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When asked by the Courier & Press about what he would be looking for in making a decision regarding the fate of Roberts Stadium, Mayor Winnecke said the following...
http://www.courierpress.com/news/2012/apr/19/roberts-hed-herpppp/
"I said this during the campaign, I want to make a good, data driven decision," Winnecke said. "I still think that, and I think it should be what's best for the city financially."
Given Mayor Winnecke's desire to make a decision driven by good financial data, let's take a look at just how big of a gap there is between the cost to renovate Roberts Stadium versus the cost of converting the entire 35 acre lot into a green space.
First of all, it is important to remember that the estimate to renovate Roberts Stadium into a mid-sized arena is $4 million to $4.5 million while the cost to build a full green space on the lot is $12 million to $14 million. For arguments sake, we will use the median estimate for both of these proposals which is $4.25 million and $13 million.
Before compiling any additional data, we know that the average difference in costs between the two projects is $8.75 million. What I find to be amazing about this whole debate is that those who support the green space idea seem to think this isn't a big gap and that Roberts is the one that is too expensive for the city to undertake.
Yet, if we take a deep look at what $8.75 million could buy our city, we will see that this is no chump change that you would find in your couch. Basically, we can renovate Roberts Stadium 3 TIMES for the cost of constructing a green space on the lot!
For $13 million, instead of building a green space, we could renovate Roberts Stadium AND...
1. Construct Mr. Bob Warren's ball fields project at Kleymeyer Park + save $750,000.
OR
2. Rebuild 3 city pools (this estimate is based off of the remodeling of Bellemeade and Howell Pools costing $2.9 million each.) + save $5,000.
OR
3. Construct 1 brand new natatorium on the east side and put down 75% of the costs for one on the north side (or renovate Lloyd Pool completely). This estimate comes from the $5 million estimate given to us by Paul Neidig, EVSC’s director of athletics...
http://www.evansvilleliving.com/articles/drowning-in-disappointment
OR
4. Construct 4.67 green space lots the size of the Roberts Stadium back lot (This estimate comes from taking the median of the $1.75 million to $2 million it is estimated to cost to convert the back lot into a green space).
OR
5. Construct 1 BMX facility (the median of the estimate from the Roberts Stadium report) + save $2.4 million.
Of course, if the city really had $13 million to work with, mixing and matching different projects from each of the 5 categories would make the most sense. How would I spend $13 million instead of constructing a green space?
Renovate Roberts Stadium ($4.25 million) + Rebuild Hartke Pool (2.9 million) + Construct A Natatorium With Hartke Pool ($5 million) + 45% Of Converting The Back Lot Into A Green Space ($850,000)
If we built the 4 above projects, it would come to a grand total of $13 million (if the full green space costs the high end of their estimate, $14 million, we would have complete funding for a green space in the back lot).
However, I am not one of those people who believe that we should just build projects that are on our wish list. It is my opinion that our city really doesn't have the $13 million that would be needed to build a green space on the lot. For this reason, I believe that every project our city constructs should fit into one of the following criteria...
1. It is necessary to maintain Evansville's quality of life. It is needed to replace an existing facility that is in need of significant repairs.
2. It is a venue that will be profitable for the city. It will also increase Evansville's revenue through indirect benefits such as drawing tourists who will eat, sleep, and shop in Evansville.
3. It is a venue that can be built with funds specifically earmarked for it that cannot be spent elsewhere.
Using these 3 categories, the above 4 projects fit into at least one of them in the following ways...
Renovate Roberts- #2, I will explain how in this post.
Rebuild Hartke- #1, We cannot let Hartke Pool continue to crumble while other new projects are built. It must be addressed within the next 5 years.
Build A Natatorium With Hartke Pool- #2,#1, I don't expect a natatorium to profit directly but I do believe that the amount of visitors it would bring to Evansville would easily offset its costs indirectly. I also believe that a new natatorium is needed regardless of what happens to Lloyd Pool in order to maintain Evansville's quality of life.
Build A Green Space In The Back Lot- #1, Our city needs to get away from the idea of constructing stand alone parks (like the new bicentennial park) and start focus on constructing small green spaces that serve as connectors between parks and as forms of alternative transportation to the automobile. A green space in the back lot only would work perfectly as a connector to Wesselman Park and Mental Health Park.
I would also like to add the following...
1. I do not believe that constructing a BMX only facility should be in the first phase of projects since there already is a private facility on Louisiana Street and a public facility at Swonder. However, I do believe that the city should work on constructing a new BMX only park next to Roberts Stadium in the northern lot once funding can be obtained. This facility would replace the smaller BMX park inside Swonder and would be used as leverage to recruit traveling BMX shows like the Dew Tour to a mid-sized Roberts Stadium located next door.
