications Sponsor: $10M T-Mobile / AT&T
Exclusive Financial Institution Sponsor: $10M Chase Bank
Exclusive Airline Sponsor: $10M Southwest Airlines
This here alone could be $70 million in just exclusivity fees. These fees would be separate from the sponsorship fees because these prevent the arena from showing sponsorship from your competitors in the arena. You can have arena sponsorship in the different tiers such as the MGD Zone, Coca-Cola Deck, etc.
The key to this arena is to make it multi-dimensional where it can draw year-round and not just the NBA and NHL events. We need it to be a premiere destination for touring events and shows. This would utilize the facility to its fullest extent, something KeyArena clearly does not. One way of helping this may be enlisting the help of AEG. AEG is one of the leading sports and entertainment presenters in the world. Such a company could land the Seattle area many events that currently skip us in-between tour stops in Vancouver, BC and Portland, OR.



Here is a chart I put together breaking down the financing for a new arena. I have broken down in 5 columns showing the current commercial real estate interest rates. For a 30 year loan, the rate is 7.5%, while a 15 year loan is 6.25%. While the shorter term has a lower interest rate, the average monthly and annual payment is much higher. I did a 15 year loan at 30 year numbers for a good comparison of the numbers.
30 year 15 year 15 year 30 yr +DP 15 yr. +DP
Interest Rate 7.50% 7.50% 6.25% 7.50% 6.25%
Loan Amount 500,000,000 500,000,000 500,000,000 300,000,000 300,000,000
Interest Amt 758,586,115 334,311,124 271,680,579 455,151,670 163,008,348
Total Amt Paid 1,258,586,115 834,311,124 771,680,579 755,151,669 463,008,348
Avg Payment Mo. 3,496,072.54 4,635,061.80 4,287,114 2,097,644 2,572,269
Avg Payment Yearly $41,952,870.51 $55,620,741.60 51,445,371.96 25,171,722.36 30,867,223.20

Annual Facility Fees $6,368,000 $6,368,000 $6,368,000 $6,368,000 $6,368,000
NHL Ownership Yearly $3,333,333 $6,666,667 $6,666,667 0 0
NBA Ownership Yearly $3,333,333 $6,666,667 $6,666,667 0 0
Concessions - NBA $1,857,600 $1,857,600 $1,857,600 $1,857,600 $1,857,600
Concessions - NHL $1,857,600 $1,857,600 $1,857,600 $1,857,600 $1,857,600
Concessions - Other Events $3,110,000 $3,110,000 $3,110,000 $3,110,000 $3,110,000
Parking $3,125,000 $3,125,000 $3,125,000 $3,125,000 $3,125,000
Facility Rental $3,125,000 $3,125,000 $3,125,000 $3,125,000 $3,125,000
NBA Rental $3,000,000 $3,000,000 $3,000,000 $3,000,000 $3,000,000
NHL Rental $3,000,000 $3,000,000 $3,000,000 $3,000,000 $3,000,000

Total Yearly Revenue $32,109,867 $38,776,533 $38,776,533 $25,443,200 $25,443,200


Concessions: Arena keeps 20%, Sports Team keeps 80%
Concessions: Arena keeps 50%, Sports Team keeps 50% (non sports events)
Parking: 2,500 sports x 125 events
Facility Rental Fee: $25,000 x 125