Two unidentified people who were at a briefing by Virginia Beach economic development director Warren Harris about new arena plans last Thursday have told the Virginian-Pilot that Harris said Virginia Beach Mayor Will Sessoms has met with the Maloof brothers, owners of the Sacramento Kings. Harris told the Virginian-Pilot that he never mentioned the Maloofs or the Kings by name in the briefing, but said that Sessoms has met with representatives of an NBA team. He did not disclose whether he referred to them by code name, such as Loofahs, Sack-o’-Tomatoes, or the Rochester Royals.
Anyway, even if the Brothers Who Shall Not Be Named did meet with Sessoms, people meet all the time without moving, or even seriously thinking about moving. Regardless, this should be enough to spark some panicked headlines out in Sacramento — oh, look, there’s one now.
Meanwhile, a new economic impact report is scheduled to be presented to the Virginia Beach city council on Tuesday, after some councilmembers noted that the first report was entirely based on the arena promoters’ figures and contained some improbable assumptions. I bet this new study is totally going to fix all those problems, though — and if not, it’ll give arena boosters another chance for excited news stories about how much economic impact is projected by the people who would be getting money from the project. It’s a win-win!
When I first saw yesterday’s headline reading “Study: NBA Team Could Move To Virginia Beach In 2013,” my first thought was, as I hope was yours: 2013? Virginia Beach? Who wrote this study, anyway?
And the answer is, the only people who could possibly have written it:
An economic study prepared for the Virginia Beach Development Authority suggests an unnamed NBA team could move to Virginia as soon as next year by playing its first two seasons in various arenas around the state while a permanent home is built near the Virginia Beach oceanfront…
The study says Philadelphia-based sports and entertainment company Comcast-Spectacor has said an NBA franchise is considering the possibility of relocating to Virginia Beach, but it doesn’t specify which one.
So basically, this is one of those studies that was researched by reading newspaper articles from August.
The report also claims that a new arena would generate $503 million a year in new economic activity, and $11 million a year in state tax revenues, and all kinds of other stuff that’s based entirely on figures provided by Comcast-Spectacor. Richmond firm Chmura Economics & Analytics charged the city $31,240 for the study. I’m really in the wrong line of work…
Hey, remember that $275-400 million arena plan that was announced for Virginia Beach last month with much fanfare, then promptly disappeared off the radar? A new poll shows that local residents don’t like the idea, opposing it by a 45-38% margin — and like it even less when the tax-kickback financing model is explained to them, with opposition rising to 58-32%.
Virginia Beach economic development director Warren Harris optimistically responded, “It just says to me that we have to put people in a position that they are informed about the project, and then see what the response would be.” Except that in this poll, the more informed residents are, the more they dislike it. Unless he meant a different meaning of “informed.”
In my recent Slate article about the Seattle arena plans, I noted that 200 events a year is generally considered the point at which a typical arena can think about starting to turn a profit. Coincidentally, that’s the number of events that Chris Hansen is promising his arena will be able to host annually — and arena boosters in Virginia Beach have projected the same figure for their proposed arena.
So, how many events does a typical arena usually host in a year? I asked the International Association of Venue Managers, and they were happy to supply a figure: In 2010, the most recent year for which figures are available, arena managers reported that they averaged 111 “event days” per year. Out of 64 arenas responding to the IAVM survey only nine — 14% — said they were busy more than 200 days a year.
Obviously, there are exceptions: Madison Square Garden has reported hosting 320 events a year (though other sources say 225 or more than 600, so clearly the science of arena stats still has a ways to go). But for the vast majority of arenas, 100 events or so a year is a far more reasonable expectation than 200. Something for Seattle and Virginia Beach officials to consider.
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.
The awesomely call-lettered Virginia Beach TV station WAVY has another report on that city’s arena plans today, though pretty much all of it is just he-said-she-said on who likes the idea and who doesn’t. There is, however, one interesting tidbit from Mayor Will Sessoms:
“I would look for help from the Commonwealth, from special tax districts at the oceanfront, perhaps an increase on the tax on hotel rooms and ticket sale revenues which could be huge,” Sessoms said.
This is the most specific that anyone has gotten about how on earth this $275-400 million arena would be paid for, and indicates that when Sessoms said that “revenue generated by the arena” would help pay for the place, he at least in part meant a TIF district to kick back arena taxes to pay for construction. Add in hotel taxes and “help from the Commonwealth” (aka state subsidies), and there’s really no telling how much of a taxpayer subsidy we could be looking at here.
All of which would help explain why Comcast-Spectacor, let along possible the owners of the Sacramento Kings, might be considering Virginia Beach as a workable place to build an NBA arena. Hopefully, more details will be forthcoming at today’s city council hearing, but right now this doesn’t look too promising.
Okay, we now know way more about the Virginia Beach arena proposal that was first rumored last week:
- The official announcement will be at a city council hearing tomorrow at 3 pm, where Comcast-Spectacor will present plans for an 18,000-seat arena across the street from the Virginia Beach Convention Center. Comcast-Spectacor subsidiary Global Spectrum, which manages sports venues, and arena booking agent Live Nation will also be on hand.
- The estimated cost of the arena would be between $275 million and $400 million, according to Virginia Beach Mayor Will Sessions, who added, “This is something Virginia Beach cannot take on on its own.” While Sessions said that Comcast-Spectacor indicated that “revenue generated by the arena” (which as we’ve seen before, could mean either actual arena revenue or kicked-back arena taxes) would help pay off any arena bonds, but also indicated he’d be asked for help from the state and the NBA as well.
- A Virginia Beach spokesperson said that Comcast was “guaranteeing” a pro sports team as part of the deal, but wouldn’t name the team.
- Even without naming names, this has been enough to get some people in Seattle panicked that someone else will steal the Sacramento Kings before they do.
- Former Heritage Foundation economist Ronald Utt makes the should-be-obvious point that basketball arenas aren’t big economic boosts to cities.
- The Kings owners the Maloof brothers aren’t expected to be at tomorrow’s council hearing, and say they haven’t spoken with Virginia Beach about its plans, but sports owners lie like eight-year-olds.
More tomorrow. You can tune in here, if you can tear yourself away from the Republican convention or the drowning of New Orleans.