Generic Page 3
Appendices of Generic Pages
"absorbing information on the values at stake"
"communication as the ultimate exercise of power"
11. INCREASE TOP AND BOTTOM LINES:
12. This model is applicable to any major stadium/arena project: professional football, professional baseball, professional basketball, professional hockey, etc., as well as for major universities.
13. Although the model applies to all, most examples are from professional football and baseball.
14. The multi-use Combining Sports, Entertainment, Communications--Real estate-Investment-Public Space model outlines how to raise $800 million to $1Billion in non-debt investment, therefore incurring no debt service. The model also includes a modest amount of public funding for infrastructure (site preparation, streets, sewers, hookup, etc.), normal to any large-scale development. The eight categories are:
- The prime owner (maybe) would put up an amount up to $50 million (but might not have to)
- $25-50 million* by the public for infrastructure (i.e., state costs: land and site prep, streets and sewers, etc.)
- $100-200 million** by bonds backed by ticket and parking revenues
- $350-450 million*** by investors (the Dreamworks model raised $2 billion).
- $25-75 million **** by a one cent or less tax for a set period in return for profit cut
- $150 million***** from lease bonds backed by state income tax on players salaries
- $25-50 million plus****** from "anchors" and others in the non-stadium part of the complex
- $25-50 million or more*******, from interest of monies waiting to be spent
15. 9. $800 million to 1 Billion - total potential for the construction of the stadium complex
- * Amount to be determined by design estimates of total involved
- ** Amount to be determined by final costs number of the stadium complex
- *** Could also be tailored to include public investment participation to share the wealth
- with others (fans, community), in order to take the sting off the notion that teams are
- wealthy and therefore unfair recipients of the money earned.
- (note: the model could cover even infrastructure costs, if it came to that)
- **** Amount depends on the jurisdiction and the negotiated profit sharing amount. This
- amount may not be part of the mix as sentiments shift from tax maximizing to tax cutting
- ***** This allows the state to set aside a specific portion of its general fund in the form of the
- money from ball players income taxes and uses it to make payments on the money borrowed
- to apply toward building the stadium
- ****** Amount to be determined by extent of development and final negotiations with anchors
- NOTE they will finance the construction of their part of the complex
- ******* Amount depends on formulas used for receipt and expensing of items 1-7
16. Re 8: not the final number: more have been presented to www.vikingsstadium.com More will be requested from fans once this process is implemented.
17. Estimated Revenues of this model: as this model will demonstrate, the complex could
generate over $200 million/year, to start.
18. Overall Goals
- To help the owner(s), the players, the legislators, the tax payers, and the fans, build a multi-use, multi-revenue generating stadium complex that is profitable and fan friendly, all year, year after year, with no or minimal tax dollars.
- Increase revenues, reduce debt, and increase profits.
- Integrate the team and new stadium into the vital social fabric of the city/state/region, providing a "common ground" fan experience of enchantment around his or her water cooler, coffee pot, black board, TV, and/or six pack (conversations at work, home, school, and play, for men, women, and children of all ethnic and racial groups), in order to enchant, enthrall and excite the fans in their "iron cages of modernity" year round
- Recognize and take advantage of the transition of pro sports teams from a sports industry into a juggernaut sports-entertainment-communications-real estate public spaces industry
- Create tangible and intangible benefits for the city/state/region
- Attain and benefit for the community and state to the tune of $1 billion in direct dollars generated by having a professional football team.
- Attain and benefit for the community and state the $1 billion in indirect dollars generated by having a professional football team.
- Involve external Minority Business Enterprises while providing internal minority issues management
- Reduce player problems and increase retention of best players over their career by increasing both profits and payroll without increasing costs, by implementing the 12 part player compensation program, changing from a management/employee model to a team of senior executives model.
- To stay ahead of the fan/tax payer curve: refusal to pay with tax dollars as they are no longer needed to underwrite professional sports (just as with the Internet, today, which was sub sized for 25 years), and to do so with the players union. Taxpayer revolt is costing Canada its teams (and maybe Floridas soon too, as its fans applauded their legislatures early May 2001 for refusing to consider a stadium funding bill for the Marlins of MLB. The new winners will maximize profits without new taxes.
- To establish that a fan base exists: compare Floridas MLB Marlins (15,000 average attendance in 36,000 seat stadium) and Devil Rays (16,000 average in 43,000 capacity) with Minnesotas sell outs of MLB Twins and NFL Vikings.
- Emphasize winning as giving ones best and providing the best ever effort each week, defining "winner" as a participant who gives his all, so that win-loss numbers refer to games and not to teams or fans, in order to prevent a negative soap opera mentality (the only thing is winning and rejecting any who dont) from taking over the game, and fostering a positive soap opera mentality (where the fans are eager to follow the positive lives and activities of the players).
