Sedgwick County is getting $14.75 million for naming rights for its new arena: $8.75 million from Intrust Bank for the arena name and a skybox, $3 million from Spirit AeroSystems for the concourse name, and $3 million from Cessna Aircraft Co. for the outdoor plaza name. That’s more than many people expected and better than several other Midwest arenas. As several county commissioners said, it is also nice that the three companies have strong associations with Wichita.
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61 Comments
What’s in a name? $
What’s Spirit’s name? Union Busting Stadium?
But what do we “name” the fuse box?
(Reference is to the stupid Arena radio spot)
The taxpayers got the restrooms named after them. It was symbolic of where our money went to.
“The Phantom
Posted January 9, 2008 at 12:56 pm | Permalink
What’s Spirit’s name? Union Busting Stadium?”
we can only hope
lazy suckers
At least we didn’t have it named for our local Great Satan, Cox Communications.
Lets see – a few hundred thousand per year. Meanwhile, Sprint is paying $2.5 million per year in Kansas City.
This will still leave large deficits to be covered.
The “Intrust Bank Arena?” How exciting! We can name whatever team plays there “The Wichita Loan Officers.”
Length of years Intrust gets is wrong. Too little for 20 years. In the short term $14 Million for the Arena is good. Longer term is the questionable aspect.
What Intrust wants to give should only be for 10 to 12 years naming rights.
Still bitter about the downtown Casino outrage from Charlie.
Look at Mulvane trying to steal the Casino from Wellington. Harrah’s and MGM back in the mix for Topeka to decide. Intrust employees won’t have to drive as far getting their gamble on.
There are rumors that Intrust board members own land near Wellington and the Turnpike…
Things that make you go hmmmm…
Length of years Intrust gets is wrong.
Isn’t that implicitly what I said?
Good one, Doug, and exactly right.
Corporate pork for rich fat cats.
Meanwhile, mom and pop who paid in hundreds of dollars so the Koch bros have subsidized sky boxes won’t even be allowed to stand outside with their shoe-shine boxes . . .
Ben,
I’m waiting for a call back with SMG, regional guy wants to have a conversation.
Mrage
Do tell…
I heard that Intrust was the only bidder on the Arena naming rights; does anyone know differently? I’m talking about the Arena specifically, not the concourse, etc.
Ask him where he will get the money to subsidize your WSU game.
That is what I heard too VT.
Actually I know they were not; my company also bid. I offered $20 cash to name it.
I got my own name for it.
That place I won’t go.
VT,
I hear tell they pimped the Great Satan pretty hard, then went to Intrust with a much lower offer.
Very interesting, Mr. C.; very interesting, indeed.
I thought they said the corporates would be lining up trying to outbid each other!
* Sedgwick County’s level of commitment – Consider the extent or length to which you would go to make your business work (i.e. travel, commuting, relocating, etc.)
* Support and approval of your idea – Having the support of your constituents is very important to the success of your business, as well as the stress levels you endure in working to making it happen. Make sure you have the support you’ll need both emotionally and from a work-load standpoint.
* Zoning restrictions for the location you are looking at – Make sure you know the restrictions on the types of businesses that can occupy a space (particularly if you are operating your business) City Hall can provide that information.
* Willingness to seek outside help if you need it – Hesitate to get professional help for your project. There are many resources that can provide you with great ideas and information that can help manage more efficiently and perhaps even find that “edge.”
* The compatibility of the business with your cities life style – Make sure your project idea fits the schedule you work best in.
* The level of personal satisfaction you will get from the project – Sometimes you really have to think about what you would enjoy rather than what you can make the most money at. Remember, you only go around this merry-go-round once!
Yeah, the story I hear is that they went to Cox and wanted $12 million; they finally had an attack of common sense and said no (given that Comcast is now switching to iptv, I give them 5 years, then I’ll piss on their grave).
They were lucky to get what they got out of Intrust.
Is anyone tallying up the amount of money that is going into this arena?
So far, for starters the cost of building is $205.5 million.
Now the amount of money for naming rights is 14.75 million.
The total is presently mounting to $220.25 million that is being put into this arena.
I am not talking about who is paying for this but the point that I am making is how much money is put into the arena vs. the amount of money that is returned.
Somehow, I just do not see how it will be profitable especially since we have local billionaires that have never considered in the past investing in this type of venture.
