Spurs seek "venue tax" funds for arena upgrades

[ducks]

Spurs seek "venue tax" funds for arena upgrades


Arguing that upgrades to the AT&T Center are necessary to remain compe ive in today's NBA, the San Antonio Spurs want Bexar County taxpayers to reauthorize the "venue tax" that built the arena.
County Judge Nelson Wolff agrees that the four-time champions should get part of the renewed revenue stream — pending voter approval — along with the San Antonio River Improvement Project, amateur sports fields and a new performing arts center.


The venue tax on hotel rooms and car rentals is set to expire when the AT&T Center is paid off, sometime between 2009 and 2012.


The Spurs have a $164 million wish list of projects for the arena — built five years ago for $193.5 million — but team management is working with the Commissioners Court to whittle that amount to between $75 million and $100 million.

The team is responsible for maintenance and upkeep of the arena, according to its contracts with the county. Some people familiar with those contracts say the Spurs should foot the bill for much of what they want the county — and, by extension, taxpayers — to fund.


Team management argues that it is not responsible for upgrades, just maintenance, and that without new sources of revenue, it cannot pay the player salaries that would allow the team to keep winning.

Wolff and other commissioners appear to have found that argument persuasive, saying the county must protect its investment in the building. And their decision reignites the national debate about how far public en ies should go to support private businesses — even those that win major sports championships.

Critics say the contracts already protect the county's investment and what the team wants is simply more bells and whistles.

Economists such as Robert A. Baade of Lake Forest College in Lake Forest, Ill., who has studied public arena funding for 20 years, say spending public dollars to enrich a private business rarely benefits those who pay the tab.

As teams increase revenue by upgrading their arenas, "that ratchets up what other teams must do," Baade said. "Where does it end?"

"It's been discussed all over the country a thousand times," said David Marquez, the county's economic development director, who oversaw the building of the arena and agrees the county ought to fund the upgrades. "We're not going to solve that problem here."

A quality standard


Terms of the Spurs' 25-year lease demand that, in exchange for the revenue the arena generates (minus the 20-odd days of the San Antonio Stock Show & Rodeo), the Spurs must keep the building to a "quality arena standard."
Toward that end, the contract allows the team to tack a $1 surcharge on tickets and parking. Each quarter, $250,000 of surcharge funds must be deposited into a "renewal and replacement" account. The rodeo also contributes $300,000 annually. The fund has a current balance of $2.1 million.

The team is "doing an outstanding job of maintaining the facility," says Derek Howard, executive director of the Community Arenas Board, which oversees the 175-acre property that includes the Freeman Coliseum and the AT&T Center. "And our position is it behooves them to keep that building in tip-top condition."

Howard said CAB members "pressed really hard" to make sure the Spurs would be responsible for keeping the building up to a "quality arena standard" during negotiations in 2000, after the venue tax won voter approval.

The thought, he said, "was 'How do we keep up with the demands of the NBA without having to go back to the community?'"

The surcharge was their answer.

Jim Lunz, who with the late Joe Bradbury represented CAB during negotiations, believes language in the contract encompasses almost everything the team is asking for. The renewal and replacement account should cover most of it, he said, while the team ought to pay for upgrades, such as new restaurants.

"For them to come back to the taxpayer because they've won some championships is ludicrous," he said.

Spurs management says the issue of upgrades was never on the table during negotiations.

"We ran out of time," said Leo Gomez, the Spurs vice president of external affairs and corporate development. "It's something we knew we'd have to address, and now here we are."

CAB member Dan Puckett, who also was on the board at the time of the negotiations, said the contract language is open to interpretation, but he favors giving the team what it wants.

"The Spurs are the best thing to happen to San Antonio," he said. "I think it would be money well-spent."

But the differences between "renewal and replacement," which comes out of the arena's annual operating budget, and "upgrades" are often murky.

