Devilish Details
The arena financing plan is plagued by “guarantees” that aren’t guaranteed anymore.
By John Branston
“The devil is in the details,” Mayor Willie Herenton told the New Memphis Arena Public Building Authority last week. Herenton was talking about the defunct proposal to have the Memphis Grizzlies become the “at-risk” developer of the $250 million arena in case it becomes, say, a $300 million arena.
“As many of us observed,” he said, “the devil is in the details, and the details just were not right.”
Herenton didn’t say what was wrong with the details, but a year after the fateful meeting that brought the Vancouver Grizzlies to Memphis, it’s increasingly clear that some assumptions about the most expensive public building in the history of Memphis and Shelby County are questionable.
The private business guarantee to buy up to 5,000 season tickets each year for 15 years to keep the team from moving after it has been in Memphis 10 years is defunct. Apparently no company wanted that sort of vague liability on its books. The “guarantee” was supposed to give the general public and elected officials extra assurance that Memphis wouldn’t be stuck with another arena and no NBA team. Critical votes in favor of the arena were made based on a guarantee that no longer exists.
Details are still lacking about other parts of the deal.
The FedEx naming rights were supposedly worth $100 million, with all of that going to the Grizzlies, not the arena. But that number was based on a FedEx marketing proposal that has not been acceptable to the NBA. The actual amount and terms of the sponsorship are unknown. If it is less than $100 million, the Grizzlies will have to look for other sources of revenue.
Here’s a list of arena funding sources, assumptions made last spring, and the best numbers available today. (The number is the amount of debt financed by each source.)
* A total of $20 million in private-backed bonds. The assumption was that private individuals would agree to back those bonds if other sources of revenue were inadequate. The commitments haven’t been made yet and the potential backers have not been identified.
* A total of $20 million in state aid. This money has not been appropriated.
* A total of $16 million from a $1 ticket surcharge, based on a projection of 1,093,710 tickets annually, including 646,000 for basketball, 233,000 for concerts, and 213,000 for family shows and other events. According to Pyramid general manager Alan Freeman, turnstile attendance for the Grizzlies has averaged 12,230 through 29 games, with 16 games to go, or 550,000 total. Concerts drew 192,000 people last year, and family shows and other events 180,000, for a total of 922,000.
The shortfall could be made up by better attendance in a new building or raising the surcharge to $1.15. Also, the Grizzlies count tickets sold and distributed whether or not they are used. Only they know how much ticket revenue they actually get.
* Another $70 million from NBA sales tax rebate from tickets, concessions, and parking, based on 14,900 average attendance. Financial consultant Marlin Mosby says tickets are by far the biggest component. With long-term guarantees off the table, the best indicator of fan interest is butts in seats. The new arena will have to attract an additional 2,670 fans per game over what The Pyramid does.
* A total of $35 million in downtown Tourism Development Zone (TDZ) taxes and county hotel/motel taxes, based on a projection of $250 million in annual sales. Another $10 million comes from city hotel/motel taxes. Shelby County Trustee Bob Patterson says hotel/motel tax collections this fiscal year are running close to the previous two years, despite the recession and the terror attacks. But exactly what will be in the TDZ in the future — AutoZone Park, for instance, is excluded because its revenues are pledged elsewhere — isn’t clear.
* A total of $25 million from car-rental surcharges, based on $77.5 million in annual revenue. The Shelby County clerk has only been collecting this since last September. With $509,021 in taxes collected during the last four months of 2001, this one is right on target.
* A total of $30 million from an MLGW payment in lieu of taxes from the water department. Ironically, Enron aside, one of the most solid sources of revenue is this diversion of revenues from a public utility to a sports arena.
* The city and county are in for $12 million each. But their obligations could increase if other revenue sources fail. They just can’t use property taxes.
So will the arena get built? Most likely, yes, because it’s a $250 million rainmaker, but the financing details will have to come out before the bonds can be issued. And one new source of arena funding could still be tapped — the team and its owners. A year ago, the “pursuit team” brought Grizzlies owner Michael Heisley to Memphis. Now they may have to help pay for the new home.
Weighty Subject
The new offensive line recruits at the U of M are a hefty bunch.
