Contributors

Purvi Bhogaita, Director of Real Property Public Works Department

Leah Brasso, Assistant to the Department Director Finance and Administrative Services

Monica Cepero, Assistant County Administrator County Administration

Marcie Gelman, Assistant Budget Director Office of Management and Budget Services

Roberto Hernandez, Deputy County Administrator County Administration

Carol Hudson, Vice President, Sports Development Greater Fort Lauderdale Visitors & Convention Bureau

Izadora Isidore-Thomas, Graduate Intern Office of the County Administrator

Scott Miller, Chief Financial Officer Finance and Administrative Services

Bob Miracle, Deputy Chief Financial Officer Finance and Administrative Services

Noel Pfeffer, Deputy County Attorney Office of the County Attorney

Henry Sniezek, Director of Planning and Redevelopment Environmental Protection and Growth Management Department

We also appreciate assistance provided by the County Attorney’s Office, the County Auditor’s Office, and the Office of Public Communications.

The Broward County Civic Arena: 2 History, Facts and Opportunities

EXECUTIVE SUMMARY

In September 2013, the Florida Panthers hockey team was sold for the fourth time in its twenty-year history. The new owners, assumed responsibility for the team’s parent company – Sunrise Sports & Entertainment and several of its subsidiaries, including, the Arena Operating Company (AOC), the Arena Development Company (ADC) and the Florida Panthers Hockey Club.

Immediately upon the sale, SSE approached Broward County with a request to revise the company’s various agreements for several reasons including claims of recurring operating losses experienced by the Panthers in excess of $25 million yearly. As such, SSE requested modifications to the various agreements and economic terms in order to “create a sustainable business model for the BB&T Center that is comparable to other NHL venues, significantly reduce losses on a consolidated basis, provide for a competitive hockey team, and first class concerts and shows.”

SSE’s proposal identifies certain issues that could serve as the basis of a new agreement. However, our review of comparable franchises suggests that their request in its totality may not be warranted. Further, there are additional provisions that should be included for the public’s benefit.

This request is important to Broward County, since the County owns the Arena and the approximately 140 acres that comprise the Arena site. The facility is managed and operated by the AOC under a 30-year operating agreement. The Florida Panthers are contractually obligated to play all of its pre- season, regular season and playoff games at the Arena through the 2028 hockey season. ADC initially constructed the Arena and holds, subject to further negotiation, certain rights to develop a specific 12-acre parcel adjacent to and south of the arena.

The Florida Panthers hockey team is the venue’s sole professional sports tenant and is responsible for programming at least 44 dates yearly. Almost one million spectators attend events at the facility each year, with hockey games attracting the majority. Furthermore, Broward County receives an annual state sales tax rebate of $2 million, which is used to pay debt service at the facility, as a result of the team playing its home games there.

Broward County’s BB&T Center is a major multi-purpose entertainment and sports venue. It was designed and constructed for professional hockey, sports,

3 The Broward County Civic Arena: History, Facts and Opportunities

entertainment, and community events. Completed in 1998, it is roughly half way through its estimated economic life of 35 years. As an operating professional sports arena, the property is valued as of May 2013 at $220 million; without a professional sports team, its value drops 73% to $60 million.

At 872,000 square feet, the BB&T Center is reportedly the largest arena in Florida and second largest in the southeast. It is the fourth largest NHL venue in the United States and sixth largest NHL venue in terms of spectator capacity. As a major arena, the facility is best suited for a mix of sporting events, major artists and performances that attract large audiences. The BB&T Center, along with other major arenas in Miami, Tampa and Orlando are in the top 30 arenas in the United States based on Pollstar’s 2012 list of the world’s top 200 venues.

The Miami-Fort Lauderdale-West Palm Beach metropolitan area is a highly competitive market for sports and entertainment. As such, the BB&T Center faces stiff competition. Its most direct competitor is the AmericanAirlines Arena (AAA) in downtown Miami. To a lesser extent, the facility also competes with larger South Florida venues such as Sunlife Stadium and potentially Marlins Park for large events/performances. It must also compete head on with smaller venues including the Broward Theatre for the Performing Arts, the Seminole Hard Rock Hotel & Casino, and the Cruzan Amphitheater, among others.

As the BB&T Center’s owner, Broward County must ensure the long-term economic viability of the facility to ensure the payment of outstanding bonds, which mature in 2028, that were issued to finance the Arena’s construction. The AOC is responsible for paying approximately $4.6 million annually of the facility’s debt. Broward County is responsible for another $10 million, which is made up of $8 million in tourist development tax proceeds and $2 million of the annual state sales tax rebate to pay its portion of the annual bond payment. A reduction or loss in AOC’s annual contribution and/or state sales tax rebate requires the County to find alternative funding sources. Currently, the two cents originally enacted for arena debt service is sufficient to pay full debt service, with each penny generating approximately $9 million yearly. Moreover, the County has agreed to budget and appropriate non-ad valorem revenues for its debt service reserve requirement should all other pledged revenue be insufficient.

Hockey is a business first, a sport second. Despite the NHL’s recent success, many of its franchises are struggling. Thirteen of the league’s 30 teams lost money during the 2011-2012 hockey season. There is revenue disparity

The Broward County Civic Arena: 4 History, Facts and Opportunities

between large market teams (New York, Los Angeles and Toronto) and small market teams (Florida, Tampa Bay, Columbus, Raleigh and others).

Although professional sports teams are not major economic drivers, the team does generate some positive economic benefits to the county’s economy in terms of employment, direct local spending, support for charitable causes, sales taxes, and other intangible benefits.

Despite the fact that the Panthers have negotiated a more lucrative naming rights contract, increased revenues from local broadcasting, and receives more funding through the NHL’s revenue sharing program, profitability evades the team. Before the recent purchase of the Panthers by the new ownership group, the Panthers were widely considered to be a prime candidate for relocation. A major league professional sports franchise is a prized corporate and community commodity with communities willing to entice teams to relocate. Areas frequently mentioned as contenders for a hockey franchise include Quebec, Toronto, Hamilton, Las Vegas, Seattle, Portland, Houston, Oklahoma City, and Indianapolis. We can assume that any of these cities would offer substantial public subsidies and inducements to entice the Panthers or any remnants of the team should it fold.

Since the Arena’s opening, facility operating revenues totaled $511.4 million ($34 million annual average), operating expenses totaled $312.7 million ($20.8 million annual average), and net operating income total $127.5 million ($8.5 million annual average) all of which was remitted to the team to support its activities pursuant to the Operating Agreement. The County has received one “profit sharing” distribution during the past 15 years: $331,000 in 1999.

In comparison to the 1996 projections, revenues were within 12% of projections, expenditures were 44% over projections, and the projected $76.6 million in “profit sharing” for the County did not materialize. Although the Operating and License agreements provide for the sharing of revenues once they reach a certain threshold, currently $12 million, given the economic nature of the NHL and the realities of operating a one sport arena, it was contemplated that SSE/AOC/Team would retain the majority of the revenues generated. In other words, profits from the AOC would support activities of the team including helping offset losses, and the County would receive a relatively minor (20%) distribution if funds were available. The County received this profit share once in FY1999 in the amount of $331,000. Similarly, Miami-Dade received its first revenue sharing distribution of $257,134 from the Miami Heat late last year, despite the Heat’s success and three championship seasons.