2. I do not believe that 2 natatoriums should be constructed in the cities first round of projects because Lloyd Pool has recently received approx $400,000 in repairs. These repairs, although just a band-aid, will serve the northern part of Evansville until the next round of funds would be identified.
Now that we know what projects make the most sense financially, we must take the next step in identifying sources of funding...
Hartke Pool and Natatorium- Although desperately needed, neither of these facilities would be able to pay back their start up costs. However, approximately every 3-4 years, our city chooses to renovate two pools. Instead of renovating two pools in the next cycle, the city should commit the $5.8 million earmarked in the city budget for a combined pool and natatorium at Hartke Pool. This $5.8 million would bring the costs down to $2.1 million. The ECVB could use a portion of their Innkeepers Tax that would be saved using Mr. Bob Warren's ball fields plan ($8 million) instead of David Dunn's ($17.5 million).
The Green Space In The Back Lot- Like the Hartke Pool Complex, this project would never come close to recouping its initial investment (which is why building one on the entire lot is a terrible idea). Funds to construct and then maintain this project should be paid off from revenue generated by Roberts Stadium.
This brings us to Roberts Stadium. To recoup the start up costs for Roberts Stadium, we will need to find sources of revenue that will generate an additional $4 million to $4.5 million. What sources should we look at?
1. We can sell 1,000 bricks for $1,000 like the University of Kentucky did with their practice facility...
http://www.ukathletics.com/sports/kfund/spec-rel/brick.html
This would give us $1 million or approximately 1/4th of the total needed to renovate Roberts. We could also sell cheaper bricks to those who want to put their name on Roberts Stadium but don't really have $1,000 to spend.
2. We can sell naming rights to the gates. How much would be need to generate?
We already know that $200,000 was earmarked from this year's budget for Roberts Stadium. This would bring the costs to renovate Roberts down to roughly $4 million, or $1 million per gate. For those who don't follow sports venues, it is important to understand that naming rights are normally sold over long periods of time instead of in one set payment. This is designed to offset the loan costs for construction of a facility which generally takes 30 years to retire.
Just last year, our city sold naming rights to our downtown arena to Ford for $4.2 million over 10 years. So by the time the debt from the loan to build the Ford Center is retired, the city will have collected roughly $12.6 million from naming rights which represents approximately 10% of the total costs.
Since Roberts Stadium is significantly older than the Ford Center, we will want to collect our initial return on investment much sooner than the life of a 30 year bond. Ideally, we should have recouped our investment within 10 years of renovations.
To collect $4 million from Roberts Stadium via selling naming rights to each gate for 10 years, we need to apply the following formula...
$4 million/10 years = $400,000- The amount of revenue we need to take in each year from the gates
$400,000/4 gates = $100,000- The amount we should sell the naming rights to each gate each year.
Note: I did not calculate the future value of an annuity (inflation) into my formula because inflation numbers rise in different increments. It shall be noted though that inflation will bring in more revenue from naming rights deals for the gates at Roberts Stadium as each year passes by.
How would a company benefit by sponsoring a Roberts Stadium gate for $100,000 each year?
1. Sponsoring a gate is 1/4th the price Ford paid to name the Ford Center.
2. Sponsoring a gate allows a company to set up products, displays, and a wide variety of other marketing materials to Roberts Stadium patrons.
3. Sponsoring a gate would allow a company to reach local residents 365 days a week IF the correct step in using Roberts Stadium as an Indoor Greenway Trail Hub is made.
4. Each gate is big enough for companies to host fundraisers, meetings, and other business functions at Roberts Stadium on non-event days.
5. Each company could receive either bulk tickets or one luxury box to each event in exchange for sponsoring a gate (this would still give us 11 luxury boxes to sell). They would also receive parking passes, access to all public areas of Roberts Stadium as well as areas to display their company logo in the sections located directly in front of their gates.
6. Depending on which gate is chosen, a company could reach motorists on the Lloyd Expressway with proper signage around their gate. If we can get the city to repair the outdoor jumbotrons, all 4 gate sponsors will be able to reach motorists going down Boeke AND the Lloyd Expressway each day.
7. Sponsoring a gate would allow a company to reach both local residents as well as tourists coming from nearby cities where a company may want to expand their business to.
8. Sponsoring a gate would be a business expense that if done properly could be written off as a tax deduction.
9. Sponsoring a gate at Roberts Stadium would be seen as a community investment versus other avenues of marketing that are seen as just a business only investment.
