Gwinnett Braves Stadium Costs Up 50%Aug 31st, 2008 | By Gwinnettian Editor | Category: All Posts, Gwinnett
This Tuesday, September 2, 2008, Gwinnett commissioners will consider giving the stadium project an additional $19 million, which would come out of the county’s reserve fund. These are Gwinnett taxpayer funds. This time discussion and debate will be open to the public.
Board of Commissioners meeting
10 a.m. work session, 2 p.m. business session Tuesday
Gwinnett Justice and Administration Center, 75 Langley Drive, Lawrenceville
By Camie Young
Gwinnett Daily Post
Saturday, August 30, 2008
DULUTH - Gwinnett’s minor league baseball stadium’s budget is $19 million more than anticipated. Officials are asking commissioners to dip into the county’s reserve fund for the extra cash.
The $59 million construction budget, which was determined after bids came in during the last week, included improvements to the stadium’s facade, a 36,000-square-footage increase and upgrades to save water and reduce future maintenance costs, said Gwinnett Convention and Visitors Bureau board chairman Richard Tucker.
He said the extra money is needed to produce a “first-class facility” under time constraints to begin the Triple-A Gwinnett Braves season in April.
“This happens every day in the real estate business,” said Tucker, a developer. “You adjust to it and you do it. In this case, they are public funds, so we are even more careful.”
Earlier this year, commissioners put up $7 million for construction of the stadium, as well as $5 million for the land on Buford Drive, south of the Mall of Georgia near Rock Springs Road, where construction has already begun. The remainder of the $40 million construction funding has come from a $33 million bond package to be paid back with rent from the Braves, a $1-per-ticket fee, parking fees, a rental car tax and naming rights.
Commissioner Bert Nasuti, a member of the visitors bureau who introduced the stadium idea, said the project remains a good investment for the county, as it is expected to bring in between $5 million and $20 million in economic development each year.
“In the long-term, it’s going to bring more money to Gwinnett County than it’s ever going to cost,” he said.
The government is facing tough financial times, implementing a hiring freeze except for public safety officers and asking police and firefighters to be careful about using gasoline. But Nasuti said the reserve fund is created for these kind of investments.
From the reserves, the county chipped in $25 million for the $90 million Arena at Gwinnett Center project more than five years ago.
“When you stop all economic development projects when there is a downturn, you’re going to punish yourself over the long term,” he said. “If you don’t do certain things now, in 10 years, you’ll have to do things that are much more expensive.”
By MICHAEL PEARSON
The Atlanta Journal-Constitution
Friday, August 29, 2008
Gwinnett Countyâ€™s new baseball stadium will cost nearly 50 percent more than originally planned, officials revealed Friday.
The 10,000-seat stadium for the top minor league franchise of the Atlanta Braves will now cost $59 million. County officials initially projected the stadium would cost $40 million.
â€œWhile it appears somewhat shocking I guess how big the increase is, it is not shocking to us,â€ said Richard Tucker, chairman of the Gwinnett Convention and Visitors Bureau board. The tourism agency is spearheading the project for the county.
The Gwinnett County Commission will vote Tuesday on spending $19 million from the countyâ€™s reserve fund to pay for the increased costs. The county has already spent $12 million from its recreation fund to pay for the project.
More than a third of the increased cost comes from upgrades from the original plans that include an addition to the concourse to make it completely circle the stadium, a canopy over parts of the stadium and upgraded finishes.
Another third results from additional site work to put stormwater detention underground, build beefier retaining walls necessary to maximize use of the site, increased sewer costs and unexpected rock removal costs, Tucker said.
The increase also includes $1.5 million to make the stadium more environmentally friendly, in part by using partially treated wastewater to irrigate the field and flush toilets.
The rest of the increase, about $3.2 million, results from increased material costs and management fees.
Commissioner Bert Nasuti, said the changes will be looked back on in coming years as wise investments for a project he said will generate much more revenue for the county than it will cost taxpayers.
â€œWeâ€™ve got only one opportunity to build it right,â€ he said.
By: J.C. Bradbury
Now that the initial shock of the move of the Triple-A Braves from Richmond to Gwinnett County has worn off, Iâ€™d like to take a look at the stadium deal. The AJC has run several articles on the subject, and the articles contain most of the details of the Bravesâ€™s lease with the city. Here are the details that I know.
â€¢ It is a 30-year lease (2009â€“2038) with the opportunity for termination by the Braves after the 2023 season (15 years); however, the conditions for termination look to be quite stringent.
â€¢ Gwinnett is responsible for design and construction of the stadium and parking facilities, as well as covering major capital repairs to the stadium and non-preventive maintenance (e.g., HVAC, scoreboard, seats, walls, floors). To ensure that the improvements will happen, Gwinnett must maintain a capital maintenance fund with a minimum balance of $500,000.
â€¢ The Braves are responsible for operation costs not associated with capital maintenance and repairs.
â€¢ The Braves retain all revenues from the operation of the facility during Braves events. This includes revenue from tickets, concessions, luxury suites, club seats, sponsorship, advertising, and broadcasting.
