Magic: We’re thinking of an arena number

Orlando Magic officials were scheduled to announce yesterday how much of their own money they’d put up towards a new $385 million arena, and the answer is … a “significant” amount. For this, we gave you a drumroll?

Magic COO Alex Martins did at least hint at how the team’s offer would be calculated, noting that basketball games would fill about 22% of the arena’s estimated 200-night-a-year schedule. As the Orlando Sentinel, hand-waving wildly, reports:

Given that rough amount, 22 percent of the $385 million estimated cost to build it downtown would peg the possible team contribution at a high end of roughly $85 million. But even within that $45 to $85 million range, it still not clear what would be provided by the Magic, or what might be raised through added ticket charges to fans, or possibly bigger shares of naming or concession rights the city now retains.

That last point could be the key issue: Not what the Magic are willing to bring to the table, but what they’ll ask for in return. Ticket surcharges, most economists agree, mostly end up coming out of team pockets, since a $5 arena surcharge is $5 less that they can otherwise jack up prices. Which is exactly why team owners generally hate them, and prefer to recoup their expenses by grabbing a bigger share of, yes, naming rights, concessions, or parking fees that would otherwise go to the public.

As I stressed to Pat Campbell of Orlando radio station WFLA this morning (and welcome to any WFLA listeners who’ve wandered over here, by the way), this is why Orlando residents need to keep their eyes not just on the arena costs, but the revenues as well. As I’ve discussed in the past, teams are increasingly willing to put up more construction money in exchange for subsidies at the back end. It’ll be very interesting to see if those end up being “substantial” as well.

Share this post: