By Aaron Applegate
© August 29, 2012
The sales pitch to the City Council was simple: Hampton Roads is ripe for a large arena to host a major league basketball or hockey team and other events, which would bring jobs, sports fans and concerts.
But details on who would pay for the estimated $350 million building or what team would play there were not part of Tuesday’s presentation.
A group of companies, led by Comcast-Spectacor – owner of NHL’s Philadelphia Flyers and former owner of the NBA’s Philadelphia 76ers – are in talks with the city to build an 18,500-seat arena next to the Virginia Beach Convention Center near the Oceanfront.
Sources have said the NBA’s Sacramento Kings are the target tenant. Comcast-Spectacor officials said Tuesday they haven’t talked to Kings representatives about moving here. The family that owns the Kings has declined to comment.
Comcast-Spectacor president and chief operating officer Peter Luukko said he was attracted to Virginia Beach because the region is “one of the largest underserved markets in North America.” Luukko described discussions as “very preliminary” but called the arena a “very viable project in a very viable market.”
“We’ve been here, we’ve done business here, and we believe in the marketplace,” he said. “This is such an untapped resource.”
He said Comcast-Spectacor and Global Spectrum, a subsidiary, would lease and operate the arena for 25 years. Live Nation, an entertainment company, is also part of the group.
“We believe it’s the biggest market without a major arena,” said Michael Evans, president of Live Nation Arenas.
Global Spectrum operates the Ted Constant Convocation Center at Old Dominion University in Norfolk, which seats 8,639 for basketball games, and the Sandler Center for the Performing Arts in Virginia Beach. Live Nation operates the Farm Bureau Live amphitheater in Virginia Beach.
The city released an economic impact study stating that an arena, starting in 2015, would host 200 events a year with 1.3 million attendees. It would also create 1,230 jobs and generate $98 million in revenue in 2015, including $66 million in Virginia Beach.
The study was written by James Koch, an economics professor at Old Dominion University. In it, he noted that he based it on data supplied by the companies and the city, adding, “If their data and projections are on target, then the results of this study will be on target.”
He also noted that the study doesn’t make any conclusions about whether the arena should be built or how it should be financed.
Warren Harris, the city’s director of economic development, said it’s too early to estimate the public cost of the project.
“We won’t know until we sit down with all the parties,” he said.
Harris said one of the city’s goals is to come up with a deal in which revenue generated by the arena would more than meet the city’s debt service obligations.
The Virginia Beach Development Authority, whose members are appointed by the council, will help develop the term sheet for a possible deal, along with Mayor Will Sessoms and Vice Mayor Louis Jones. That should be ready to bring to the City Council by late October or early November, Harris said.
Sessoms pledged to keep the City Council informed with weekly updates.
“If we take steps forward, you’ll know about it; if we take steps backwards, you’ll know about it,” he said.
John Richardson, the authority’s chairman, said Tuesday he doesn’t know what the city’s share of the project might be.
“Whatever the city contributes is taxpayer-generated money, so it’s got to be fair to the community,” he said.
Councilman Bill DeSteph said he would support such a venture funded with private equity and questioned whether taxpayers should contribute.
Plans for a $391 million entertainment complex for the Kings in Sacramento fell apart in April.
NBA spokesman Mike Bass said the league has not been contacted by the Kings about moving and that the franchise has not filed an application for relocation. That means the Kings will play next season in Sacramento.
Tuesday’s presentation included a short video of Gov. Bob McDonnell touting the business climate in Virginia. “We’re ready for major league sports. The time is right,” he said.
Virginia Secretary of Commerce and Trade Jim Cheng attended the presentation.
Several state programs could help pay for the arena.
Tuesday’s presentation lumped Hampton Roads with Richmond to create a population base of about 3 million people in an area referred to as “Southeastern Virginia.” That region is larger than 22 markets with professional sports franchises, city officials said.
The presentation said Comcast-Spectacor will “commit to pursuing a professional sports franchise” for the arena.
Harris said the project is a “once-in-a-lifetime opportunity.”
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