5 The Broward County Civic Arena: History, Facts and Opportunities

Remaining balances on the various arena related debt payments (principal and interest) equal $225.1 million as detailed below:

County State Sales Debt Type AOC Total TDT Tax Rebate County Preferred Revenue $59,217,822 $120,000,000 $26,000,000 $205,217,822 Allocation (CPRA) – arena bond payments Arena Completion Debt $9,145,959 N/A N/A $9,145,959 2010 Loan $4,127,251 N/A N/A $4,127,251 2012 Loan $6,685,632 N/A N/A $6,685,632 Total Amount $79,176,664 $120,000,000 $26,000,000 $225,176,664

Many professional sports teams are mobile. The mobility of these teams is based on the nature of their relationship with the facility they occupy: this relationship is similar to a landlord – tenant one. As a tenant, with little or no equity in the facility, teams can, and often do, test the waters to seek more advantageous business terms. Other areas are eager to lure a professional team to their facility and go to great lengths to offer incentives and subsidies. The competitive fervor between metropolitan areas is what has led to escalating levels of public funding for professional sports facilities.

Arguments can be made in support of, or opposition to, the provision of public funds for professional sports facilities. This argument, however, usually takes place before a facility is built. However, sports teams continue seeking additional public participation for various reasons. In Broward County’s case, the County has already built the facility for a major league sport, and is less than halfway through the economic life of this asset.

Current development trends associated with sports and entertainment venues include creating an around the clock entertainment and tourism destination, and sports-based master-planned communities.

Many venues across the United States have dealt with the loss of a professional sports team. The evidence suggests that a major arena in a large metropolitan area with multiple competing venues may not be financially viable following the loss of a major league sports tenant. Further in-depth economic analysis to determine the magnitude of this will require third party assistance.

There are essentially two options for the County Commission to consider: negotiate new terms or decline SSE’s request. Moving forward with new contract terms provides an opportunity to incorporate further performance- based changes into the agreement, such as including a specific revenue threshold for requiring financial contributions for major capital improvements, to be held by the County in trust. Further, such concessions providing financial contributions should require an equity investment or other innovative means of assuring the facility is maintained at a high level of quality for the remainder of its useful economic life.

The Broward County Civic Arena: 6 History, Facts and Opportunities

Additional economic development of the arena site must be paramount to any considerations. New development provides an opportunity to generate increased public revenues through lease payments, sales taxes, license fees, etc. to offset any additional subsidies if provided by Broward County. It also presents an opportunity to compliment the investments being made at Sawgrass Mills as well as to assure that the arena is integral to any new development in the future for western Broward County.

In exchange for financial considerations, a new contract provision that requires SSE to pay back all or a portion of assistance provided should SSE not satisfy the performance-based milestones contained within the agreement should be included in any new agreement.

Other opportunities include:

⋅ Expanding our focus on the operational performance of the arena in addition to financial performance.

⋅ Stabilizing the finances of the hockey franchise to allow the new owner an opportunity to restructure the organization, improve SSE’s financial condition, and improve the competitiveness of the hockey team thus potentially leading to increased attendance and increased revenues.

⋅ Retaining a valuable and existing major league franchise.

⋅ Streamlining the agreement for administrative efficiency.

Along with the opportunities inherent in new agreement terms, several risks are evident:

⋅ The hockey team’s financial condition and on-ice performance may not improve. However, additional development could offset these losses.

⋅ Additional recurring TDT funds allocated for the Arena cannot be made available for other tourism-related programs unless SSE can demonstrate success in increasing tourism-generating opportunities during the summer off-season.

⋅ Economic structure of the NHL, which places greater reliance on local market support for the team, creates franchise instability.

⋅ New contractual terms may increase the team’s overall value as a result of increased public subsidies, thus inadvertently making it more attractive for future sale, if not carefully crafted.

⋅ Currently unknown if market demand exists for the type of development that will ultimately be pursued.

7 The Broward County Civic Arena: History, Facts and Opportunities

⋅ Future economic conditions, such as a recession or increases in interest rates may delay or prevent any proposed development from occurring. Previous development attempts did not proceed beyond the conceptual stage.

On the other hand, should the County Commission decline SSE’s request, this could result in new ownership succeeding in stabilizing the team and the SSE without additional public assistance. TDT revenues in excess of arena debt service would be retained for other tourism related programs. However, it may place SSE in a position to seek relocation, bankruptcy or default. If SSE were to default, it presents Broward County with a need to develop a Master Plan for the overall site and seek a new arena operating partner.

Other risks associated with declining SSE’s request include:

⋅ Without a major tenant, the BB&T Center would have to rely on more concerts and events. However, it is too large to efficiently host minor league sports and smaller performances.

⋅ If the AOC/ADC/Panthers relocate, fold or default, the County would be responsible for the entire $14 million debt service payment plus any outstanding arena completion bonds owed by ADC.

⋅ If the AOC/ADC/Panthers relocate, fold or default, the County may be ineligible to continue to receive $ 2 million in annual sales tax rebates that are used to pay a portion of the arena bonds. The County would then have to absorb this additional debt cost.

⋅ Relocation, folding or default of the Panthers and/or AOC will likely result in a reduction of revenues associated with naming rights, sponsorships, advertising, parking, concessions, sales taxes, etc.

In conclusion, the BB&T Center is a missed economic development opportunity and an underutilized asset. In its present form it is slowly becoming economically obsolete as a sports and entertainment venue unless additional development is introduced to provide enhanced entertainment options and increase the site’s attraction for tourism.

As an auto centric facility surrounded by vast open parking areas with easy access to the Sawgrass Expressway, the BB&T Center offers little in terms of creating an engaging experience or capturing additional economic benefits from attendees before or after an event. However, with plenty of underutilized land currently used for surface parking, the facility is in an ideal position to anchor a new phase of economic development and to establish itself as an expanded destination for entertainment and tourism.

The Broward County Civic Arena: 8 History, Facts and Opportunities

Contents Introduction ...... 12 Proposal Overview ...... 12 Issue ...... 14 Purpose ...... 15 Background ...... 16 Historical Overview ...... 16 The Arena Facility ...... 19 The Arena Partnership ...... 22 Arena Management and Operations ...... 22 Panthers Arena Use Agreement ...... 26 Development Agreement ...... 27 The Florida Panthers ...... 28 Franchise Overview ...... 28 Overview of Hockey Economics ...... 28 The Panthers Impact on Broward County ...... 30 Team Challenges ...... 32 Performance Summary ...... 38 Financial Summary ...... 38 Non-Sporting Events Ticket Sales ...... 42 Facility Improvements ...... 43 Contract Compliance ...... 44 Outstanding Debt Balances ...... 44 Project Oz ...... 44 Trends in Professional Sports Facilities ...... 46 Current Trends ...... 46 Foundational Analysis: Can a Major Arena Succeed without Major League Sports? ...... 52 Venue Success Factors ...... 52 Experience of Arenas without NHL or NBA Teams ...... 53 Lessons from Venues that have Lost NBA or NHL Teams ...... 57 Review of SSE’s Contract Modification Requests ...... 68

9 The Broward County Civic Arena: History, Facts and Opportunities

Impact of Increasing the County’s Contribution to Arena Debt Service ...... 74 Option 1: Negotiate new terms...... 76 Option 2: Decline SSE’s request...... 77 Conclusion ...... 78 Appendix A ...... 80 Entertainment and Shopping Districts Project Summaries ...... 80 Appendix B ...... 84 Development Catalyst Project Summaries ...... 84 Appendix C ...... 88 Live, Work, Play, and Shop Districts Project Summaries ...... 88 Appendix D ...... 96 Comparative Analysis of NHL Teams ...... 96 Appendix E ...... 106 NHL Team and Arena Profiles ...... 106

The Broward County Civic Arena: 10 History, Facts and Opportunities

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11 The Broward County Civic Arena: History, Facts and Opportunities

Part Introduction

This section –  provides an overview of the proposal from Sunrise Sports & Entertainment (“SSE”) for financial and contractual amendments and modifications to their various agreements with Broward County and SSE’s subsidiaries  presents and describes the importance of this issue before the Broward County Board of County Commissioners  discusses the nature of the report  identifies several key questions which the report will attempt to answer.