What with oil going $100 a barrel, and predictions that gas may hit $4 next year, maybe the arena should be cancelled and the money used to majorly expand our mass-transit system.
Wiseman – don’t forget the tens of millions being spent by the City on infrastructure. That was all suppsoed to be included in the $184.5 million total cost.
Well Mrage – did SMG have $200+ million worth of good news? Ask about the Survivor-Mean Streets idea?
:)
This is ridiculously low for Intrust and ridiculously high for Cessna and Spirit.
Is it their way of thanking the city and county for defeating the casino issue?
“Look at Mulvane trying to steal the Casino…..”
Sounds like “casino envy” to me —- the arena would benefit by having the resort / casino closer.
They are not stealing it, they are making it more attractive for the casino to locate their — playing by the rules.
MRage time to get over your bitterness over the casino loss and actually think in the best interest of your arena and not your unmerited arrogance and damaged ego
The current “Capitalization Rate” for commercial office property is about 10% in the Wichita area.
This means that a commercial property should be able to generate about a 7% “capitalization rate” — in other words, a property can be valued by dividing that lease or rent by the rate. This calculation works in both directions.
(Forgive me realestate pros, this isnt my line of work, but I am trying to re-educate myself)
Scroll down to page 6 of this link:
http://www.martenscos.com/userfiles/Grubb%20&%20Ellis%202007%20Real%20Estate%20Forecast.pdf
Anyway, the question to ask:
“If this facility was owned by the private sector, could it produce $220 million X 7%, or about $15,400,000.00 per YEAR in revenue?”
Of course, this is down and dirty math. Left out utilities, taxes (if private) and other issues.
Also, will this facilty be able to INCREASE the taxable value of surrounding property? That, too, must be figured into the cost/benefit analysis.
I want to make the best of this.
I am curious how it will all work out.
sorry, that first line is wrong
The “capitalization rate” it wichita is NOT 10%, it is closer to 7%, I think, for commercial property of this type.
Also
The “naming rights” that Intrust and others just purchased — would you consider that part of the “purchase price” or part of the “revenue generated”?
“…taxable value of surrounding property? That, too, must be figured into the cost/benefit analysis.”
Econ shouldn’t that be compared to what the valuations would be if nothing were done or other type businesses were located there?
ken
Agreed.
I am just trying to be “devil’s advocate” here.
This Arena might work.
However, will it work better than what would have happened, naturally, without the Arena?
That, we don’t know.
I do think the “naming rights” should be counted as revenue, upon reflection.
Therefore:
$205.5 Million X 7% = $14,385,000.00 income generated, in the private sector, per YEAR to make it worth the price?
And, now, it appears we got MORE than that much, through NAMING RIGHTS alone? ($14.75 Million).
Granted, that revenue doesnt repeat, every year, does it?
Paul – one correction to your figures: we get that $15 million over a 25-year period. About a half-million per year or so. Therefore we are still FAR short of what is needed.
I would inlude an allowance for taxes as an expense since the County will not be receiving them from the Arena property that has been removed from the rolls. On the other hand I would include as revenue ‘increases’ in bed taxes etc if they materialize.
Finally, I would probably use 8 or 9 % instead of 7 but that is a minor issue. Of course, you also have to subtract expenses as you noted to turn gross into net.
Paul, ken – I think we are generally in agreement here.
” would you consider that part of the “purchase price” or part of the “revenue generated”?”
I would call it revenue generated but would do so only at its ‘flow rate’ of about half-million per year.
Meanwhile, by the way, we have our biggest Arena booster saying we should allow its use rent-free to generate events. Help me out here Paul – how do I make money without revenues?
SMG regional guy answered a lot of questions!
The seating size…he says its alright, because events are getting smaller in many respects due to economic issues, general higher prices.
KU playing in the Arena…big maybe. The seating size doesn’t prohibit them, it has to be made up in the offer to KU getting them to host a game in Wichita. He says that game would have higher ticket prices, than KU playing in Allen Field House.
How WSU or KSU games or small tournaments get paid for.
Some group like the Wichita Sports Commission guarantees the rent for WSU or KSU. It’s up to the colleges and SMG to make a tournament or game people want to see so tickets can cover the guarantee and try to make the event profitable.
It’s not a subsidy getting WSU to play in the Arena, coming from the taxpayers. If a corporate wants be responsible for the guarantee, they probably can. If the event doesn’t sell out, then the Corporate or Wichita Sports Commission has to pay the loss. SMG has to absorb that loss and they don’t want that to happen.
