Tuesday, February 19, 2013

Orlando City Stadium Cost Breakdown

Following yesterday's news conference announcing Flavio Augusto da Silva as a new major owner in Orlando City Soccer Club, the bulk of the questions from the press focused on the team's stadium effort. Seen as the lone sticking point from bring Major League Soccer to Central Florida, team officials were quick to dish out numbers about costs and team contributions. So where do those numbers stack up with recent stadium deals and what are the REAL impacts to the tax payers of Florida?

First the numbers. There are several key numbers to focus on when it comes to the Major League Soccer effort they are the stadium cost and the franchise fee.

The Stadium: As reported previously, will be around 19,000 seats with 25 suites and 1,000 club seats included in that total. The cost of the stadium alone has been pegged at $96.5M, slightly more than the $85M spent to build Houston's 24,000 seat BBVA Compass Stadium which can likely be attributed to additional luxury add-ons and potential structural costs from being in a hurricane prone area. For our purposes let's call the stadium cost at $95M which then needs to include land costs of $10M which would get us to the $105M total quoted at the press conference yesterday.


The Franchise Fee: Major League Soccer charges a "franchise fee" for the right to operate a new team in the league; this is the case with pretty much any new team added to any professional sports league in America. Based on the statements from team officials yesterday, they are estimating the franchise fee for Orlando will be in the $40M-$50M range. While roughly half of the $100M franchise fee MLS is seeking for a second team in New York City, that fee estimate is well in line with the most recent expansion team in Montreal who paid $40M to enter the league.

Total to Bring MLS to Orlando: $145M-$155M

Team President Phil Rawlins made a pretty bold statement during the press conference, considering the history of stadium deals in Orlando and in Florida. He stated that the club's contribution to bringing MLS to Central Florida would be in excess of half of the total cost. So does that check out? Well half of $150M would be $75M and officials were on record saying their total contribution would be at least $30M for the stadium and $50 for the franchise for a total of $80M. By the numbers it looks like that statement holds water.

What's the breakdown of the stadium cost? Right now the $105M price tag is broken down below:
$30M - Cash from Orlando City Soccer Club
$20M - Land/Cash from City of Orlando
$25M - Cash from Hotel Taxes from Orange County
$30M - Sales Tax Rebate from State of Florida

Where does that rank in Florida stadium deals? Well the Orlando Magic chipped in just $50M towards the $480M Amway Center, or roughly 10% of the total bill. And maybe worst, the Miami Marlins paid nothing out of pocket (but through loans from Miami-Dade County) to build the $634M Marlins Park that opened last year.

Keep in mind that the City of Orlando and Orange County are sharing a $175M bill to renovate the Florida Citrus Bowl which has no professional sports tenant.

Team officials stated that they would use the new stadium for roughly 30-40 soccer matches per year. Broken down that would like mean 19-20 MLS regular season matches, 3-5 pre-season matches, 2-3 friendlies, 2-3 international friendlies, and potentially 2-3 playoff matches. The rest of the time the stadium could be used for concerts, high school football, high school soccer, college soccer, etc.

Is this a bad deal for the tax payers of Central Florida? Not in my book, but I write for a soccer blog so you can only guess which way I am leaning. The land from the City of Orlando could be sold to private development and that money used for schools or other public benefits, no argument there. But the City currently owns hundreds of vacant lots, more so since the housing bust, that sit idle and offer no benefit. A piece of land valued at $10M is only good if someone is using it, the stadium does offer an avenue for potential property tax and additional revenue from visitors. The hotel tax being chipped in by Orange County must be used to promote tourism; that's why the money has gone towards the Orange County Convention Center and Citrus Bowl Renovation before. The hotel tax can't be used to build schools or police stations, pure and simple. The sales tax rebate from the state would be up to $1M per year over 30 years. Yes sales tax goes towards funding schools and other public facilities, but this sales tax rebate is in line with what the other 9 professional sports franchises already receive from the state.

Stadium funding is a dirty business, but the deal propose by the team, City, County, and State may be the most positive in Florida in recent memory.


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