Proposal Overview

In September 2013, the Florida Panthers hockey team was sold for the fourth time in its twenty-year history. Along with the purchase of the team, the new owners, South Florida Sports & Entertainment, assumed ownership of the team’s parent company – Sunrise Sports & Entertainment and several of its subsidiaries, including, the Arena Operating Company (AOC), the Arena Development Company (ADC) and the Florida Panthers Hockey Club.1

Immediately upon the sale, SSE approached Broward County with a request to revise the company’s various agreements for several reasons including the recurring annual operating losses experienced by the Panthers. Company representatives claimed the team had suffered annual losses in the range of $25 million for several years and expressed that level of financial loss could not be sustained by the team’s new owners. As such, SSE requested modifications to the various agreements and economic terms in order to “create a sustainable business model for the BB&T Center that is comparable to other NHL venues, significantly reduce losses on a consolidated basis, provide for a competitive hockey team, and first class concerts and shows.”2

OPERATING AGREEMENT SSE’s proposed modifications to the Operating Agreement ask the County to do the following:

 Rebate SSE’s annual contribution to arena bond payments by using $4.5 million of the County’s tourist development tax proceeds to fund arena operations.

 Cap SSE’s costs for the arena’s annual windstorm insurance premiums to the first $1 million, with the County responsible for all additional costs.

 Pay the first $500,000 of arena repairs and maintenance annually.

1 Also included in the sale were Incredible Ice, LLC; PHGP, LLC; SSE Gaming, LLC; SSE Development, LLC; SSE Promotions, LLC; SSE Publications, LLC; and SSE Consulting, LLC. 2 Sunrise Sports + Entertainment (January 2, 2014). “Requested Revisions to Operating Agreement; License Agreement; and Development Agreement.” The Broward County Civic Arena: 12 History, Facts and Opportunities

 Reduce and limit SSE’s annual contribution to the capital improvements reserve account from $500,000 to $250,000.

 Modify the classification for accounting purposes of certain operating revenues and expenses for the purpose of revenue sharing distribution.

 Eliminate existing Operating Reserve and Capital Expenditure Reserve accounts, which requires an annual contribution from the AOC of $500,000, to the extent the County’s revenue share contribution is not sufficient.

 Delete the existing monthly financial reporting requirements and provide additional time for the submission of quarterly and annual financial reports and statements.

 Limit the County’s right to audit the AOC’s financial records to twice yearly.

 Retitle/clarify the agreement as an Operating Lease, thus allowing the County and ADC to potentially use recently amended Florida Statutes regarding leasing of county-owned real property.

 Revise definitions, replace or eliminate outdated provisions, consolidate prior amendments, and add clarifying language.

LICENSE AGREEMENT The proposed changes to the License Agreement between the County, the Panthers, and the AOC reflect the changes proposed to the Operating Agreement to make these documents consistent with the one another.

DEVELOPMENT AGREEMENT Proposed amendments to the Development Agreement between Broward County and the ADC seek to expand the company’s existing development rights by swapping 12 acres south of the arena for 22 acres on the north side for future development.

CONSIDERATION OFFERED In exchange for these considerations, SSE proposes to provide the County with the following commitments:

⋅ Develop the north parcel as a mixed-use project with entertainment, restaurants, retail, office, casino, residential, hotel and related uses.

⋅ Immediately repay existing outstanding loans from Broward County - three years ahead of schedule.

⋅ Continue supporting small businesses at the BB&T Center through their relationship with BB&T.

⋅ Pursue additional events at the arena. 13 The Broward County Civic Arena: History, Facts and Opportunities

⋅ Improve the competitiveness of the hockey team.

⋅ Provide a workforce training and college scholarship program.

⋅ Relocate the exploration vessel Nautilus to Fort Lauderdale during the winter months in partnership with Nova Southeastern University.

Issue

The issue before the County Commission for consideration is straightforward: Should Broward County provide SSE and its various subsidiaries with revised financial, contractual, and development conditions relating to SSE’s use, management and development of the Broward County Civic Arena in exchange for a mixed-use development commitment, early payment of two outstanding loans, and other considerations?

IMPORTANCE OF THE ISSUE Broward County owns the Arena and the approximately 140 acres that comprise the Arena site. The facility is managed and operated by the AOC under a 30- year operating agreement. The Florida Panthers are contractually obligated to play all of its pre-season, regular season and playoff games at the Arena through the 2028 hockey season. ADC initially constructed the Arena and holds, subject to further negotiation, certain rights to develop a specific 12-acre parcel adjacent to and south of the arena site.

The Florida Panthers hockey team is the venue’s sole professional sports tenant and is responsible for programming at least 44 dates yearly. Almost one million spectators attend events at the facility each year, with hockey games attracting the majority. Furthermore, Broward County receives an annual state sales tax rebate of $2 million, which is used to pay debt service at the facility, as a result of the team playing its home games at the facility.

As the BB&T Center’s owner, Broward County must ensure the continued economic viability of the facility to ensure the payment of outstanding bonds that were issued to finance the Arena’s construction. The AOC is responsible for paying approximately $4.6 million annually of the facility’s debt. Broward County is responsible for another $10 million. The County has pledged tourist development tax proceeds to pay $8 million of debt service and $ 2 million of the annual state sales tax rebate to pay its portion of the annual bond payment. A reduction or loss in AOC’s annual contribution and/or state sales tax rebate requires the County to find alternative funding sources. Currently, the two cents originally enacted for arena debt service is sufficient to pay full debt service. Moreover, the County has additionally covenanted to budget and appropriate non-ad valorem revenues for its debt service reserve requirement should all other pledged revenue be insufficient.

The Broward County Civic Arena: 14 History, Facts and Opportunities

Purpose

The County Administrator’s Office has prepared this document to assist the County Commission in evaluating SSE’s request for contract changes. It provides information obtained from –

 website reviews  examination of current literature on sports economics and professional sports facilities trends  interviews with comparable jurisdictions  analysis of legal documents from several NHL and NBA franchises  assessments of the performance of the various parties. This report examines SSE’s request within the larger context of operating large multi-purpose venues. It attempts to address the following key questions:

 Why is this issue significant?  How did Broward County end up with an Arena and professional hockey team?  Who are the parties involved and what is the nature of the partnership?  What are the essential elements of this partnership?  What are the challenges and opportunities facing the Arena?  What are the challenges and opportunities for the Florida Panthers?  What are the current trends in the development of professional sports facilities?  Can a major arena succeed without professional sports?  How do our agreements compare with others?  What options are available to the Board and what are their risks?

15 The Broward County Civic Arena: History, Facts and Opportunities

Part Background

This section –  provides a historical overview of the effort to build a major league sports and entertainment venue in Broward County  presents an overview of the facility  describes the financing of the facility  outlines the partnership between Broward County and SSE’s various entities  discusses three agreements between SSE’s subsidiaries and Broward County.

Historical Overview

Prior to the opening of the Miami Arena in 1988, South Florida had only two major sports and entertainment venues: the Orange Bowl and the Hollywood Sportatorium (what is now known as Sun Life Stadium opened in the summer of 1987). From the professional sports perspective, Miami was home to the National Football League (NFL) Dolphins and Fort Lauderdale - the North American Soccer League’s Strikers. Minor league baseball and Major League Baseball’s Spring Training were also present in Pompano Beach and Fort Lauderdale. Over time, the North American Soccer League folded and minor league baseball teams, as well as Spring Training, relocated to other parts of the state or left the state completely enticed by new facilities or other incentives.

In its day, Broward’s privately-owned Sportatorium hosted big-name performers like Elvis, Chicago, Elton John, AC/DC and others. During its 19-year history, several unsuccessful attempts were made to lure a National Basketball Association (NBA) or World Hockey Association team to the facility.3 The opening of the Miami Arena marked the end of Broward’s only major sports and entertainment venue. For the next decade, south Floridians would watch major concerts, performances, hockey, and basketball at the downtown Miami Arena.