The County isn’t responsible for loser events so taxpayers aren’t paying for it.
SMG acknowledges the parking downtown is sensitive, but Wichita has more places to park, than Oklahoma City when people go to the Ford Center. A parking plan is being formed, SMG isn’t too worried about it, but acknowledges some people are.
I have talked about Big 12 Men’s and Women’s tournament coming to Wichita, SMG says that’s not likely to happen because we’re not ready in hotels, event coordination, a lot issues in tourism that prohibit that kind of event.
Plus, the Big 12 women can’t use Koch Arena to play. This is where the Coliseum comes into the discussion. Can some corporate invest in a 10,000 seat Arena, mostly for dirt shows, occasionally used for hard court events.
The Coliseum has to be torn down likely. In the paper today Wink Hartman is back mumbling about his Park City Arena. He should be investing in a rebuilt Coliseum instead of doing what he’s thinking.
He’ll have a better Arena that could more events.
We can exist with two Arena’s if one is mostly used for dirt shows, but occasionally can have a hard court. If the County has some guidance with it, so that facility doesn’t take events from Intrust Bank Arena.
If we want the Big 12 tournament someday to come here, there are things to do. It would take investors and coordination between Arena’s. Its possible, that’s if people try to make it happen.
With Intrust Bank Arena we have to act like other communities, how they attract events.
To my surprise, SMG is not managing Century II.
My concerns are settled with the seating size but other Arena being built with 18,000 seats, I’ll wonder about.
He mentioned the BOK Center in Tulsa having an 18,000 seat Arena, SMG is managing it, but Tulsa isn’t likely to get The Big 12 Tournament, because they have issues not having a second Arena. It’s not likely to get an NBA team. Tulsa is being competitive with Oklahoma City more than anything.
He likes Wichita market a little better for Arena potential than Tulsa.
University of Tulsa just won the GMAC bowl game, they have college football. They are doing more than Wichita overall.
Let’s hope Intrust Bank Arena, SMG, County and City can coordinate bringing events to town. Fix the hotels and keep flights at the Airport low enough.
The Intrust Bank Arena was always more important to me than a Casino.
I just saw the Casino development money potential should have been spent in Sedgwick County. We didn’t give Harrah’s or MGM enough time to decide the best location for a Casino.
People who voted No foolishly tried to stop the Casino from being downtown. But you threw it out of the County and that’s going to haunt Wichita a long time. A lot of development money isn’t buying property in this County, not in Wichita.
So – no Big 12 Tourney – just like I said
No MVC Tourney – just like I said.
“MAYBE” a rare KU game – IF we can get a corporate to underwrite it
Sports Commission – where do they get their money? A lot comes from the taxpayers. So, if the Sports Commission covers it that means the TAXPAYERS are.
“He (Wink Hartman) should be investing in a rebuilt Coliseum instead of doing what he’s thinking”
WHY? So he can lose a bundle? Maybe YOU should do that Mrage! Get your investors together.
Still wondering how we will make $15 million per year AFTER expenses. In fact, I wonder how we will even cover the expenses.
Sports Commission has corporate investors and will finally require investor funds to operate.
KU game is a better possibility yearly than you imagine.
My focus is on stadiums. It seems weird Hartman wants to build that Arena, for what? What events, high school Arena sports? He’s going to lose money doing that.
If he partnered with County, he would have more protection from losses. SMG could help manage and market it, bringing events to the facility.
I can’t build a stadium without City and County partnership. Wink can’t run a stand alone Arena by himself.
I think SMG can market Intrust Bank Arena for enough events, your feared operating expenses may not exist.
SMG isn’t ready to announce a schedule of events, opening day is still too far away. But a year from opening day, maybe SMG can begin to talk about the kind of events their going to bring here.
I’ve not seen the arena. Do y’all think it would be big enough to hold the semi-weekly Kansas-JM-Regular-Khan stalking meetings?
We shall see Mrage, we shall see.
Wink Hartman is a successful businessman. I have more reason to believe he knows what he is doing then that you do in such matters. Consider: an arena whose capacity matches the draw of its tenants. That minimizes overhead while maximizing revenue. Mrage – that is how a business makes money.
