Virginia Beach arena to be paid for by (reply hazy, ask again later)

Well, that was the epitome of anticlimax. Yesterday’s big Virginia Beach arena announcement turned out to have no mention of the Sacramento Kings or any other teams, no discussion of how an arena would be paid for, and really, no details at all. What it did have: effusive promises about economic impact and job creation. Old Dominion economist James Koch put his name on the economic projections, but as one Virginia Beach city council member noted at yesterday’s hearing, all of his data came from the arena proponents, so it’s unclear what he did beyond running the numbers through a modeling script.

Even then, though, Koch did come up with a figure for how much an arena — provided it attracts an NBA team, 200 events a year, and so on — would generate for Virginia Beach in terms of new tax revenue. (Tax revenue is the key number in these things, not “economic impact” — except for the taxes paid, it should hardly matter to Virginians whether money is changing hands between team owners and players, or between arena builders and construction contractors for that matter, in their town or somewhere else.) That figure is: $5.2 million a year. So in the best-case scenario, we can say that the benefit to Virginia Beach would make it worth dedicating about $5.2 million a year toward an arena. That’s enough to pay off maybe $75 million in arena costs, meaning the other $200-325 million would have to come from Comcast’s pockets.

Whether that’s going to happen, unfortunately, we have no clue, as there’s currently no financing plan for the arena — that’s something the city and Comcast plan on working out between now and October, which is an awfully short time to find hundreds of millions of dollars in between the sofa cushions. But hey, why worry yourself over things like how it’ll be paid for when there are pretty pictures to paint? After all, it was so much fun the last time.

8 comments on “Virginia Beach arena to be paid for by (reply hazy, ask again later)

  1. Comcast has their whole corporate charter, shareholders, and all but they’re also booking a profit of $1 billion+ each quarter. If Comcast can make accountants happy with projections the money isn’t a problem.

  2. Capital isn’t a problem for Comcast. Getting a return on that capital is another story.

  3. Why is it every time an arena is built you hear it is going to attract “200 events”? What’s so magical about this figure? Has anyone done an analysis of how many arenas with 1 or fewer major league teams actually get 200 events?

  4. 200 events a year is the rule-of-thumb breakeven point for a typical arena. (For operating costs, that is — if you want to pay off construction costs, that’s another story.)

    As for the analysis, I don’t know the answer, but I know who to ask…

  5. That entire presentation was so half-baked that Comcast probably did itself more harm than good by presenting it now. It kind of seems like they might have had a deal with a team, but then that team backed out within the last week or so. I’m not even going to suggest a team would do that, but it sure had that feel.

    And no, I’m not implying anything. Yes, the Kings have a history of acting that way, but so do others. It could have been them, but there are probably a dozen other possibilities.

    With that presentation, VB arena proponents just set themselves back. What a bunch of dingbats.

  6. I think not naming the target team is par for the course in new arena and relocation deals. They seem to like to play coy as to which team is the target. Seattle hasn’t indicated which team they want to get, just that they want to dress them up in Sonics clothes.

  7. This just in: According to the International Association of Venue Managers, in 2010 (most recent figures available), the average arena was booked for 111 event days.

  8. Realizing that this is the typical “break even” point is 200 events, the context its said can be quite funny. The city of Allentown, PA is building a hockey arena as a part of rebuilding its downtown. It is smack in the crosshairs of NYC, Philly, Newark, and several small arenas, yet “expects” to get “200 events a year”. I’m guessing some of those “events” may be less than large scale.