Presentation To: Centre City Development Corporation NFL Stadium Financing Background January 2010
Overview Stadium Development Background Review of Recent NFL Stadiums Appendix A Summary Tables Appendix B Evolution Media Capital 2
Stadium Development Background 3
Stadium Development History The last 20 years has witnessed an unprecedented boom in major league stadium construction. Since 1988, 106 new stadiums, or substantially renovated stadiums, have opened, or will open by 2012. 4
NFL Stadium Development History Early on, the NFL lagged the other leagues in building new stadiums; however, the NFL recognized the importance of these buildings and created a financial program to assist the teams. Qualcomm Stadium Renovation G-3 Program Approved 5
NFL Teams Pursuing New Stadiums For the 4 teams that are looking for new stadiums, the financial gulf widens every year, especially in a salary-capped league. 6
Review of Recent NFL Stadiums 7
Recent NFL Stadium Development EMC s NFL Stadium review focuses on the 11 facilities built or renovated starting in 2002. However, it excludes two-team or potential two-team facilities (Jets/Giants, 49ers) as they are not comparable with single tenant stadiums. Franchise Stadium Name Year Opened Detroit Lions Ford Field 2002 Houston Texans Reliant Stadium 2002 New England Patriots Gillette Stadium 2002 Seattle Seahawks Qwest Field 2002 Chicago Bears Soldier Field 2003 Green Bay Packers Lambeau Field 2003 Philadelphia Eagles Lincoln Financial Field 2003 Arizona Cardinals University of Phoenix Stadium 2006 Indianapolis Colts Lucas Oil Stadium 2008 Dallas Cowboys Cowboys Stadium 2009 Kansas City Chiefs Arrowhead Stadium 2010 8
Stadium Costs Starting in 2002, NFL stadiums have cost in excess of $400M, other than renovations. R R 9
Downtown Location A number of sports facilities are being located downtown to spur development and to leverage parking and transit assets. Reliant Stadium Ford Field Qwest Field Soldier Field Lucas Oil Stadium In addition, a number of facilities in other sports are being located downtown. 10
Development Catalyst Cities and team owners are recognizing that these projects can act as catalysts of successful mixed-use development. - Arena District (2000) 95 acres; over $1.1B of development - Victory (2004) 75 acres; 4M sf planned, $3B of development - East Village (2004) over $1.7B of development to date. - Westgate City Center (2006) 6.5M sf - LA Live (2007) 27 acres, 5.6M sf - Patriot Place (2007) 1.3M sf - Atlantic Yards 22 acres; over $4B of planned development 11
Increase in Private Funding For the most recent NFL stadiums, private investment has averaged 46%, compared to 35% prior to 2002. Nielsen Mkt Rank: 11 10 7 13 3 70 4 12 25 5 32 12
Private Funding Tools Seat Licenses NFL teams have been able to invest more private dollars into stadiums as a result of Seat Licenses. 13
Private Funding Tools G-3 Program In addition, the NFL has demonstrated its commitment to new stadiums through the G-3 Stadium Program, an unprecedented league-wide funding initiative. Franchise Stadium Name G-3 Funding Detroit Lions Ford Field X Houston Texans Reliant Stadium New England Patriots Gillette Stadium X Seattle Seahawks Qwest Field X Chicago Bears Soldier Field X Green Bay Packers Lambeau Field X Philadelphia Eagles Lincoln Financial Field X Arizona Cardinals University of Phoenix Stadium X Indianapolis Colts Lucas Oil Stadium X Dallas Cowboys Cowboys Stadium X Kansas City Chiefs Arrowhead Stadium 14
Team Objectives In return for its investment, Teams have generally requested the following terms: Year-round operating control Including control over scheduling, vendor selection and sales and marketing Team pays year round expenses Revenue sharing Team generally keeps all revenues; revenue sharing is limited 15
Public Funding Sources Stadiums have continued to be funded through a variety of sources. Franchise Sales Hotel Rental Parking Admission Lottery Restaurant Income Tax Tax Tax Car Tax Tax Tax Revenues Tax Detroit Lions Houston Texans Seattle Seahawks Chicago Bears Green Bay Packers Philadelphia Eagles Arizona Cardinals Indianapolis Colts Dallas Cowboys Kansas City Chiefs In California, stadium funding has often come from redevelopment agencies. 16