Following the award of a hockey franchise to H. Wayne Huizenga in 1992, Huizenga made it clear that the Miami Arena would be a temporary home for the Panthers until a larger facility was built either in Miami-Dade or Broward counties. Almost immediately, efforts began to find a location for a new arena. In addition, the Miami Heat basketball team expressed its desire to leave the Miami Arena and find a new home venue for its games. Initially, a 20,000 seat arena was envisioned to be part of Huizenga’s plan to build a large sports and entertainment complex he called Blockbuster Park. Multiple sites in Miami- Dade and Broward counties were considered before a site in Miramar was ultimately selected. Huizenga’s sale of Blockbuster Entertainment to Viacom ended the Blockbuster Park concept.

3 The World Hockey Association was a competing league of the National Hockey League (NHL). It eventually merged into the NHL. The Broward County Civic Arena: 16 History, Facts and Opportunities

Without a new arena, Huizenga indicated that he would consider offers from potential buyers who would relocate the team elsewhere. He requested public support in building an arena in order to keep the team here. The Heat also expressed its interest in joining the Panthers in a new venue. Competition ensued between Miami-Dade, Broward, and Palm Beach counties on financing and siting the new facility. Ultimately, the Panthers settled on Broward County since they viewed it as the center of the region’s population. After several sites including Pompano Beach, Hollywood, Las Olas, Broward Boulevard and Sunrise were evaluated, the Sunrise site was eventually selected by the NHL and Huizenga.

Broward County’s interest in financing and owning the proposed arena peaked when a financing plan was developed that would purportedly–

⋅ minimize the risks to the County ⋅ protect the County’s general fund ⋅ use an increase in the tourist development tax to fund a majority of the debt issued ⋅ obtain an annual state sales tax rebate that would assist in making debt payments ⋅ require the team to cover any construction cost overruns ⋅ share facility revenues with the County ⋅ require a long-term commitment from teams to play in the facility.

During the fall of 1995, community support for the arena began to solidify. After the team promised to contribute $500,000 a year for 30 years for tourism promotion and advertising, the Tourist Development Council expressed its support for an increase in the tourist development tax to help finance the cost of the new facility.

On January 30, 1996, the County Commission voted to begin negotiations with the Florida Panthers and the Miami Heat for a new arena to be funded in part by an increase in the tourist development tax.

WHY AN ARENA? Four key reasons emerged from our review of hundreds of newspaper articles from both the Sun Sentinel and the Miami Herald during this time frame illustrating the community’s support for a major league arena in Broward County. They are:

(1) An arena hosting a major league sports team would increase the area’s stature and lend to the “maturity of our community.”4 “Two hundred feet of ice may do what 23 miles of sand have never quite done: raise Broward County onto the list of big-league metropolitan areas.5

4 Nitkin, David (April 7, 1996). “Arena Seen as a Step toward Maturity for Broward County.” Sun-Sentinel. 5 LaMendola, Bob; Benedick, Robin; Young, Michael E.; and Jack Zink (February 18, 1995). “Arena would put Broward on the Map.” Sun- Sentinel. 17 The Broward County Civic Arena: History, Facts and Opportunities

(2) Generate publicity and interest in the area to help increase tourism: “…amenities built in the past decade or two give people reasons beyond sunshine, bikinis and early bird specials to visit or move to Broward.” 6

(3) Attract “big-name concerts, circuses, Olympic-style competitions, national gymnastics meets, major boxing bouts, state high school championships, figure skating, roller skating, tractor pulls, monster truck meets, and political rallies.7

(4) Create an identity distinct from Miami Dade County. Many felt that Broward County was merely a suburb of Dade. “…it gives us more of an identity” said Ric Green, former sports director of the Broward Economic Development Council (predecessor of the Greater Fort Lauderdale Alliance). Fort Lauderdale lacked the national and international appeal that Miami had.8

WHY HOCKEY? Both the Florida Panthers and Miami Heat were critical of the Miami Arena and were seeking new playing venues. The Miami Arena was viewed as too small, and lacked the luxury suites and other revenue producing amenities that professional sports teams seek. In addition, most of the arena-related revenue from sponsorships and advertising were directed to the Miami Heat. The Panthers did not share in these revenues and, as a result, claimed they were losing millions of dollars annually.

Broward County pursued a two sport strategy for the facility hoping to entice both the Panthers and the Heat to sign long-term leases. The Panthers were crucial to financing the facility since they were eligible to receive $2 million yearly from a rebate of state sales taxes, which would be used to pay a portion of the debt. The Miami Heat was not eligible at the time to receive this rebate. Without the sales tax rebate to help finance the debt, the arena would not proceed.

In February 1996, both the NHL and the NBA notified Broward County that they would consider playing in Broward County’s new arena only if their team was the sole major league sports tenant in the building.9 Both leagues also expressed a desire for their team to be responsible for the facility’s management.10 The County continued to negotiate with both teams and on February 27, 1996, signed a non-binding letter of intent with the NHL to relocate the Panthers to the new arena. Shortly thereafter, the County imposed a deadline for the Heat to sign a similar letter of intent, which it did not do.

6 Nitkin, David (April 7, 1996). “Arena Seen as a Step toward Maturity for Broward County.” Sun-Sentinel. 7 LaMendola, Bob; Benedick, Robin; Young, Michael E.; and Jack Zink (February 18, 1995). “Arena would put Broward on the Map.” Sun- Sentinel. 8 Ibid. 9 Nitkin, David (February 10, 1996). “County Officials say NHL, NBA don’t want to Share an Arena.” Sun-Sentinel. 10 Ibid. The Broward County Civic Arena: 18 History, Facts and Opportunities

Instead, it notified the County that they had negotiated a deal with Miami-Dade County for a new downtown Miami venue.

On April 2, 1996, the County Commission voted to proceed with negotiations with the Panthers. On April 16th the Sunrise site was selected. Finally, on June 4, 1996 the County Commission approved the agreements with the Arena Operating Company, the Arena Development Company, and the Florida Panthers Hockey Club.

The Arena Facility

Major arenas contain The BB&T Center is a major multi-purpose entertainment and sports venue. It seating capacity for was designed and constructed for professional hockey, sports, entertainment, 15,000 or more spectators. and community events. Completed in 1998 at a cost of $212 million, the BB&T Center is roughly half way through its estimated economic life of 30-35 years.11 It is the home venue for Broward County’s only major league professional sports team - the NHL’s Florida Panthers.

Throughout the past 15 years, the arena has been known as the National Car Rental Center (1998-2002), the Office Depot Center (2002-2005), the BankAtlantic Center (2005-2012), and now, the BB&T Center. BB&T purchased the naming rights to the BankAtlantic Center upon completing its 2012 acquisition of BankAtlantic. It paid $36.8 million for the naming rights to the facility through 2022.12

At 872,000 square feet, the BB&T Center is the largest arena in Florida and second largest in the southeast, behind the Greensboro Coliseum in Greensboro, North Carolina. Its seating capacity is about 20,763 for concerts and 19,250 for ice hockey. It is the fourth largest NHL venue in the United States and sixth largest NHL venue in terms of spectator capacity.

As a major or first-tier arena, the facility is best suited for a mix of sporting events, major artists and performances that attract large audiences. The Florida Panthers professional hockey team is the arena’s primary tenant and conducts its home games in the facility under a concurrent License Agreement with the County, and its sister company, the Arena Operating Company.