If he can house football and hockey he can have numerous events at or near sellout. That sounds like a viable business plan to me. If it is not then he won’t attract investors.
Ben,
SMG has no clear ideas what to do with the Coliseum. SMG knows about Wink’s Arena plans. Maybe they can partner instead of paying for separate Arena’s. We need dirt show events, rodeo’s and monster trucks, motocross and BMX events.
Wink’s Arena possibly could do hockey, is he buying the Thunder, I don’t think so. Thunder is going to play downtown.
That’s what my stadium ideas are all about. Constructing stadiums Wichita needs or has lacked.
Hartman has to think…does he want what the County needs? What is the County about to lose, the Coliseum and its abilities for events.
He wants high school Arena events and Arena football. A rebuilt Coliseum can do those events and dirt shows.
He partners with the County so they both get what they need. He gets SMG to market it.
We’re not going to have an 18,000 floor seat Intrust Bank Arena so the Big 12 tournament isn’t ever coming here.
I’ll accept the yearly KU game instead. WSU and KSU tournaments much as they can. College basketball every year in Intrust Bank Arena.
Hartman has to think…does he want what the County needs?
Hartman is a businessman. He is going to think “what will be successful”. Perhaps you should contact him and tell him why he should hitch his wagon to serving the County.
So now we are looking at ‘maybe’ one KU game. And ‘maybe’ a WSU game. Hardly enough to pay the costs of that thing.
Ben
Generally, I agree with you.
Please note, I DID state that the “naming” revenues were about the equivelent of one YEAR’S revenue desired in my rough, amateur cost/benefit analysis “goal”.
This thing can work, but it looks like HARD work to get it to “break even” — and people of good will can only hope for the best.
“I told you so” or “I was wrong it worked”
Saying one might be gratifying, saying the other is less costly, to all of us.
What will we say, in a few years?
Mirage: How does taking an event from one government venue, and moving that event to another government venue, benefit the taxpayers?
This Arena only makes sense if it brings in NEW business, and if it dramatically increases the property values and the “guest taxes” in the downtown area.
Ben
Agreed, don’t think they talked about “free rent” to “attract events” prior to the ballot issue, did they?
econ,
The Coliseum lost business, I stopped going there years ago. So had many others. Intrust Bank Arena properly designed inside…SMG told the County, make it look like quality found in the Ford Center, in Denver’s Pepsi Center and at the Sprint Center.
People might like Intrust Bank Arena interior a lot, though they may complain about parking.
Intrust Bank Arena with the same event like the Thunder, could have more fans attending.
Transfer from the Coliseum is possibly more profitable. The Arena could have more fans in nicer seats and amenities. There is more to do downtown before Arena events and after.
People might be going to Intrust Bank Arena a lot more than they ever did going to the Coliseum. Especially if parking downtown isn’t a problem.
Paul – no arguement with your ‘back-of-the-envelope’ calculations. I’d have to get my accountant to really work up time value and all the rest to get precise. The point is (I think) it will take a heck of a lot more recurring revenue to make this thing viable. That is why Wink Hartman is seeking a facility at about one-tenth the cost.
Transfer from the Coliseum is possibly more profitable.
How? Higher overhead generally means LESS profit.
Ben and econ,
Remember the overhead costs are not County’s responsibility. Your discussing SMG’s financial risk. They will try not to have higher overhead cost ruin profits.
Increase in events downtown, helps taxpayers. Intrust Bank Arena should more business that helps the local economy in sales.
Will Charlie Chandler allow the Arena to fail? He’s signed contracts to brand the Arena for 20 years.
Wrong Mrage. County pays utilities and general maintainence. That is supposed to be covered by rent. Remember rent? You know, that thing you don’t want to charge! And how about the County employees there? Who pays them?
If they didn’t anticipate losses then why did they tell me they were setting aside $23,611,000 to cover them? Unfortunately, that reserve, like parking and infrastructure, has been gobbled up by cost overruns – already.
What exactly is SMG’s deal with the county in terms of loss protection and profit sharing (how many years, loss coverage, and percentage of profits)?
And what’s the main cost driver for the arena? It’s going to be paid for, so there’s no debt service. It would mostly be staff costs and event promotion, right?
If so I don’t see much of a risk from SMG’s point of view — or the county. The main problem I see is the lack of a regular tenant.
Correct me if I’m wrong (which is entirely possible).
