Sometimes it’s hard to tell who should be going for the ball. Like in doubles tennis or baseball, say, or even quasi-governmental organizations.
The Memphis & Shelby County Sports Authority recently turned its sports-event recruiting duties over to the Memphis Convention and Visitors Bureau (CVB).
“It didn’t make a lot of sense to have taxpayers funding two organizations to do the same thing,” Sports Authority chairman Willie Gregory told the City Council’s operation and management budget committee last week.
The CVB plans to add a special sports staffer in June and has recently created the Sports Foundation, to be headed by former Redbirds president and general manager Allie Prescott. The Sports Foundation will be able to solicit funds from private companies and thus help recruit more sporting events to the city.
“You have to have money behind the efforts to go after sporting events, but the economic impact and the return to the city make it well worth the costs,” said John Oros, executive vice president and COO of the CVB.
And the group that won the bid to bring Spring Fling — Tennessee’s high school sports championship festival — to Memphis in 2003, 2004, and 2005 just simply doesn’t have the funds.
The last thing most people want to hear is that the Sports Authority, the entity that issued the bonds to build FedExForum, is broke.
To cover windstorm costs and a shortfall in revenue streams for the project, the authority made a deal last August that netted a $5 million payment from Goldman Sachs. The deal also gave $1 million over five years to the Sports Authority, mostly for operating costs.
Lisa Daniel, senior managing consultant with Public Financial Management (PFM), told committee members that the Sports Authority should have the funds to cover May’s $5.2 million debt service payment.
Revenue from the county car- rental tax, as well as revenue from sales tax on admission to NBA games, arena food and drink, and NBA-authorized franchise goods are pledged to both senior and subordinate bonds. The revenue first satisfies senior bond service; excess goes to the subordinate bonds.
As of November 1, 2004 — before a single regular-season Grizzlies game was played in the Forum — the receipt for arena-related sales tax was $5.57 million. The bond structure assumed that arena-related sales would generate $7.86 million. Luckily, the car-rental tax exceeded expectations by $2 million and covered the shortfall.
PFM projected that after the May 2005 senior debt service payment, approximately $178,000 would be left over.
I know a W’s a W, but to me, less than a quarter of a mil is a bit of a squeaker.
“We expect some [money] left over,” said Daniel. “PFM’s recommendation, since revenue has been volatile in the past three years, is to retain any surplus as a debt service cushion, so you won’t have to come back to the city and the county and ask for more money.”
One way or another, the residents of Shelby County are going to pay for the FedExForum. Let’s hope we can do it with our game-time popcorn and sodas.