APPRAISED PROPERTY VALUES According to a May 2013 valuation report completed by CBRE, the appraised values of the property are:

Appraisal Premise Opinion of Value Land Only (as if vacant) $60 million Land with an arena, but without a professional sports $60 million team Land with an operating professional sports arena $220 million

11 Ibid. 12 CBRE (May 24, 2016). BB&T Valuation Report. 19 The Broward County Civic Arena: History, Facts and Opportunities

SITE DESCRIPTION In 1996, Broward County purchased two parcels of land totaling 139.7 acres at a cost of $13.1 million for the purpose of constructing the arena. The City of Sunrise purchased and conveyed 4.17 acres at a cost of $4 million for the project. It also contributed $ 1 million for traffic related impacts.

The property itself is irregularly- shaped and contains the structure, surface parking for 7,500 vehicles, and undeveloped parcels. It also contains a park and ride facility for Broward County Transit’s express bus service to downtown Fort Lauderdale. The property consists of six parcels: three of which are buildable and three of which contain plat restrictions for wetlands or drainage. Parcel A’s approved development intensity includes a 500–room hotel, 25,000 square feet of commercial use and 165,000 square feet of office. Parcel B allows for 1.28 million square feet of “industrial” use. The buildable area is currently restricted to a Civic Center/Arena facility with up to a maximum of 21,500 permanent seats, a maximum of 7,500 parking spaces, and ancillary uses and facilities located within the Arena building and on the Arena grounds.

SURROUNDING AREA The immediate surrounding area is largely developed with commercial and residential uses, and the Sawgrass Mills mall. East of the Arena is the 1,400 unit Artesia residential condominium project. Sawgrass Mills Mall is located immediately across NW 136th Street.

Several large undeveloped tracts remain in the area and are slated for future development including:13

> Metropica – mixed-use development of restaurants, retail and luxury high-rise condominiums

> Westerra – 1.6 million square feet of office, 1,500 residential units, hotel, and 400,000 square feet of retail

> Flagler Plaza – 41 acres planned for 822,000 square feet of office space.

13 ibid The Broward County Civic Arena: 20 History, Facts and Opportunities

FINANCING In 1996, the County issued $184.1 million in revenue bonds to construct the Arena, which were refinanced in 2006. In addition, in 2000, the County issued $6.9 million in completion bonds to pay for project cost overruns. These bonds were later refinanced in 2005. The AOC is responsible for 100% of the debt service on these bonds which is approximately $600,000 per year.

The approximately $14 million annual debt service payment on the 2006 bonds is funded with three pledged revenue sources:  $8 million in tourist development taxes  approximately $4.6 million from the Arena Operator  $2 million from the State in the form of a sales tax rebate.

The bonds are further secured by a debt service reserve of approximately $7 million which has been satisfied by a surety policy with AMBAC. The County has additionally covenanted to budget and appropriate for this reserve requirement from non-ad valorem revenues should all other pledges be insufficient.

Since 2010, the County has loaned the Arena more than $15 million which was used by AOC primarily to assist with making the annual debt service payment to the County in FY10, and FY11 and also provided funds in FY12 for capital improvements to generate additional profits for the team. The first payment on these loans was made by the AOC in FY13 and a portion of the remaining $10 million plus is due each year from FY14 to FY17. In addition to the loans, in 2004 and 2006 the County entered into refinancing transactions which resulted in total savings of $21.9 million for the County. Of this total, the County provided AOC $13.3 million (60%) for AOC to reduce its arena bond payments in FY2004 thru FY2007. The County funded additional capital projects at the arena with a portion of these remaining savings. Also, in May of 2013, the County provided a $4.1 million grant to AOC to replace the arena’s scoreboard.

COMPETITION The Miami-Fort Lauderdale-West Palm Beach metropolitan area offers numerous entertainment options and venues. As such, the BB&T Center faces stiff competition. Its most direct competitor is the AmericanAirlines Arena (AAA) in downtown Miami. To a lesser extent, the facility also competes with larger South Florida venues such as Sunlife Stadium and Figure 1 AmericanAirlines Arena, Miami potentially Marlins Park for large events/performances. It must also compete head on with smaller venues including the Broward Theatre for the Performing Arts, the Seminole Hard Rock Hotel & Casino, and the Cruzan Amphitheater, among others.

21 The Broward County Civic Arena: History, Facts and Opportunities

The Arena Partnership

The business relationships between Broward County and SSE’s entities are complex. Broward County owns the Arena and the Arena site. The facility is managed and operated by the Arena Operating Company (AOC) under a 30-year operating agreement. The team is contractually obligated to play all of its pre- season, regular season and playoff games at the Arena through the 2028 hockey season. ADC initially constructed the Arena and holds, subject to further negotiation, certain rights to develop a specific 12- acre parcel adjacent to and south of the Arena. The following is a graphical depiction of the relationship between the various parties prepared by the County Auditor’s Office.

Develop ADC / "Project Developer" SSE Operate AOC / Facility "Operator"

County "Team" Use

Arena Management and Operations

Under a 30-year operating agreement that expires in 2028, the County granted AOC the sole and exclusive right to manage and operate the facility. This includes the exclusive right to enter into arrangements with events or performances wishing to use the BB&T Center. AOC has the exclusive option to extend the term for two, five-year periods under the same terms and conditions. Neither party can terminate for convenience.

COUNTY RESPONSIBILITIES As the owner of the facility, the County is required to:

 Satisfy the annual outstanding debt payment for bonds issued to finance the construction of the facility. This is secured by a fixed amount of tourist development taxes, state sales tax rebates, and payments from the AOC. The tourist development taxes (TDT) generated by the County under §125.0104, Florida Statutes, provide an additional two percent tax on the total amount charged for transient rental transactions. These revenues are authorized to pay the debt service on bonds issued to finance professional sports franchise facilities, retained spring training franchise facilities, and convention centers. Excess TDT funds available after the County meets its contractual obligations may be used for other purposes as authorized. The states sales tax rebate is authorized under §212.20, and §288.1162 Florida

The Broward County Civic Arena: 22 History, Facts and Opportunities

Statutes for professional sports franchises not based in the state before April 1, 1987.

 Pay AOC an annual management fee, currently estimated at $367,709, which increases each year by the percentage increase in the Consumer Price Index.

 Approve requests for “Additions and Capital Repairs” in excess of $100,000 of which are paid for from the Renewal and Replacement Account. This includes reviewing construction plans and specifications as well as any Additions and Capital Repairs, which are defined as installations, alterations, improvements, and purchases of additional or replacement furniture, machinery or equipment.14

 Provide insurance for County-sponsored events.

Also, the County can use the arena’s parking lots at no charge during a declared state or local emergency as a staging area, which was done as a result of the aftermath of Hurricane Wilma in 2005. Additionally, the County may use the facility up to 15 days per year to host events. Finally, under a separate agreement, the County may use 342 parking spaces for the purpose of operating a Park and Ride transit center (BB&T Center Park & Ride).

ARENA OPERATING COMPANY RESPONSIBILITIES AOC’s responsibilities under the Operating Agreement and its eight subsequent amendments are:

Financial  Rent/Debt Service Payment – The AOC, on an annual basis, must pay the difference between the total debt service due that year less $10 million, plus another $620,000 for completion debt, which amounts to approximately $4.62 million.15

Total Annual Bond Completion TDT Sales Tax Rebate AOC Annual “Rent” Payment Payment Debt ($8 million) ($2 million) (≈$14 million) ($620,000)

 2012 County Loan Payments: The AOC is responsible for the principal amount of $7.7 million to fund capital improvements associated with ClubRed ($4.7 million) and improvements to the suite level and loge boxes ($3 million);

Payment Date Amount Due July 1, 2013 -July 1, 2016 $2 million (each July 1) July 1, 2017 $685,632

14 Section 1.3 of the Operating Agreement between Broward County and the Arena Operating Company. 15 The $10 million consists of the fixed amount of $8 million the County receives from the Tourism Development Tax and $2 million in State Sales Tax Rebate, which the County has pledged to debt service payments. 23 The Broward County Civic Arena: History, Facts and Opportunities

 2010 County Loan Payments – The AOC must repay a $6.5 million loan from Broward County for debt relief ($2.5 million annually for the first two years and $1.5 million in the third year, beginning 2013 );

 Capital Expenditure Reserve Contributions – The AOC must put aside $500,000 annually beginning July 1, 2013 through July 1, 2017. If the County receives a revenue sharing distribution, $250,000 of the County’s proceeds can be used toward the $500,000 contribution;

 Tourism Promotion – The AOC must make a $500,000 annual payment;

 Renewal and Replacement Contribution – The AOC’s annual contribution is calculated to be approximately $900,000 based on a formula; however, section 1.84 of the Operating Agreement requires the AOC to deposit all Seat Use Charges into this account. In 2013, AOC collected $1.3 million from Seat Use Charges.