Referendum Scorecard Although controversial, stadium referendums have passed a majority of the time. It is interesting to note that even for failed referendums, the stadiums generally still were built, either through legislative action, successor referenda or privately. Passed Failed Astros Cardinals (NFL) Indians Rockets Padres Chiefs/Royals Rangers (MLB) Mariners Lions/Tigers Pirates/Steelers Bengals/Reds Hornets/Bobcats 49ers Twins Broncos Wizards Browns Kings (NBA) Buccaneers Blue Jackets Packers Giants (MLB) Patriots Seahawks Texans Industry Cowboys Titans Heat Oklahoma City Spurs Spurs (2) Mavericks/Stars Coyotes Sprint Center Cardinals (NFL) Rockets Chiefs/Royals 27 11 Failed, then passed Failed, then passed via legislature Failed, not yet passed Failed, then constructed privately 27 Passed 11 Failed 71% Success Rate 17
Public Sector Objectives In return for its investment, the public sector has trended towards certain terms:. Long-term, ironclad lease 25+ years; at least as long as the term of the bonds Specific performance Stadium ownership No risk in terms of cost overruns or operations Of the 11 football stadiums reviewed, only 1 has the public sector taking the risk of cost overruns and only 1 has the public sector paying the year-round operating costs Rent Of the 11 football stadiums reviewed, 5 teams pay rent in excess of $1 million annually Usage Concerts, City events 18
Team Responsibilities Responsible for Cost Overruns Franchise Year Opened Ownership Retain Revenues Operating Expenses Detroit Lions 2002 X X Team Houston Texans 2002 X X Team X New England Patriots 2002 X X X Team X Seattle Seahawks 2002 X X Team Chicago Bears 2003 X X Team X Green Bay Packers 2003 X X Split Philadelphia Eagles 2003 X X Split X Arizona Cardinals 2006 X Public Indianapolis Colts 2008 X X Split Dallas Cowboys 2009 X X Team X Kansas City Chiefs 2010 X X Team Rent (>$1M p.a.) 19
Creditworthy Financing Mechanisms Frequently, bonds for these projects are secured by separate creditworthy entities, to ensure the most cost efficient financing. This is typically the case in California. Franchise Stadium Name Third Party Financing Mechanisms Detroit Lions Ford Field Houston Texans Reliant Stadium New England Patriots Gillette Stadium Seattle Seahawks Qwest Field X Chicago Bears Soldier Field X Green Bay Packers Lambeau Field Philadelphia Eagles Lincoln Financial Field X Arizona Cardinals University of Phoenix Stadium Indianapolis Colts Lucas Oil Stadium X Dallas Cowboys Cowboys Stadium Kansas City Chiefs Arrowhead Stadium 20
Partnering Given the cost of these facilities, public funding has generally been a partnership among multiple public entities. In only one case has a City acted alone. Franchise Stadium Name Funding Entities Detroit Lions Ford Field County, City Houston Texans Reliant Stadium County New England Patriots Gillette Stadium State Seattle Seahawks Qwest Field State, County Chicago Bears Soldier Field State, City Green Bay Packers Lambeau Field State, County Philadelphia Eagles Lincoln Financial Field State, City Arizona Cardinals University of Phoenix Stadium County Indianapolis Colts Lucas Oil Stadium Multi-County Dallas Cowboys Cowboys Stadium City Kansas City Chiefs Arrowhead Stadium County MLB Franchise Stadium Name Funding Entities Florida Marlins Miami Ballpark County, City St. Louis Cardinals Busch Memorial Stadium State, County Philadelphia Phillies Citizens Bank Park State, City NBA/NHL Franchise Arena Name Funding Entities Orlando Magic Amway Center State, County, City Memphis Grizzlies FedExForum State, County, City Pittsburgh Penguins Consol Energy Center State, County 21
Looking Under Rocks Creatively using all assets that a public partner has at its disposal is a hallmark of successful projects. Leasing Dominion Tower for State office space Predators Transfer of operating losses in new lease Property tax waiver allows for tax-exempt PILOT Program Inclusion of Rodeo in the financing plan Leverage City wage tax Development generates significant tax revenues 22