19. Developing a Profitable Sports-Entertainment Model, Combining Sports, Entertainment, Communications--Real estate,-Investment-Public Spaces Venue
20. This model positively exploits for the owner all aspects of the transition of professional teams from being part of just the sports industry to being part of the Sports-Entertainment-Tourism-Communications-High Tech-Real Estate-Public Spaces industry, a unique industry that is only now being understood and only now beginning to be exploited in all senses of maximizing profits for both the near and long haul. The famous example is railroads, who thought they were in the train business, not recognizing they were in the transportation business, missing out on ships, trucks, and planes.
21. The most dramatic recent understanding of this is AOLs purchase of Time Warner, an understanding missed by amazon.com and most of the rest of the dot.com world.
22. Professional sports has become a major part of four major, emerging and enormous growth industries (as reported by The Hoffman Development Group, September 1999): $ 625 Billion in discovery learning/edutainment (source: Lehman Bros. 1997) 1.000 Trillion high-tech business solutions (source: IBM) 120 Billion space exploration spin-off business (source: KMPG Peat Marwick, 1997) 1.500 Trillion in tourism (by the year 2010; source: US Department of Commerce) $3.245 Trillion Total
23. The Stadium Complex would be (1) a destination and a gathering place for fans, visitors, tourists, consumers, and sports/entertainment/real estate/business people, as well as (2) a business, real estate and communications hub; these two together will generate profits in the near term and long term, year around; and (3) a place that would also involve the non-profit community of schools, community centers, and the faith community,
24. In a nation of overweight couch potatoes living in what the classical sociologist Max Weber called the "iron cage of modernity" (the routinized bureaucratization of every day life), sports provides a way to re-enchant life, even if just in fantasy, while at the same time giving all members of our society and culture a common topic on which to talk. No other exists.
25. Sports re-enchant Modernity. Thus, even if it wanted to be "pure" sports cannot, for it is entertainment and escapist fare also. And it provides couch potatoes physical feats to fantasize about in terms of their being able to do it too, "if ."
26. To maximize profits, professional sports needs to recognize its real estate aspect, and include mixed-use commercial and residential development (with the financing provided by the tenants and anchors) on the outer edge of their properties. Rather than build just a stadium, other facilities can be built-in, whether above ground or below ground, to generate activity and profits year round. The game provides sports and entertainment. Music is used and could therefore also be made and recorded in recording facilities. With so much parking, other use facilities could be built, such as multi-plex movie theaters and large event hosting. The same is true of public spaces. Then, given the huge amounts of money in salaries, the opportunity for profit investment vehicles is huge, which, when established and managed, would allow for a wide range of compensation parts, including signing bonuses, deferred payments, set aside funds to meet contract incentives, and to provide players with exposure to strategies for positive player retirement: profit pool investments as well as retirement hedge funds. In order to maximize these parts, the facilities would also be used to provide and generate communications, including using an Internet web portal, providing television and radio broadcasts, as well as generating print publications.
27. FOR ANY OWNER with other sports franchises, this model will work for any of their franchises, be the other franchises in baseball, basketball, hockey, etc., as well as being of value for the college, especially the college from which any owner is an alumni also seeking their college or university to build or expand their stadium.
28. The benefits of this model are legion. The bottom line of this model is profits.
29. The proposed construction financing and on-going stadium revenue model will drive over all debt below 20% if aggressively pursued and creatively structured.
30. One of the more famous investment models is that of Dreamworks, SKG, which raised $2 billion in financing without debt, even thought the investors knew 65% of profits would go to the founders, not the investors. Dreamworks could do that because investors wanted to be in the movie business. So too do investors want to be part of a professional sports franchise. The Dreamworks Model will not fit all industries (although many dot.coms thought it did: the difference is that the dot.coms didnt have product people were clamoring for nor did they have a product which inspired bidding wars by television networks nor a product anyone wanted to watch on TV).
31. To remove the aura of supporting "billionaire owners and millionaire players," several investment vehicles for the public can also be created to give more a sense of the team being theirs, reducing the resentment factor.
32. This is a "Big Picture" Vision. It takes elements of various traditional financing plans and combines them into a new financing configuration for a multiple use sports-entertainment property. It takes the best of other models and creates out of them a more comprehensive model, including not only minimal public financing (for the usual development infrastructure), but a public partnership, with the new stadium owned and operated by the team but with the potential of including one or more of several options, including a publicly traded entity for public stock ownership (non-voting), a private placement for deep pocket investors, an IPO for the web site portal, a public partnership, a profit sharing to pay back bonds levied, all without increases in taxes, etc., still leaving everything under the control of the team.
33. This model also saves enormous amount of time, and, thus dollars, because it does not require the lobbying and cajoling and several legislative sessions over several years to get to a vote. This model creates a real partnership between the team and the state/city/region and the people. In this way, legislative decisions will be based on what works for both the team and the city/state/region, as it will now be to best interest of all of these jurisdictions, as they, as partners, get a cut.