Distribution of Funds from Operating Fund The agreement prioritizes the distribution of funds from the Operating Fund for AOC to meet its financial obligations in the following order:

1) Arena debt payment.

2) 2012 County Loan payments.

3) Facility Operating Expenses, excluding payment of Management Fees.

4) Payment to the Panthers of any unreimbursed amounts advanced by the Team to the AOC in order to make the annual arena debt payment.

5) AOC Management Fee (estimated at $367,709).

6) Renewal and Replacement Account contribution = $900,000 or actual seat use charge collections.

7) Operating Reserve Contribution – three months of operating expenses.

8) Capital Expenditure Reserve Contribution.

9) Distribution of Remaining Funds (“Revenue Sharing” or Net Operating Income Distribution)  First $12 million to AOC  Excess of $12 million, 80% to Panthers and 20% to Broward County

The Broward County Civic Arena: 24 History, Facts and Opportunities

Required Financial Accounts and Purpose The AOC is required to maintain the following financial accounts:

Account Title Purpose

Capital Expenditure Reserve Capital improvements

Operating Fund Deposit of all facility operating revenue and payment of operating expenses

County Preferred Revenue Allocation AOC’s annual contribution toward payment of Account outstanding Arena bonds

2012 County Loan Reserve Account Assure the annual payment of the loan

Renewal and Replacement (R&R) Installations, alterations, improvements, and purchases Account of additional or replacement furniture, machinery or equipment.

Operating Reserve Account Three months of operating expenses

Reporting Requirements Regular reporting by the AOC to Broward County and the Panthers include:

Report Date Due Receiving Entity Audit - consolidated balance February 27 County sheet of the AOC and the Administrator/CFO Panthers, a consolidated statement of profit and loss, and a consolidated statement of changes in financial condition and accompanied by an auditor’s report containing an opinion of an independent certified public accountant.

Projected financial condition February 27 County Administrator / and operations for the AOC and CFO and County Auditor Panthers for the following fiscal year.

Annual budget (estimated August 1 County revenues and expenses for the Administrator/CFO for next fiscal year) County review only.

R&R Account Budget for the next fiscal year

Monthly Financial Statement 20th day of the  County Administrator following month / CFO  Florida Panthers

Quarterly Financial Statement 45 days after the end  CFO of each quarter  Panthers

Certified Audit of Facility 60 days after end of Panthers Operations each fiscal year

25 The Broward County Civic Arena: History, Facts and Opportunities

Records and Audits  Allows the County, but subject to the consent of the NHL, to examine the books, records, accounts, and financial statements of the Panthers once annually.

 County may examine AOC’s records at any time upon reasonable notice.

Insurance AOC must provide insurance coverage for the full replacement value of the BB&T Center for all perils except flood and earthquake. The Team purchases this insurance from the NHL’s insurance pool. As a result of the 2005 hurricane season, the cost of insurance increased substantially from $800,000 to a range of $3 million annually. Insurance costs have since stabilized at around $1.7 million yearly.

Operating Expenses and Capital Improvements AOC is responsible for all operating expenses and capital improvements, but must get approval from Broward County for any improvement over $100,000.

Marketing & Public Relations AOC is responsible, in coordination with the Broward County Convention Center and the Broward County Performing Arts Center, for marketing and public relations of the arena.

Naming Rights AOC has the exclusive right to sell or grant naming rights to some or all portions of the facility, a portion of which can be bartered or traded (no more than 20%).

Complimentary Tourism Promotion AOC is required to provide the Greater Fort Lauderdale Visitors and Convention Bureau with complimentary tickets to Panthers home games for tourism development-related purposes.

Panthers Arena Use Agreement

The Florida Panthers are the only major league professional sports team that plays its home games in the facility. They are committed through the 2027- 2028 hockey season by means of a License Agreement. This document sets forth the rights and obligations of all of the parties with respect to the team’s use of the arena.

 Essentially, AOC charges the team rent of $7,500 per game up to $307,500 per hockey season. The team is responsible for reimbursing AOC for hockey event staffing expenses, hockey event utility expenses, expenses relating to team office space, and the team retail store. AOC incurs approximately $2.2 million in hockey-related expenses yearly. Maintenance, custodial and utilities are considered facility expenses and are not charged to the team.

The Broward County Civic Arena: 26 History, Facts and Opportunities

 The Panthers have first priority with regard to scheduling hockey events.

 The team has the option to extend the License for two additional five-year terms (extension term). It also has the option to renew for additional five year terms (subsequent extension terms).

 The team has exclusive rights to the following revenues related to hockey events: ticket sales, concession revenues, sponsor signs, sponsorship receipts, pay television receipts, television and radio broadcasting, promotional and team retail store sales.

 The Team must provide up to 50 General Seating tickets for each hockey event for tourism promotion.

 Required Team reports > By the 15th of each month following a month in which home games were played at the facility the Team must provide AOC with a copy of an official ticket receipts statement.

> Within 120 days following the end of the Hockey season, must provide AOC’s independent auditor with access to records for auditing purposes.

 The Team can make minor additions and improvements (costing less than $100,000) to the facility without AOC’s or the County’s approval.

 The Team must maintain insurance (commercial general liability, property insurance, worker’s compensation and employer’s liability insurance, operators insurance).

Development Agreement

On June 4, 1996, the County and ADC entered into a Development Agreement which set forth the terms under which the County would finance the construction of the arena and how ADC would develop and construct it. It provided for 123.043 acres for the arena (Parcel “B”) and a 12-acre “private development site” (Parcel “A”) adjacent to the arena site for development.

27 The Broward County Civic Arena: History, Facts and Opportunities

Part The Florida Panthers

This section –  describes the Florida Panthers hockey team  provides an overview of NHL economics  summarizes the Panthers impact on Broward County  concludes with an overview of the challenges facing the franchise.

Franchise Overview

HISTORY Expansion of the NHL since 1990 resulted in nine new teams primarily in southern states and the west: San Jose, Anaheim, Tampa, Atlanta, Nashville, Ottawa, and South Florida. Later, the NHL expanded by two additional teams in Minnesota (1997) and Ohio (2000).

As for Florida, the Panthers were awarded to H. Wayne Huizenga in 1992 and began playing a year later. From its inaugural season to 1998, the team played its home games at the former Miami Arena and moved to the now BB&T Center in time for the 1998-1999 hockey season. It is one of two professional hockey teams in the state, the other being Tampa Bay’s Lightning. The team is the southernmost team in the NHL and located in what is widely considered by hockey enthusiasts as a “non-traditional hockey market.”

AFFILIATES The team’s minor league affiliates are the San Antonio Rampage of the American Hockey League. This team is owned by the NBA’s San Antonio Spurs and play in the AT& T Center. Cincinnati’s Cyclones of the East Coast Hockey League (ECHL), which play in the US Bank Arena, are the other minor league affiliated team of the Florida Panthers.

