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“Broward County is ready to enter the big leagues.” – Sun Sentinel, Feb. 1, 1996 PowerPoint Presentation
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“Broward County is ready to enter the big leagues.” – Sun Sentinel, Feb. 1, 1996 - PowerPoint PPT Presentation


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The BB&T Center = The Big Leagues. “Broward County is ready to enter the big leagues.” – Sun Sentinel, Feb. 1, 1996. The BB&T Center = Publically-owned. “…Let’s all remember: the BB&T Center is publicly owned, so taxpayers need it to succeed.” – Sun Sentinel, Feb. 16, 2014.

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slide2

The BB&T Center = The Big Leagues

“Broward County is ready to enter the big leagues.”

– Sun Sentinel, Feb. 1, 1996

slide3

The BB&T Center = Publically-owned

“…Let’s all remember: the BB&T Center is publicly owned, so taxpayers need it to succeed.”

– Sun Sentinel, Feb. 16, 2014

slide4

A True Partner To Broward County

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

slide5

Major Upcoming BB&T Center Events

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

slide6

The Arena Needs Assistance

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.

slide7

Changing Conditions

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

slide8

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.

slide9

South Florida Competition In 2014

Today, there are 19 venues competing for events and the financial risk is solely on the venue.

slide10

BB&T Center

Lease Analysis

February 2014

tipping point sports llc background
Tipping Point Sports, LLC Background
  • 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
stadium and arena building boom
Stadium and Arena Building Boom

113 new stadiums and arenas opened since 1998

BB&T Center

Lease

Opening

market demographics
Market Demographics

South Florida market is:

  • #5 (out of 11) in terms of TV households
  • #9 when we consider number of franchises in each market
arena lease restructurings
Arena Lease Restructurings
  • 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
bb t center investment
BB&T Center Investment

Source: Arena Operating Company

arena occupancy costs
Arena Occupancy Costs

Occupancy Costs include the following, averaged over 30 years:

Construction investment (depreciated over 10 years)

Capex (standardized at $2M, adjusted for each lease)

Rent (based on each lease)

Revenue splits with the public sector and surcharges (standardized economics, adjusted for each lease)

Annual and event operating costs, net of other event profit (standardized at $4M, adjusted for each lease)

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)

arena lease comps occupancy cost
Arena Lease Comps – Occupancy Cost

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.

average

Source: Tipping Point Sports research

arena lease comps investment percentage
Arena Lease Comps – Investment Percentage

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.

average

Source: Tipping Point Sports research

slide20

Live Nation

“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

global spectrum
Global Spectrum
  • Global Spectrum manages 123 venues worldwide
  • Comcast-Spectacor
    • Global Spectrum’s Immediate Parent Company
    • 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
  • Comcast
    • Global Spectrum’s Ultimate Parent Company
    • 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.
      • NBCUniversaloperates 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
BB&T Center Financial Position
  • Financial success of the BB&T Center hinges upon the Panthers
  • Revenues driven in 3 major categories
    • Hockey – 23% of total revenues
    • Non-Hickey – 33% of total revenues
    • Suites, Sponsorships, Other – 44% of total revenues
  • Relocation of Panthers will have a dramatic negative effect on overall revenues
    • 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
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 concerts
    • “Bread and butter” events for any arena
    • 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 agreements
    • 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 2014

“Here Comes Broward County!”The Economic Impacts ofThe BB&T ArenaFebruary 18, 2014

Hank Fishkind Ph.D., President

Fishkind & Associates, Inc.

12051 Corporate Boulevard

Orlando, Florida 32817

measuring benefits
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 events

Fishkind & Associates, Inc.

direct spending local infusion of money
Direct SpendingLocal Infusion of Money

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.

Fishkind & Associates, Inc.

direct jobs supported
Direct Jobs Supported

Fishkind & Associates, Inc.

annual economic impact bb t arena
Annual Economic ImpactBB&T Arena

Fishkind & Associates, Inc.

summary of economic impacts
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.

slide30

Brian Johnson, Exec. Dir., Minority Builders Coalition

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

tourist development tax
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
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
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
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
2 PERCENT TAX REVENUE IN EXCESS OF $8 MILLION

TOTAL: $103,238,777

Figures for 2014 are Estimated

slide37

SSE/BB&T Center Request

  • 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
slide38

SSE/BB&T Center Commitments

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