Appendix A Stadium Summary 23
Appendix A Stadium Summary Seating Capacity Franchise Year Opened Seating Capacity # of Suites # of Club Seats Detroit Lions 2002 65,000 125 7,500 Houston Texans 2002 71,504 166 8,200 New England Patriots 2002 68,756 80 6,000 Seattle Seahawks 2002 67,000 82 7,000 Chicago Bears 2003 61,500 133 8,600 Green Bay Packers 2003 72,922 365 6,260 Philadelphia Eagles 2003 67,594 117 9,000 Arizona Cardinals 2006 63,400 88 7,000 Indianapolis Colts 2008 63,000 140 7,100 Dallas Cowboys 2009 80,000 300 15,000 Kansas City Chiefs 2010 77,000 80 10,200 24
Appendix A Stadium Summary Site Information Franchise Year Opened Downtown Site Development Transit Detroit Lions 2002 X X Light Rail Houston Texans 2002 X X Light Rail New England Patriots 2002 X Regional Rail Seattle Seahawks 2002 X Light Rail, Regional Rail Chicago Bears 2003 X Subway Green Bay Packers 2003 Philadelphia Eagles 2003 Subway Arizona Cardinals 2006 X Indianapolis Colts 2008 X Dallas Cowboys 2009 Kansas City Chiefs 2010 25
Appendix A Stadium Summary Funding Franchise Year Opened Project Cost Renovation Public Investment Private Investment Public Investment Percentage Private Investment Percentage Detroit Lions 2002 471.0 125.0 346.0 27% 73% 11 Houston Texans 2002 424.0 309.0 115.0 73% 27% 10 New England Patriots 2002 395.0 70.0 325.0 18% 82% 7 Seattle Seahawks 2002 460.0 300.0 160.0 65% 35% 13 Chicago Bears 2003 632.0 X 432.0 200.0 68% 32% 3 Green Bay Packers 2003 295.0 X 169.1 125.9 57% 43% 70 Philadelphia Eagles 2003 474.0 188.7 285.3 40% 60% 4 Arizona Cardinals 2006 455.0 310.0 145.0 68% 32% 12 Indianapolis Colts 2008 720.0 620.0 100.0 86% 14% 25 Dallas Cowboys 2009 1,200.0 350.0 850.0 29% 71% 5 Kansas City Chiefs 2010 388.0 X 263.0 125.0 68% 32% 32 Market Rank* *Based on television households as measured by Neilsen. Average: 537.6 295.3 229.2 54% 46% 26
Appendix A Stadium Summary Private Funding Franchise Year Opened Private Investment Seat Licenses G-3 Funding Detroit Lions 2002 346.0 X Houston Texans 2002 115.0 X New England Patriots 2002 325.0 X Seattle Seahawks 2002 160.0 X X Chicago Bears 2003 200.0 X X Green Bay Packers 2003 125.9 X X Philadelphia Eagles 2003 285.3 X X Arizona Cardinals 2006 145.0 X Indianapolis Colts 2008 100.0 X Dallas Cowboys 2009 850.0 X X Kansas City Chiefs 2010 125.0 27
Appendix A Stadium Summary Public Funding Sources Franchise Sales Hotel Rental Parking Admission Lottery Restaurant Income Tax Tax Tax Car Tax Tax Tax Revenues Tax Detroit Lions Houston Texans Seattle Seahawks Chicago Bears Green Bay Packers Philadelphia Eagles Arizona Cardinals Indianapolis Colts Dallas Cowboys Kansas City Chiefs 28
Appendix A Stadium Summary Public Financing Third Party Financing Mechanisms Public Entities Involved Franchise Year Opened Public Investment Detroit Lions 2002 125.0 County, City X Houston Texans 2002 309.0 County X New England Patriots 2002 70.0 State Seattle Seahawks 2002 300.0 X State, County X Chicago Bears 2003 432.0 X State, City Green Bay Packers 2003 169.1 State, County X Philadelphia Eagles 2003 188.7 X State, City Arizona Cardinals 2006 310.0 County X Indianapolis Colts 2008 620.0 X Multi-County Dallas Cowboys 2009 350.0 City X Kansas City Chiefs 2010 263.0 County X Referendum 29
Appendix A Stadium Summary Team Responsibilities Responsible for Cost Overruns Franchise Year Opened Ownership Retain Revenues Operating Expenses Detroit Lions 2002 X X Team Houston Texans 2002 X X Team X New England Patriots 2002 X X X Team X Seattle Seahawks 2002 X X Team Chicago Bears 2003 X X Team X Green Bay Packers 2003 X X Split Philadelphia Eagles 2003 X X Split X Arizona Cardinals 2006 X Public Indianapolis Colts 2008 X X Split Dallas Cowboys 2009 X X Team X Kansas City Chiefs 2010 X X Team Rent (>$1M p.a.) 30
Appendix B Evolution Media Capital