Overview of Hockey Economics

CURRENT STATE OF THE NATIONAL HOCKEY LEAGUE The NHL is one of the major professional sports leagues in the United States. It consists of 30 teams, 23 in the United States and 7 in Canada. Of the four major professional sports leagues, the NHL has the smallest fan base, least amount of television/broadcast revenues, and the least sponsorship revenue16

This season, the NHL is experiencing an increase in popularity with resulting increases to the league’s profitability. This year’s Winter Classic, an outdoor game held on New Year’s Day, set an NHL attendance record of 105,491 in frigid and snowy conditions.17 Attendance has increased, television viewership is up, ticket prices are up and so is revenue. The NHL recently signed new lucrative

16 Markus, David (August 2008). “Champions of the turnstiles.” Retrieved from www.gsb.stanford.edu/news/bmag/sbsm0408/feature_sports.shtml. 17 The game between the Toronto Maple Leafs and the Detroit Red Wings was played in Michigan Stadium (Ann Arbor, Michigan). The Broward County Civic Arena: 28 History, Facts and Opportunities

broadcasting rights agreements in the U.S. and Canada. Rogers Communications signed a 12-year agreement worth $5.2 billion for Canadian broadcast rights. In 2011, NBC paid $2 billion for U.S. broadcasts.18 Teams like the Panthers should receive $15-$20 million yearly as a result from revenue sharing.

Hockey is a business first, a sport second. For many team owners, an NHL team is a corporate commodity that is bought at one price and sold at an increased value later on. The bottom line matters, revenues are of paramount importance and costs are fought with grim determination”.19

Despite the NHL’s recent success, many of its franchises are struggling. Forbes reports that for the 2011-2012 season, 13 of the league’s 30 teams lost money. There is revenue disparity between large market teams (New York, Los Angeles and Toronto) and small market teams (Florida, Tampa Bay, Columbus, Raleigh and others). WR Hambrecht + Co believes that unless that disparity is addressed “we will continue to see such struggling teams seek more advantageous playing locales.”20

NHL TEAM VALUES WR Hambrecht + Co also finds “there is a ‘high physic’ value to owning a professional franchise which goes beyond intrinsic financial metrics…There is a great degree of prestige that accompanies an ownership stake in a team that has the potential to capture a championship, which of course translates into a very palpable value in the eyes of the investor.”21 In addition, research shows that higher public subsidies for a team increase the team’s economic value.

Among the major sporting leagues, NHL team values are lower than the NFL, Major League Baseball (MLB), and the NBA. During the period of 2003 through 2012 “the NHL’s average team value went from $159 million to $282 million, an increase of $123 million or 77%”.22 Franchise values in the NHL are at all-time highs. 23 According to Forbes Magazine’s annual estimate of professional sports franchises, in 2012, the highest valued team in the NHL was the Toronto Maple Leafs at $1.15 billion and the lowest valued team, the Columbus Blue Jackets, at $175 million. The Florida Panthers ranked 23rd out of the 30 NHL teams at $240 million – a 41 percent increase in value over the previous year. The team most recently sold for $240 million in 2013, a 20 percent increase from its previous sale price of $200 million in 2009.

18 Willis, J. (November 26, 2011). American NHL Teams the Big Winners in New Canadian TV Deal. USAToday. 19 Fort, Rodney D. Sports Economics. 2011. 20 W.R. Hambrecht + Co. The U.S. Professional Sports Market & Franchise Value Report. 2012 21 Ibid. 22 Marquette Sports Law Center. A Comparison of Team Values in Professional Team Sports.2013. 23 W.R. Hambrecht + Co. 29 The Broward County Civic Arena: History, Facts and Opportunities

TEAM REVENUE SOURCES NHL teams obtain most of their revenue from local sources, including ticket sales, corporate sponsorships, naming rights, and premium seating sales.24

The Panthers Impact on Broward County

Although professional sports teams are not major economic drivers, certainly not on the same level of Broward County’s Port Everglades, Airport, or Convention Center, the team does generate some positive economic benefits to the county’s economy in terms of employment, direct local spending, support for charitable causes, taxes, and other intangible benefits.

EMPLOYMENT & JOBS The Panthers and the AOC employ both directly or indirectly 260 full-time persons, and 1,185 part time positions to support events at the arena. Applying a conservative multiplier of 1.25 to each full-time position yields an additional 325 full time indirect jobs created at restaurants, retail, service industry etc., as a result of spending by the team, AOC, and events at the BB&T Center.

DIRECT AND INDIRECT LOCAL SPENDING The team generates economic impacts from spending associated with game day operations and other team business activities. Spending is generated by game attendees on tickets, concessions, merchandise, parking, local restaurants, retail stores, hotels, entertainment and other establishments. Local hotels such as the Marriott Harbor Beach, Marriott Heron Bay, Doubletree, Westin, Ritz- Carlton, and the Renaissance are frequently used by teams and others when visiting the BB&T Center. In addition, the local economy benefits from spending in connection with sponsorships, advertising, media broadcasting, and other corporate activities associated with the team and the BB&T Center.

Although the majority of season ticket holders and club members are Broward County residents (60% Broward, 22% Palm Beach and 13% Dade), the AOC reports that 68% of single game revenues are from individuals that reside outside of Dade, Broward or Palm Beach counties. Also, for the recent Billy Joel concerts, 36% of tickets sold were to individuals that reside outside of South Florida.

SUPPORT FOR CHARITABLE CAUSES The AOC reports that the Florida Panthers Foundation has provided almost $1.1 million since 2011 in financial contributions to charitable organizations and community events. In addition, the Panthers serve, or have served, on nine governing boards of local charitable groups.

24 HOK Sports. Hartford Downtown Arena Feasibility Study. 2008. The Broward County Civic Arena: 30 History, Facts and Opportunities

Direct Financial Support Current or Former Board Membership Broward Back to School Drive Boys & Girls Club Winterfest Winterfest KaBoom! American Heart Association Jessica Jure Children’s Cancer Foundation Leukemia & Lymphoma Society St. Baldrick’s Foundation Broward Health Foundation St. Jude Children’s Research Hospital Florida Sports Foundation Broward Health Foundation Ghost Light Society Children Battling Cancer Association of Fundraising Professionals The Leukemia & Lymphoma Society Kapow Ronald McDonald House American Cancer Society American Heart Foundation Make-A-Wish Foundation American Red Cross Young-at-Art Boys & Girls Club Flashes of Hope Zmotion Live Strong Event Chrons & Colitis Foundation of America Gilda’s Club

TAXES AND OTHER PUBLIC REVENUES Broward County benefits from the Panthers through arena bond payments from AOC, sales taxes, tourist development taxes, and other revenues related to hockey games at the BB&T Center. For example:

 Since 1998, the AOC has made $47.8 million in arena bond payments.

 It generates more than $ 3 million annually in sales taxes, $ 2 million of which are returned to Broward County and used to pay the debt on the facility.

 More than 2,500 hotel nights per hockey season are generated by visiting teams in hotels located in Broward County, generating $323,650 in additional hotel revenue (based on the Average Daily Rate between October and March) and $16,183 in additional tourist development tax proceeds. Any hotel room nights or additional tourist development taxes generated by attendees, the media, and other hockey event support personnel are not captured.

INTANGIBLE IMPACTS A major league professional sports team, such as the Panthers, offers non- quantifiable benefits to its host community.

