Va Beach/Kings/Arena Details worked outNovember 27th, 2012 at 6:44 pm by Bruce Rader under News, Personalities, Sports, Uncategorized
After months of negotiations it appears the details have been worked out to build an arena in Virginia Beach, and bring a major league sports team with it.
But the deal is far from being done.
A plan to build a $350 million arena on the Virginia Beach oceanfront, with an NBA team as its anchor tenant, moved forward during Tuesday night’s Virginia Beach City Council meeting.
Virginia Beach Mayor Will Sessoms announced that he has been advised by Peter Luukko, the President and CEO of Comcast-Spectacor that a proposal is ready for the city to build the arena in the Virginia Beach resort area.
Today, the city staff under the direction of the Mayor sent to state officials a request for $150 million dollars to help with construction costs and moving expenses for the unnamed team.
As I reported earlier this month, George Maloof Jr., one of the owners of the NBA’s Sacramento Kings met in Richmond with Gov. Bob McDonnell and other state officials to talk about moving his team to Virginia Beach if an arena was built there. No one involved in the negotiations, including the Kings have ever confirmed the Kings are the “major league sports team” being referred to.
Before and since that meeting, Mr. Luukko, has been negotiating a deal with Beach officials and presumably the Kings to bring the three groups together.
The city would own the building, Comcast-Spectacor in partnership with concert industry giant Live Nation would manage and book the arena, provide lease payments and all operating costs. In partnership with world-wide concert promoter Live Nation, the operators would count on the major league sports team as it’s principal tenant. But the majority of the dates would be filled by major concerts, large religious functions and other sporting events. These events range from ACC and NCAA basketball tournaments, Olympic trials, NCAA swimming championships, and pay per view wrestling and MMA shows. Comcast-Spectacor would kick in $35 million to make the deal work.
The Kings would be the main tenant.
But the deal hinges on the Virginia General Assembly agreeing to borrow $150 million, with that money expected to be paid back over time via state tax revenue that would be generated by the arena.
$70 million of the requested state funds would go towards arena capital costs, and $80 million will go to the team for moving expenses. That would include an estimated $30 million dollar relocation fee the Kings would have to pay the other NBA owners, and for potential loss of income the Kings would face by having to play two years at the Old Dominion Constant Center while the arena is being built.
Already one consultant report, given to state officials, concludes an arena with an NBA team in Virginia Beach could generate as much as $182 million in visitor spending each year, with the state alone taking in almost $11 million a year in tax dollars.
Virginia Governor Bob McDonnell has long supported efforts to bring a professional sports franchise to Hampton Roads. But will he have enough sway to convince state leaders that the state tax revenue the arena will bring in will pay off the loan? In addition to the money, McDonnell believes the national exposure of a “major league team” will be good for the state.
The city would be responsible for borrowing $195 dollars. The council it would seem, has to be convinced money generated by the arena on the local level will be enough to pay back that loan without the city having to use current or future tax dollars. In addition city hotels, restaurants and shops both in the resort area and nearby would look forward to increased business especially during the non-tourist season from September through April.
Mr. Luukko is expected to come before the Virginia Beach Council next week to make Comcast-Spectacor’s formal proposal. Mayor Sessoms told Jason Marks of WAVY-TV Tuesday night he and Mr. Luukko believed the chances of this all coming together was about 50-50.