Appendix B Evolution Media Capital Sports Venue Advisory & Financing Experience Stadiums (NFL) Client Project Date City of San Diego New stadium 2009-2010 City of Anaheim New stadium 2004-2005 Lease restructuring, renovation, Atlanta Falcons 2002-2007 new stadium NJ Sports and Exposition Authority New stadium 2002-2005 San Francisco 49ers New stadium 2001-2009 Philadelphia Eagles New stadium 2001-2002 Denver Broncos New stadium refinancing 2001-2002 City of Philadelphia New stadium 1998-2000 City of San Francisco New stadium 1996-1997 Hamilton County, OH New stadium (Bengals) 1995-1999 Maryland Stadium Authority New stadium, relocation 1988-1999
Appendix B Evolution Media Capital Sports Venue Advisory & Financing Experience Ballparks (MLB) Client Project Date Boston Red Sox Spring Training ballpark 2008-2009 Baltimore Orioles Spring Training ballpark renovation 2008-2009 Tampa Bay Rays New ballpark 2008 Los Angeles Dodgers Ballpark renovation, financing 2004-2005 MLB Leaguewide credit facility 2003 Florida Marlins New ballpark 2002-2005 Kansas City Royals Ballpark renovation 2002-2005 VA Baseball Stadium Authority New ballpark, relocation 2002-2004 City of Oakland New ballpark 2002-2003 Minnesota Twins New ballpark 2000-2001 City of Philadelphia New ballpark 1998-2000 San Diego Padres New ballpark 1997-2002 New York City New ballparks 1996-1999 Hamilton County, OH New ballpark (Reds) 1995-1999 State of Wisconsin New ballpark 1995-1996 City of Arlington, TX New ballpark (Rangers) 1991-1992 Maryland Stadium Authority New ballpark 1988-1999
Appendix B Evolution Media Capital Sports Venue Advisory & Financing Experience Arenas (NBA/NHL) Client Project Date Columbus Blue Jackets Arena lease restructuring 2008-2009 Phoenix Coyotes Arena lease restructuring 2008 NBA Lease analysis - Magic, Nets 2007-2009 City of Las Vegas New arena 2007-2008 Nashville Predators Arena lease restructuring 2007 New Jersey Devils New arena 2006-2007 NJ Sports and Exposition Authority Renovated arena 2003 Sacramento Kings New arena 2001-2006 City of Louisville New arena 2001-2002 Pittsburgh Penguins New arena 2001-2007 Phoenix Coyotes New arena (Scottsdale) 1999-2000 City of Los Angeles New Arena 1996
Appendix B Evolution Media Capital Mitchell Ziets Mitchell Ziets joined Evolution Media Capital in 2009 and leads the firm s Sports Finance and Advisory practice. Prior to joining EMC, Mr. Ziets founded and served as President and CEO of MZ Sports LLC, a boutique sports advisory firm. Over the past twenty years, Mr. Ziets has advised on over 75 sports facilities and franchise acquisitions. Since founding MZ Sports in 2001, Mr. Ziets has advised on over thirty acquisitions of sports properties, including successful acquisitions of the Nationals, Dodgers, Cavaliers, Mighty Ducks and Supersonics, among others. For Advisory assignments, Mr. Ziets conducts financial and operational due diligence, develops financial projections, provides asset valuations, advises on acquisition deal structure, raises acquisition debt and equity, and leads the league approval process. In addition, Mr. Ziets has a long history advising teams and public entities on new or renovated stadiums. His client roster includes some of the nation s most well known sports facilities including Oriole Park at Camden Yards, M&T Bank Stadium, Dodgers Stadium, Miller Park, Paul Brown Stadium, the Georgia Dome, Lincoln Financial Field, Citizen s Bank Park, Great American Ballpark, Staples Center, Prudential Center and Petco Park. With a background in corporate and municipal finance, Mr. Ziets has structured and executed financing plans which include municipal, team and project debt. Mr. Ziets received an M.S. in Operations Research from the University of California, Berkeley and is a graduate of the Wharton School of the University of Pennsylvania, where he received a Bachelor of Science Degree in Economics. In 2000, Mr. Ziets was selected as one of the Top 40 Under Forty leaders in the Philadelphia region by the Philadelphia Business Journal and as one of the top Forty Under Forty Sports Executives by the Sports Business Journal.