By Chris Przybyszewski
Rick Mallory, the offensive line coach for the University of Memphis Tigers, has only been in town for a couple of years. But he already has tales to tell. “I’ll tell you a story about [sophomore offensive lineman] Andrew Handy,” he says. “When we brought him up on a trip, we went to Chili’s. Andrew was wearing a windbreaker, and he had a sleeveless T-shirt on. It was warm in there and he took the windbreaker off. When he did, the whole place got quiet for a minute.”
Apparently Handy’s physique proved more impressive than the onlookers’ baby-back ribs. But Mallory isn’t bragging (much). He’s making a point that the future of the offensive line at the U of M will be big. Very big. And big is good on the offensive line. But Mallory says that he and head coach Tommy West wanted more than just size. “We look for guys who can run and hit,” Mallory says. “We’re not interested in walling off the ball, which is what a lot of people do. We want guys to get on people and stay on people.”
Mallory and the rest of the coaching staff focused on recruiting for the offensive line. The emphasis was necessary, even though the Tigers have a core of veteran offensive linemen coming back next season. But, according to Mallory, there is no depth.
“When I first got here our numbers were out of whack,” Mallory says. “I had never been in a place with such a low number of offensive linemen. That didn’t bode well for balance and our future. So we had to get these numbers right and make a real emphasis to get offensive and defensive linemen. The guys who signed this year will have to play in two years.”
Sophomores playing the offensive line is something of a rarity in Division I ball since so many recruits need at least two years’ practice and weight training before taking the field. But this year’s offensive line recruiting class is probably one of the most talented the school has had.
Leading that group is 6’7″, 260-pound Willie Henderson, a standout on defense for Ridgeway High School. Henderson, who was ranked in the top 25 for his position in the country by ESPN.com, says that he is ready to switch to O line if the Tigers need him there. Mallory says that whether or not the switch happens depends on Henderson’s ability to play the position. “I can’t tell you if he’s going to be a D-end, a D-tackle, or an offensive tackle,” Mallory says. “But if he’s smart, if he wants to make some money [in the NFL], he’ll play offensive tackle.”
In a couple of weeks, the six new offensive line recruits will hit the spring training field and Mallory and West will have their work cut out for them. “This is what I like about Tommy, he’s fundamentally orientated,” Mallory says. “He’s not scheme orientated. Our philosophy is to just get very good at what we do, which means you don’t need to do much as far as schematics are concerned. What it does mean is that you have to coach your butt off to get them prepared.”
And, according to Mallory, the curve is steep. Last year’s offensive line traveled light-years in terms of ability and on-field performance. The new recruits not only have to match that curve, they must also keep up with the squad’s improvement this year. “I finally feel like we will play like I think we should be playing and not the way we played in the past,” Mallory says. “As last year wore on, we neared my expectation level. We haven’t hit it yet and the players know that. But what we put on the field next year will be a hyperaggressive line.”
The Score
NOTABLE:
Despite missing several games due to injury, Grizzlies guard Jason Williams ranks sixth in the league in total steals with 80 over 42 games. Williams also remains in the top 10 in the assists-per-game category with 7.6.
Rookie forward Pau Gasol is ranked sixth in the league in field-goal percentage, hitting 52 percent of his attempts. Gasol also ranks ninth in the league in blocks per game (2.3) and 16th in in rebounds with 8.9 per game.
Toe woes, which have sent Williams and forward Stromile Swift to the bench, aren’t just a Grizzlies problem. L.A. Lakers center Shaquille O’Neal has been limited by his own legit digit problems and the Philadelphia 76ers’ Allen Iverson has sat out two games with a phalange strain.
Why the Washington Wizards like Michael Jordan:Last season’s per-game ticket gross at Washington’s MCI Center was $400,000. This season, it’s $850,000. That translates to a $20 million increase in ticket revenue for the 2001-2002 season.
Here’s a list of offensive line recruits for the U of M Tigers for 2002 (see article, right): Blake Butler (6’3″, 270 lbs); David Davis (6’4″, 285 lbs); Willie Henderson (6’7″, 260 lbs), Bruce McCaleb (6’2″, 260 lbs); Phillip Walls (6’1″, 275 lbs.); LaVale Washington (6’1″, 255 lbs).
QUOTABLE:
“The whole deal is a house of cards.” — Attorney Duncan Ragsdale on the NBA arena agreement. Ragsdale filed a complaint this week seeking a temporary restraining order against the city’s and county’s approval of financing bonds for the deal. *