Virginia Beach arena to require $391m in public money, still no clue where it’d come from

The Virginia Beach city council gave its nonbinding agreement last night to move ahead with talks for a new $426 million arena, which is no real surprise, given that it’s nonbinding, and they’ll get a chance to vote on any actual deal once there’s one to vote on. But it does mean that Comcast-Spectacor can go back to the owners of the Sacramento Kings and say, “No, seriously, are you actually going to move here and what would it take to get you to do so?” which is kind of an important question.

As for how this arena would be paid for, Mayor Will Sessoms presented this new framework, according to WAVY-TV:

  • $195 million from the City of Virginia Beach
  • $35 million from Comcast-Spectacor
  • $150 million from State of Virginia (including moving costs for a sports team and initial construction)
  • $46 million borrowed

Um, er, yeah, you guys know that money that’s borrowed has to be paid off somehow, right? So who would be paying off the $46 million? Guys? Anyone?

Actually, how any of it will be paid for is still, generously, a work in progress, with proposals including everything from a 1% hotel tax hike (which would generate enough to pay for maybe $40 million of the total) to a $2 per ticket “arena development fee” (which would generate … let’s generously say 150 events a year, average 10,000 people per event, that’s about $3 million a year, covering maybe another $50 million in costs). Presumably Comcast would pay some rent as well, but still we’re talking about a massive funding gap. In other words, we’re still back where we were in August: There are developers willing to build an arena in Virginia Beach, as soon as somebody else figures out how to pay for it.

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8 comments on “Virginia Beach arena to require $391m in public money, still no clue where it’d come from

  1. I think they’ve built enough excitement over this to where we’re bound to have announcement of a completed deal in January. Whether it actually completes is another matter; you always have to keep that in mind when dealing with the Maloofs (let’s face it, it’s going to be the Kings).

    By the way, Neil, I got to hear the Fresh Air interview with Louise Story yesterday. Sports facilities are just a small part of the subsidy problem, as I bet you’re aware. Still, the “United States of Subsidies” (NY Times) is very good, in my opinion. Just wanted to know if you have any thoughts about it.

  2. I’v seen “United States of Subsidies,” haven’t had a chance to sit down with it yet. Maybe this weekend.

  3. Dan, I really have no idea, but you can remember this: Sports tickets are not subject to the sales tax in the state of California. This is true if the facility is in San Diego, LA, Oakland, SF or Sacramento.

    So what you’re left with is a part-time restaurant and small gift shop. It just doesn’t seem like that would generate much sales tax revenues. I’d bet the sports stores in the malls provide a far better rate of return.

  4. In Seattle, for example, they don’t charge state or local sales tax on event tickets because they charge an admissions tax instead. Sales tax typically is only charged on tangible goods (you could hit/hold) and not on admissions to enter an event. Further, the tickets are only charged the Seattle or King County Admissions tax rate, not both.

  5. Virginia Governor McDonnell will not include the $150M in his budget proposal.

    Does this effectively kill the deal?

  6. Actually, reading further, it looks like the governor just said, “You call that an arena plan? I’m not giving you $150 million until you come up with a real plan. Also, go clean your room.”

    So, dead for the moment, probably for this legislative session, but possibly undead in future years, if the Kings are still rattling around then.

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