10. Sponsoring a gate would bring more media and community attention to a company than other traditional avenues of marketing such as billboards, ads, and other generic forms of marketing.
If we collect $100,000 from each gate each year, all additional fundraisers would either be saved for future repairs or used to fund one of the other 3 projects. With that being said, revenue from other fundraisers such as selling the seats, selling bricks, and taking donations from those who would like to put their names on various plazas, streets, and pavilions around Roberts Stadium could also be used to lower the asking price for naming rights to each gate.
WHAT ABOUT MAINTENANCE AND UPKEEP?
Obviously, it is pointless to pay off the debt on the start up costs to renovating Roberts Stadium if the maintenance and operation budgets are in the red.
For a rough estimate, SMG placed operating Roberts Stadium each year at $1,163,000. It is unclear how much of this expense would be cut if Roberts Stadium were to be scaled down from its current size. So for the time being, we will use the full SMG estimate as an operating expense.
Also, the maintenance budget for Roberts Stadium has ranged from $69,000 to $94,000 (an estimate that has not be reached to my knowledge). Since I don't like the way Roberts Stadium is being run by Dave Rector, I am going to nearly double the estimate to $137,000.
Therefore, when we combine operating and maintenance expenses, we get $1.3 million a year to run the facility.
The good thing about mid-sized arenas is that, in a very quiet manner, they almost always host more events than their big brother premier arenas. The reason that they do this in a quiet manner is because they don't host big time events that bring in patrons in bulk at one time. For example, while the Rose Garden in Portland sells 18,000 + tickets to each Portland Trail Blazers game, Memorial Coliseum next door sells 3,000 to 4,000 tickets to a minor league hockey game. But when you add in that Memorial Coliseum hosts more events than the Rose Garden, the figures even out.
Another good thing about mid-sized arenas is that they are flexible. If one of your teams fails financially, you can replace them very easily with another team, concert, trade show, or other miscellaneous events. Roberts Stadium needs to remain versatile in order for it to remain profitable!
In order to try to get a realistic estimate on revenue, I am going to throw out all team events, all concerts, and all miscellaneous events since we don't know how many and what kind we are going to put in Roberts Stadium. Although I am omitting them now, these events will play an integral role in keeping Roberts Stadium solvent as these events, especially ones with teams, will pay for their own labor and overhead costs which is the vast majority of the SMG estimate.
For the time being, I am only going to calculate the 180 expo events that Mr. Greg Stilwell and Alan Brille want to bring to Roberts. Since we would be demolishing the precast sections above street level, we can use Roberts Stadium as both a mid-sized arena AND expo hall. It is believed that each of these expo events will bring in at least 1,000 people where the city will make at least $10 per person (this is outlined in the Roberts Stadium report).
Our new formula should look like this...
180 (events) x 1,000 (number of guests) = 180,000 (number of annual guests for expo events)
180,000 (see above) x $10 (profit per person) = $1,800,000 (revenue generated each year)
$1,800,000 (revenue) - $1,300,000 (expenses)= $500,000 (profit BEFORE all team and concert events are considered)
As someone who has seen and analyzed many arenas, ballparks, and stadiums, I find $10 per person to be a very reasonable number. We will be generating $2-$3 alone from parking fees as well as a $2-$3 ticket handling charge for each ticket sold. The rest of the $4 to $6 per person would be attained via concession stand and merchandise stand revenue sharing as well as rent per event.
I also find that Roberts Stadium has an enormous ceiling for profit when you add in minor league basketball, indoor football, indoor soccer, professional lacrosse, youth sports tournaments, BMX tournaments, college basketball tournaments, high school basketball games and tournaments, trade shows like the Home Show (would be flexed from the Ford Center so that the Icemen would get another Saturday), as well as mid-sized concerts.
In the end, a mid-sized Roberts Stadium would bring the following benefits to our city...
1. A profitable arena using tenants that don't belong in the Ford Center.
2. A an arena that will increase tourists for the Ford Center and Bosse Field to market to.
3. An arena that will provide funds for upkeep for the Wesselman Park area.
4. An arena that will increase the amount of events going on next to Wesselman Woods.
5. An arena that will serve as the anchor to Evansville's next wave of capital improvement projects.
In the next few weeks, Mayor Winnecke is supposedly going to sit down with City Controller Russ Lloyd Jr. to discuss the financial aspects of his decision on Roberts Stadium. I sure hope he genuinely evaluates the financial benefits of using Roberts Stadium as a mid-sized arena when he does. I hope he SAVES ROBERTS STADIUM!
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