For example, in the Spurs' wish list is a $96 million lump sum for "system upgrades and improvements" that includes a line item for repainting the outside of the building.

"I do that every year," said John Sparks, the arena's general manager, adding that it likely won't be included in any final request.

Some differences seem semantic. Recent upgrades to the arena's scoreboard, which AT&T paid for when the building changed names, "could have ended up under R and R, or it could have ended up under maintenance," Sparks said.

What isn't included in either the maintenance budget or the renewal and replacement account, he said, is "the 'wow' stuff, the great thing that we need to have" that will keep the AT&T Center "on par with the top 10 arenas."

That includes the new dining options; enclosing the Sombrilla, the airy open bar area between the arena and the Coliseum; and reconfiguring the lower seating bowl for better sight lines.

Successful strategy


Commissioner Paul Elizondo, who was tasked by Wolff to negotiate with the team, said he's more interested in spending venue tax money to replace the roof than to expand the arena's restaurants.
"South food court expansion, east balcony restaurant," he read from the wish list. "I have yet to be convinced."

He does believe the county must protect its investment in both the building and the team.

"The Spurs have to have enough money to pay (top players) and win. So far that strategy has been successful. We want to keep it that way," Elizondo said.

The upgrades also would benefit the San Antonio LivestockExposition, which runs the rodeo. Already the arena has allowed for the expansion of an event that this year generated $7.6 million for education, up 75 percent since it began using the arena in 2003. Not surprisingly, rodeo officials are all for the upgrades.

That the venue tax is ostensibly paid for with other people's money is a big reason the Spurs, back in 1999, chose the county's plan to build a new arena over the city's plan, which would have stuck local taxpayers with a quarter-cent sales tax increase.

To emphasize the point, officials this time have redubbed the venue tax the "visitor tax," as a reminder that, for the most part, locals won't pay.

But Lake Forest's Baade said the idea of transferring the cost to others is really fiction.

"Every time you travel, you're paying for an arena somewhere," he said. "It's an elaborate s game."http://www.mysanantonio.com/sports/stories/MYSA083007.01A.Spurs_Venue_Tax.34406d3.html

[ShoogarBear]

This is the reality of professional sports in 2007, and I don't criticize the Spurs for doing (perhaps better than anyone) what everyone else is doing. You only have to look at what's going on in Seattle to see what the alternatives could be.

But remember this the next time someone starts spewing the crock about how Peter Holt et al. are "businessman" who should be able to do what they want because of the "free market". Their "business" is only making a profit because it is artificially propped up by huge amounts of tax dollars.

[ObiwanGinobili]

i just don;t understand the concept that arenas/centers are in the NBA 'compe ion'.

Is there some ranking system or beauty pagent for centers/arenas/pavillions??? there is nothing so awfull about the AT&T center that would keep me away at this point. Nothing bad enough about the Alamodome either.

I'm all for upkeep. But I just dont; see what major or urgent renovations could possibly be needed on a building that is barely 4 years old and is reguarly maintianed.

maybe i just have a more simplistic eye towards material things then most people... or apparently, the ever demanding NBA Centers Compe ion judges.....

[ShoogarBear]

They're in "compe ion" in the sense that if Dallas can generate $X in income from their arena rights, then other teams need to be able to generate something in that vicinity so that they have the capital base to pay compe ive salaries. That's the argument, anyway.

This is a s game, because other than the TV money that each team gets, it is (purposely) hard as to tell actually how much teams get in income from ticket sales vs. concessions vs. parking vs. revenue from other events at the stadium, etc. And things like tax-supported upgrades to the stadium don't even appear on their books, of course, so it's "hidden" profit.

[HOEmada]

I wonder what the upgrades might be. I will admit that the American Airlines Center in Dallas is much nicer that the AT&T center. Man i hate saying something in Dallas is better, but it's true. Can we just put a Las Palapas in there?

[MoSpur]

The AT&T Center looks like a huge barn. I don't like the design on the outside. That's just my opinion though.

