The Wichita Eagle looks at a report in the Kansas City Star (by our old friend Kevin Collison) that that city’s new Sprint Center is making money, and wonders whether that might be good news for Wichita’s soon-to-open Intrust Bank Arena, NCAAs or no NCAAs.
Only one problem: While the Sprint Center is indeed turning a profit, that’s only an operational profit — in other words, it doesn’t count the cost of paying for building it in the first place. Kansas City essentially handed over the building to arena managers AEG after it was complete, and told them to deal with the expense of running the place and allowed them to keep most of the proceeds; the fact that K.C. will see any money at all, in fact (estimated at $1.8 million this year), is an indication that AEG is doing a good job, since according to its lease it doesn’t need to share any profits at all with the city until it’s making a 16% return itself. Given that K.C. is on the hook for $10-15 million a year in arena bond payments (guesstimating here — that information doesn’t seem to be online anywhere [UPDATE: It is now, and I was — ahem — on the money]), there’s almost no way it will actually turn a profit on building the Sprint Center.
That said, it’s still better for AEG to be running a profit than running a loss, especially since the Sprint Center still doesn’t have a major-league sports tenant. And AEG seems to be intent on using its success with concerts to drive a hard bargain with any sports teams looking to move to Kansas City: AEG president Tim Leiweke told the Star, “The economic model of this building is quite successful. The last thing we or the city want to do is throw away that model and make the arena a loss leader with another tenant. It’s a tougher scenario with a professional team. I’m sure we wouldn’t be able to write a check to the city for $1.8 million.” In other words: As predicted, they’re not going to be no pushovers for, say, the Islanders.