34. And, this can also be considered a fall back position. The savings in time (and dollars to go with it) favor a streets, sewers, and "normal" expenses ONLY by the jurisdictions! AND if a contest is held with fans to suggest new ways to finance the stadium, workable ideas will be found and ways of generating those funds will be graduated.
35. The dollar safety net this model provides is real, even though it not needed, as overall revenues from the complex could generate over $200 million/year.
36. The value added to the team as a result of this model will return to the owner a handsome ROI if and when the team is sold.
37. There are currently 2 million minority-owned firms generating more than $205 billion annually, who represent a non-white demographic that will become over 50% of the population by 2060, which will have a collective spending of $3 trillion in disposable income over the next 45 years. Therefore, it makes good business sense to involve a wide range of business groups, including Minority Business Enterprises, both for their expertise and for their extension of the fan base.
38. The "market" is worldwide. 125 million people in the world live in a country in which they were not born. 20% of those live in the U.S. The U.S. is the lead nation of the world. People the world over follow Americas teams. The teams communication and focus on its markets must be global in its view while still being able to deal with the particulars and parts of the globe, whether out side its state or within. This is why our proposal emphasizes the necessary capability to deal with Minority Business Enterprises as well as Minority Issues Management, be they team, management, city, state, or world.
39. The model creates a large, profitable "common ground," which is essential in an industry whose primary focus is to win a Championship with only a 1/32 chance for doing so. By following this larger model and vision, teams can facilitate the enjoyment of the product, football or baseball, its source, the NFL or MLB, and its local embodiment, their team, so that the enjoyment of the game becomes paramount and winning a Super Bowl or World Series secondary, the latter never allowed to destroy the fans enjoyment of the game. The model also provides a "common ground" for all of the various stakeholders. 14 empirically tested models for conflict resolution are presented, to show what has been proven to work and has been proven to not work. They will help those who need to come together to resolve this to do so, meaning those from the business, community, political, legislative, and fan communities. When one realizes that these methods helped put Germany back together after the war, end apartheid in South Africa, break up the USSR, and restore order in Mozambique (See Appendix L), surely sister cities, political parties of this great nation, profit and not-for-profit interests, can also find a common ground to secure what all want but cant agree on the how of: to build new stadiums without tax dollars. This models shows the way and the how for doing so.
40. As always, the #1 issue is money: financing the construction to build the Stadium and to generate the revenue to sustain the on-going operations of the team, year after year. The key to all of this is maintaining flexibility by both the private and public sides, so that owners get their profits without giving up appropriate sovereignty and the elected officials get their taxes without having to risk not getting re-elected.
41. The Multiple Sources of Money Making with this Model
Remembering the past is important to help develop visions for the future. A pro sport is a business, not philanthropy. We must not forget that when Jerry Jones bought the Cowboys, the team was losing $1 million/month. Following this Model ensures that no owner or ownership or investor group would ever have to loose money again. It is too easy to throw stones at "rich" owners, but it is they who have rescued professional sports. Everyone involved needs to work with them, not against them.
42. In summary: our Proposal outlines how the owner can build a new stadium with minimal taxpayer dollars (going for the usual infrastructure of roads and sewers, and require a minimum amount to put up from the owner (not that we are opposed to either tax payer dollars nor more owner dollars above the $50 million. But calculations show that our proposal resolves the issues, pleases everyone, and enables moving forward with great dispatch, saving up front money and time as well as providing more profits and operations that are more stable. This proposal also includes a 12 point compensation package that makes money for both the team and the players while saving money for fans by enabling a reducing of ticket prices, a 10 point component internal competitive analysis model to bring to bear on both the stadium and on-going operations, an Internet networking model to add to our outline for a teams web site, and a review of 40 communication models to bring to bear on both print, broadcast, and Internet communication media and methods, as well as an outline of methods for even greater savings of operational costs through the use of the Internet, based on summaries we have prepared of work being done to save billions by, for example, both Oracle and GE, all of which comprise several of the 12 Appendices that are a part of this model.
43. The model closes with 13 appendices regarding "why" and "how".
44. Appendices A-F, attached, offer more backup and background and rationale.
45. Appendices G-M, our tools, are summarized but not attached.
46. A final set of reminder notes for this briefing
- a. This model will work even if all a team follows are the 8 financing mechanisms.
- b. 8 is not the final answer. Fans in their Emails to us at have already presented many ideas to us :www.vikingsstadium.com More will be requested from fans once this process is implemented. By the time we are finished, we could well have a dozen or more workable financing methods to help meet the goal of financing without adding debt.
- c. AND, if a team also adapts some or all of the 40 ways to generate revenues in 26 categories as well as some or all of the other ingredients in this models recipe for success (team operations, player compensation, communications, and the Internet), the team and the community will gain far more.