The Charlotte city council voted 9-2 last night to spend $34 million on renovations to the Hornets‘ Time Warner Cable Arena, which opened in 2005 and is the third-newest building in the NBA. Of course they did, because they (or their predecessors nine years ago) included a “state-of-the-art” clause in the Hornets’ (then Bobcats) lease, which means the city must go on spending indefinitely to keep the arena as up-to-date as the newest NBA arenas:
“It is a contractual obligation,” said council member Claire Fallon, a Democrat. “If we break the contract, who will believe our word anymore?”
At this point it’s worth asking — not that any of the media outlets who were actually at the council vote seem to have asked it, but I’ll ask it to the winds, anyway — how much Charlotte will likely have to put up for renovations over the life of the arena, whatever that may turn out to be. You have to expect that the Hornets will come back for more upgrades in another nine years or so — it’s in their contract, why wouldn’t they? — and that those will be more expensive, since by then there will be even more new arenas to keep up with. And nine years after that … well, by then the arena will be 27 years old, so you have to expect the Hornets will be looking to tear it down and build a new one.
As a reminder, the Hornets are owned by the billionaire most famous former athlete on earth, and got the arena scot-free when Charlotte covered all $260 million in construction costs. Add in the gift-that-keeps-on-giving state-of-the-art clause, and this is a serious contender for “worst arena deal ever,” though at least Michael Jordan isn’t getting negative rent. Yet.
The city of Charlotte is asking the city council to approve $27.5 million in upgrades to the Hornets‘ nine-year-old arena — the NBA’s third-newest building — on the grounds that hey, it could have been worse:
In March, the Hornets asked the city to also spend roughly $6 million to renovate suites and $600,000 to refurbish the Hornets’ locker room.
Deputy City Manager Ron Kimble said the city pushed back against spending taxpayer dollars on those expenses, even though he said the team could have had a legal case that those particular upgrades are part of the 25-year operating agreement.
“The city didn’t want to pay for home team locker rooms and suite improvements,” Kimble said. “We want to fund (improvements) that the everyday fan can enjoy.”
The problem is that in exchange for the Hornets (then Bobcats) owners agreeing to severe penalties for breaking their lease and going elsewhere, as the old Hornets (now Pelicans) did when they bolted for New Orleans, Charlotte agreed to a lease clause that requires the city to keep the arena among the NBA’s most modern — which is effectively a blank check for the Hornets to bill the city for anything that the guy down the road has in his arena.
Kimble told council members he believes the city could not spend any less.
“I feel like this is the lowest amount (we could spend) under the contract,” he said.
All together now: Friends don’t let friends sign state-of-the-art clauses.
We haven’t heard much lately about the $42 million in upgrades the Charlotte Hornets (formerly Bobcats) owners want to keep their nine-year-old arena “economically competitive,” but apparently that’s only because everyone has been working it out behind the scenes. Charlotte city manager Ron Kimble says that talks on the upgrades will begin in the next month, while Mayor Dan Clodfelter said that “negotiations are going along very productively,” implying that … talks are already ongoing? Hey, who’s running continuity at the Charlotte Business Journal, anyway?
No one’s saying how much Charlotte would be putting up for the renovations, though given that city officials were dumb enough to put a state-of-the-art clause in the then-Bobcats’ lease when they built the arena back in 2005, it’s likely to be a sizable sum. Clodfelter says not to worry, because renovations are needed anyway to bring the 2017 NBA All-Star Game to town, which will surely make any new costs pay for themselves, right? No? Oh, well.
Apparently that clause in the Charlotte Bobcats‘ lease that requires the city of Charlotte to keep their arena “economically competitive” isn’t enough for the team owners (some guy named Michael something) to feel confident in getting their $41.9 million in public subsidies for arena renovation, because they’ve now pulled out the big guns:
The NBA commissioner wants to put the all-star game in Charlotte, but first he wants to see upgrades at the 9-year-old uptown arena.
Adam Silver, who became commissioner in February, called for improvements to the luxury suites, scoreboards and lighting during a 20-minute press conference with local media Monday afternoon.
The All-Star Game is at stake, people! If you don’t put up $41.9 million, you will miss your chance to see a bunch of famous names go out on a court and play a lackadaisical version of something akin to basketball! Or, you know, not.
Friday afternoon, finally I can relax from a crazy week and not have to worry about any breaking sports subsidy news interrupting my — wait, what?
To keep Time Warner Cable Arena among the NBA’s most modern buildings, the Charlotte Bobcats and tourism officials have submitted a $41.9 million list of improvements to the city of Charlotte.
The request includes suite improvements, restaurant renovations and moving the ticket office at the 8 1/2-year-old facility.
And why, exactly, would the city of Charlotte do that? I mean, sure the city just gave $87.5 million to the Carolina Panthers for upgrades to their stadium, but the Bobcats‘ arena isn’t even a decade old, and presumably they have a lease binding them to the place for—
The lease calls for the city to make improvements to the building to keep it among the most modern in the NBA, to ensure the team can “maintain economic competitiveness and revenue potential.”
There could still be some haggling involved over the exact upgrades and cost ($1.42 million to relocate the ticket office, that’s seriously an issue of “economic competitiveness”?) before this is all over. But the point here to remember is: Do not allow state-of-the-art clauses in your sports leases, people. They are licenses for teams to write themselves checks at public expense, or even worse, demand new buildings before the old ones are paid off. Maybe city officials would start listening to me if I charged a $50,000 consulting fee…