[Trainwreck2100]

I wonder if they'll jack up the price of admission due to the renovations

[ashbeeigh]

I went to a concert at the American Airlines Center this summer while I was up there ans my goodness, it is very, very, nice. But more of these car rental taxes? Is that the city's only answer to raising money for anything in this city?

[ChumpDumper]

This is the reality of professional sports in 2007, and I don't criticize the Spurs for doing (perhaps better than anyone) what everyone else is doing. You only have to look at what's going on in Seattle to see what the alternatives could be.

But remember this the next time someone starts spewing the crock about how Peter Holt et al. are "businessman" who should be able to do what they want because of the "free market". Their "business" is only making a profit because it is artificially propped up by huge amounts of tax dollars.

Well, they are businessmen, and businesses do this stuff all the time. It is far from a free market argument, but this kind of thing is what a city (or county) has to do to get or keep an NBA franchise.

[METALMiKE]

Just demolish it and build another Downtown.

[objective]

Let them use their Houston trade cash considerations and luxury tax savings on renovations first.

[T Park]

But more of these car rental taxes? Is that the city's only answer to raising money for anything in this city?

Either that or raise taxes somewhere else.

The Spurs tried to do a school bond deal one time where it would've been fantastic for the northside school district and those idiots shot it down.

So oh well.

[Mark in Austin]

Whatever.

The Spurs have turned a profit and increased in franchise value every year they've been in the barn.

The extra costs associated with the rising salary cap are balanced out by the extra income realized by the renewed media deals.

This isn't about being profitable; it's about being more profitable.

If the Spurs want this upgrade they need to sell it better from a fan's point of view as an enhanced game-time experience, not "poor us, we don't make any money." If they try this same poverty line again, I say that and them.

[T Park]

yeah tell the only game in town to off.

Intelligent.

[PM5K]

What greedy s, it's a brand new buidling.

They really know how to take advantage of a city with only one professional sports team...

[T Park]

What greedy s, it's a brand new buidling.

alot of things change in 5 years.

[ChumpDumper]

The car rental tax is really hurting San Antonians, isn't it?

[PM5K]

alot of things change in 5 years.

Not that ing much, they want almost as much as it cost to build the arena in the first place, that's absurd...

[METALMiKE]

I wonder what EXACTLY they are planning to do with that money.

[ShoogarBear]

I wonder what EXACTLY they are planning to do with that money.

There was a web site you that spelled out the details ovf every NBA arena, including things like number of luxury boxes, other amenities, etc.

I guess one answer to your question would be to look at the top luxury arenas like the AAC,Toyota Center, etc. and see what they have that the AT&T does not.

[Kori Ellis]

The AT&T Center was relatively low cost compared to some state of the art arenas. People should expect major upgrades every five years or so as that's normal with most other arenas/stadiums around the league.

I don't see anything wrong with it as long as the specifics are spelled out as to what the upgrades are.

And hopefully during the upgrade, they will put the paper towel holders near the sinks in the restrooms, instead of all the way around the corner like they are now. I understand they forgot to put them in when they originally built it so they added them at the last minute.

[cherylsteele]

Trainwreck...I love your avatar.

[SequSpur]

are you kidding me? 90 something million? Man that. This team is less than 36 months away from the ing lottery. They ain't going to sell out then. They know this and they are trying to capitalize now.

i know dudes that went to games all the time but haven't been in years, not because they aren't fans, because they're smart.

[ChumpDumper]

are you kidding me? 90 something million? Man that. This team is less than 36 months away from the ing lottery. They ain't going to sell out then. They know this and they are trying to capitalize now.

More or less true.

i know dudes that went to games all the time but haven't been in years, not because they aren't fans, because they're smart.

They're waiting for prices to go down?

[SequSpur]

They're waiting for prices to go down?

No dude... the product is still the same. Bonner gets 3 mill, there is a problem.

They are pricing the homeboy out.