â€¢ The Braves have exclusive rights to the stadium, except for 10 non-Braves events hosted by Gwinnett. The Braves are entitled to concessions revenue from these events.
â€¢ Gwinnett is responsible for selling the naming rights. The Braves are entitled to $350,000 share of this revenue annually.
â€¢ The Braves will operate parking services and set parking fees. Revenues will be split 50-50 with Gwinnett.
â€¢ The Braves will pay rent of $250,000 per year for the first five years. After this time the rent will increase according to the growth of the Consumer Price Index. In addition, the Braves will pay Gwinnett a ticket fee of $1 per ticket sold, with a minimum guarantee of $400,000 remitted to Gwinnett.
After reviewing the agreement, I see why the Braves were so eager to sign this deal, and why Gwinnett officials negotiated this deal in private and approved it quickly. Gwinnett County administrator Jock Connell anticipates the total expenditure for the stadium to be $45 million. $12 million will come from tax dollars earmarked towards recreation, and the remaining $33 million will be borrowed with revenue from the stadium paying off the debt. From the information I have seen, I donâ€™t think this is likely.
Gwinnett is guaranteed four sources of revenue: rent, naming rights, parking, and non-Braves events. Letâ€™s look at what these sources will bring in.
â€¢ Gwinnett is guaranteed a minimum of $650,000 a year in rent: $250,000 (rent) +$400,000 (ticket fee minimum). While it is possible for the county to earn more from the ticket fee, I think it is unlikely. In 2006, the Richmond Braves total home attendance was 321,696 and averaged 4,730 per game.
The current ballpark design is for 5,500 seats, 1,500 in grass seating, 300 club seats, and 16 suites. In order to earn more than $400,000 from the ticket fee, the team would have to average over 5,700 fans a game (assuming 70 home games). That is not going to happen.
[Update: This stadium design refers to an older design considered by Gwinnett for hosting an independent league team. To be a Triple-A facility, it most hold a minimum 10,000 fans. However, I still do not think the team will average more than 5,700 fans.]
â€¢ Gwinnett retains all naming rights sales beyond $350,000, which it must pay to the Braves. How much will the naming rights generate? Letâ€™s look for a comparable deal. Lackawanna County Stadiumâ€”home of the Scranton/Wilkes-Barre Yankeesâ€”sold its rights to be called PNC Field for the price of $365,000 annually (a three-year deal) just last year . While I donâ€™t doubt that a new stadium in Gwinnett can garner a higher price, I donâ€™t think it will be that much higher. Iâ€™ll be generous and assume that they can sell the rights for $450,0000 per year. Thus, the county gets $100,000 ($450,000 â€” $350,000)
â€¢ Gwinnett receives 50% of the parking. Richmond charges $3 for parking. If we assume that the Braves sell out all 2,300 parking spaces for 70 games, this translates to $483,000 in revenue. Gwinnett would receive $241,500 of this.
â€¢ As for revenue from the 10 non-Braves events, I wonâ€™t even try to guess. But the fact that the Braves retain all of the concession revenues doesnâ€™t help.
So, letâ€™s add up what we have. We anticipate an annual income stream of $991,500â€”Iâ€™ll make in an even million. Will the non-concession revenue from the 10 non-Braves events be enough to cover the debt payments and capital maintenance over the life of the stadium? The stadium will be financed through local bonds, which is complicated. But letâ€™s just make this simple by pretending this is a regular 30-year mortgage for $33 million, and we will give the county a 3% interest rate. This results in annual payments of $1.67 million, which means that Gwinnett needs to bring in $670,000 per year on the 10 non-Braves events in order to cover its loan payments. If each of these events brings in 7,000 people (approaching stadium capacity), then the county must bring in about $10 per person in profits (revenue minus operating costs) at these events. I think that this is unlikely.
[Update: I have just received a copy of the feasibility study of bringing a minor league team to Gwinnett, which was released in summer 2007. The plan calls for borrowing for 25 years at a 5.5% interest rate. Keeping the term of the loan to 30 years and re-running the numbers with the higher interest rate, the annual dept payments rise to $2.25 million.—requiring nearly $18 per person in profit to cover the remaining debt with 10 events of 7,000 people.]
I want to caution that this is a first pass at these numbers, and I have had to make several simplifying assumptions. However, I have tried to be optimistic about revenue projections that favor Gwinnett. I am willing to update my estimates as new information comes to light.
I find it disturbing that Gwinnett officials pushed this through so quickly and without public debate. If the Braves sell 5,000 tickets a game for and average of $10, the team will bring in $3.5 million year just off of tickets. With naming rights ($350,000) and all of the other rights (concessions, advertising, etc.) adding in, this is a good deal for the Braves.
I think it is a shame that this was rushed through in secret. It is possible that Gwinnett County residents donâ€™t mind an increased tax burden if it means they get the Braves. It could mean only a few dollars more in taxes a year for the next 30 years. But, I think everyone would be happier if we could have had the opportunity to agree on this with some advance notice.