Ben,
Not every event is covered by the Sports Commission, so many events will have to pay rent. Ticket sales will pay for employees and maintenance. Intrust is buying tickets for every event. Spirit and Cessna for awhile.
Isn’t that how WSU does it, sell out Koch so they pay for maintenance and employees?
Price for skyboxes are a Million dollars? Business can rent them each event night too. Some of that for maintenance. There will be products sold inside the Arena to help pay employees.
Some day SMG will open an local office and you can discuss it more with them.
—–
Former Wichitan,
Download the PDF agreement between SMG and County if you want.
Can’t the Arena say whatever sells out tickets, is a tenant? It needs many sell outs as possible.
It needs people to keep coming to a variety events because they like to be in the building. Maybe the Arena will sell memberships so people save money going to a variety of events.
Thunder Hockey is a seasonal tenant. College basketball events can be a seasonal tenant. Concerts every month, that’s a tenant.
http://www.sedgwickcounty.org/arena/index.cfm
“Maybe the Arena will sell memberships so people save money going to a variety of events.”
I suggested that long ago – you and Joe! rejected it.
“It needs many sell outs as possible.
It needs people to keep coming to a variety events because they like to be in the building.”
It sure does. Good luck getting them.
” Thunder Hockey is a seasonal tenant. College basketball events can be a seasonal tenant. Concerts every month, that’s a tenant.”
Hocky is uncertain – especially with Hartman out there. College? Maybe 1 or 2 games a YEAR if you are lucky. Concerts every month? I hope so but doubt it.
Yes, WSU pays for Koch by filling it. That is why they won’t be filling yours.
Ben,
Until Hartman opens his Arena and signs the Thunder to play there, why believe its probable?
Thunder are going to explore how many fans they can attract downtown. People stopped going to the Coliseum because it was uncomfortable to be there. Ugly building inside and out.
Because the Arena is downtown, more to do before and after events. See a movie, get a drink, eat some food in Old Town, walk by the river on a nice evening. They might park near Century II and not complain about it.
Intrust Bank Arena is open all year. Koch is open for WSU basketball season, only a few months a year.
Paul – taking your ‘back-envelope’ calculation a bit further: Each seat needs to generate about $100 per month clear profit to generate the ROI.
“People stopped going to the Coliseum because it was uncomfortable to be there” NOT TRUE! People like the easy access and parking.
“Koch is open for WSU basketball season, only a few months a year.” NOT TRUE! As a WSU alum I know it is used for other things. Other things that will NOT be in your Arena.
“Until Hartman opens his Arena and signs the Thunder to play there, why believe its probable?”
It’s called CONTINGENCT PLANNING. We do that in business.
CONTINGENCY – cannot type this late
The arena has a HUGE publicity problem.
There are a large number of people who will avoid the thing just on principle.
Here!
And it CONTINUES to be poorly sold! More ghost pictures? Geez the people pitching this dog could not sell water to me if I was on fire.
Very true JR. Even Joe! Williams seems to have abandoned the cause. And Mrage hasn’t really come up with an event that is likely to attract me. As for SMG – where are they?
maybe they can turn it into a gigantic strip joint on Friday nights…LOL.
Ben
Yes, $100 per seat per month is a high goal. However, I see nothing wrong with setting the goal that high.
That figure probably would require a sell out event, every week of the year.
Obviously, the arena is paid for and the taxpayers won’t have to further subsidize the Arena if our “free market” comparision “goal” is not met.
However, we have set a reasonable bench mark for future discussion about the “success” of the Arena.
I would also admit, to the Arena supporters, that increased property values, and increased sales tax revenues, in the downtown area, might make the Arena project look better than our harsh bench marks would indicate.
Yes Paul. Actually my $100 is simply based largely on your numbers: A bit over 15 million/year devided by 15,000 seats = over $1000/year.
Working very round numbers – $100/seat/month.
It is similar to how I do economics sometimes: I ask what I do with my wallet in some circumstance and extrapolate. Very rough – ‘back of the envelope’ – but I find it to be generally accurate.
Going further – about $20/week PROFIT. So, ticket prices must include that AND all overhead costs. So, what will the ticket price be for a WSU game? Or a Thunder game?
Of course, if only half are sold you have to double the ‘per’ number to keep up.
This is why a smaller (Wink Hartman) Arena can make sense. If he only has to clear $10/week/seat then he might be able to pull it off.
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