Provides a Community Amenity First, major league sports are viewed as an amenity that adds to a community’s quality of life, not unlike parks, public art, and the performing arts. In a document from the University of Michigan titled “Sports Stadiums + Public Subsidies,” it is noted that sports teams are important institutions within a city or a region, they help connect people with places, and foster community pride.25 The presence of a major league sports franchise can help make a metro

25 Sports Stadiums + Public Subsidies. Untitled Document. http://www.umich.edu/~econdev/stadium_subsidy/ retrieved January 13, 2014. 31 The Broward County Civic Arena: History, Facts and Opportunities

area an attractive place to live resulting from the perceived prestige associated with being a “major league city.” 26 Furthermore, rooting for a sports team provides for shared community experiences and by contributing to a sense that one lives in a “world class” city.27

Enhances Greater Fort Lauderdale Marketing and Tourism Efforts The team’s presence also compliments and reinforces the Greater Fort Lauderdale’s Convention and Visitors Bureau’s marketing and tourism promotion efforts. Being a winter sport, the Panthers’ hockey games are broadcasted across the United States and internationally in many of Broward County’s strategic tourism promotion targets, such as the Northeast, Midwest, Canada and parts of Europe. In addition, through cross promotion, the Panthers help promote other events being held at the BB&T Center. This is an effective advertising method that cannot be replicated without significant cost.

Provides Entertainment Alternatives Professional sporting events at the BB&T Center, namely NHL hockey, provide the community an entertainment alternative. Tickets to Panther games are priced in various price points starting at less than $10.00.

In addition, SSE owns and operates the Saveology.com Iceplex in Coral Springs. This 125,000 square feet ice skating facility contains three rinks. It was constructed by SSE at their cost and is the Panthers’ practice facility. When not in use by the team, the facility provides community based programs, adult and youth hockey programs, and other ice skating activities.

Team Challenges

It has been reported in the media that due to the Panthers’ financial struggles the team has had five ownership groups in its 20-year history:

 H. Wayne Huizenga  Alan Cohen  Cliff Viner  Stu Siegel  Vincent “Vinnie” Viola

26 Rappaaport, J. and Wilkerson C. “What are the Benefits of Hosting a Major League Sports Franchise?” Federal Reserve Bank of Kansas City Economic Review. 2011. Pp. 55-86. 27 ibid The Broward County Civic Arena: 32 History, Facts and Opportunities

FINANCIAL HARDSHIPS Local media reports indicate the team lost $20-30 million annually or $110 million under the previous owner. In addition, data compiled by CBRE indicates local market support for the team is below other NHL teams, resulting in lower prices for tickets and less revenue for the team.28 For example, the team’s --

⋅ Luxury suite prices (2011) are well below the NHL average and 35% below Tampa Bay’s.

⋅ Club seats are priced well below the average.

⋅ Season ticket prices are among the lowest.

⋅ Single game tickets were approximately 50% below the league averages, and as much as 55% to 65% below Tampa Bay’s pricing.

⋅ Revenues from luxury suites and sponsorship have declined between FY 11 and FY 12.

⋅ Average cost of a ticket is $55.75.

Also, the team’s Fan Cost Index (FCI)29, which is published by the Team Marketing Report, lists the Panthers FCI at $336.99, which is slightly below the NHL average of $354.82. In contrast, the highest in the NHL is Toronto at $631.15 and the lowest being Phoenix at $253.30.

ATTENDANCE STRUGGLES Attendance is important in the NHL because it drives revenue from ticket sales, parking revenue, concession sales, and helps attract larger sponsorship and advertising deals. The Panthers are struggling to attract fans to the BB&T Center on game day. According to hockeyattendance.com, through the first 21 games (or December 31, 2013) of the 2013-2014 hockey season, the Panthers are 26th out of the 30 teams for attendance. They are averaging 14,658 fans per game. Total attendance thus far is 307,818 - just 76.1% of capacity, second worst in the league and just above Columbus Blue Jackets’ draw of 75% of capacity. Top attendance this season was on Sunday, December 29th versus the Montreal Canadiens (19, 891) followed by Saturday, December 28th’s game against the Detroit Red Wings at 18,932. The lowest attended game so far this season was Tuesday, December 3rd versus the Ottawa Senators which drew only 10,074 fans or just 52% of total seating capacity.

28 CBRE.2013. 29 The Fan Cost Index is based on the prices of four average price tickets, two small draft beers, four small soft drinks, four regular hot dogs, parking for one car, two game programs and two least expensive adult-size adjustable caps. 33 The Broward County Civic Arena: History, Facts and Opportunities

Average Attendance per Game 2005 - Present 18,000 17,000 16,000 15,000 14,000 13,000

Total Attendance per Hockey Season 2005 - Present 800,000 600,000 400,000 200,000

-

Until this year’s decline in average attendance per game, regular season attendance at Panther home games was trending higher from the 2007 season through 2013, except for a dip in 2010. In fact, last season’s average attendance per game of 16,992 was the highest during our study period. 2012’s total attendance of 681,763 was the highest since 2005. At the current trend, 2013- 2014 will result in the least attendance since the 2005-2006 season.30

TELEVISION VIEWERSHIP CONCERNS On ice performance (i.e., losing seasons) has an impact on television viewership, which helps drive local broadcast and advertising revenue. According to Sports Business News, the team was last in the NHL with television viewership at only 13,400 viewers per game during the 2011-12 season. 31

30 Notes: 2012-2013 Season Limited to 24 Home Games. 2013-2014 Season thru 21 Games

31 Sports Business News (December 4, 2012). “Addition, Subtraction, Contraction and then NHL Expansion. Retrieved from http://www.sportsbusiness.com/content/addition-subtraction-and-then-nhl-expa... The Broward County Civic Arena: 34 History, Facts and Opportunities

CORPORATE SUPPORT ISSUES Corporate support for the team offers an opportunity for improvement. We note that of the 15 largest public companies based in Broward County in terms of revenue, only four support the team through sponsorship, advertising or suite rental:

 AutoNation  Citrix  National Beverage Corp.  The Ultimate Software Group

Also, of the 25 largest firms in terms of employees, only 10 support the team through sponsorship, advertising or suite rental:

 Nova Southeastern University  AutoNation  Citrix  JM Family Enterprises  Rick Case Automotive Group  City Furniture  Sun-Sentinel/WSFL TV  Zimmerman  Saveology  Ed Morse Automotive Group.

FRANCHISE INSTABILITY Despite the fact that the Team has negotiated a more lucrative naming rights contract, increased revenues from local broadcasting, and receives more funding through the NHL’s revenue sharing program, profitability evades the team, resulting in franchise instability. This instability is not unique in the NHL. In fact, according to an on-line article from SBNation.com lamenting upon the instability of certain NHL franchises, “in the last 15 years alone, similar situations have played out for the New Jersey Devils, St. Louis Blues, Nashville Predators, Edmonton Oilers, Buffalo Sabres, Ottawa Senators, Florida Panthers, Atlanta Thrashers, Dallas Stars, New York Islanders and Tampa Bay Lightning.”32

Before the recent purchase of the Panthers by the new ownership group, the Panthers were widely considered to be a prime candidate for relocation. One on-line article described the Panthers as a “franchise on life support.”33 Team relocations are not uncommon in the NHL. Since the mid-1970s, cities like Atlanta, Oakland, Cleveland, Minneapolis/St. Paul/Bloomington, Quebec, Winnipeg, Kansas City, Denver and Hartford have all lost NHL teams. Atlanta has the distinction of losing two NHL teams; most recently, in 2011 when the

32 Jansky, D. (February 1, 2013). Phoenix Coyotes sale sage illustrates far too familiar NHL ownership problems. Retrieved from SBNation.com:http://www.sbnation.com/nhl/2013/2/1/3939968/phoenix-coyotes-sale-grg-jamison-coll… 33 Augello, M. (August 7, 2013). Odds Decreasing for Second NHL Team in GTA? Retrieved from HockeyBuzz.com: https://www.hockeybuzz.com/blog.php?post_id=53248. 35 The Broward County Civic Arena: History, Facts and Opportunities

Thrashers were sold to True North Entertainment and relocated to Winnipeg, where they became the latest version of the Winnipeg Jets. Of those cities losing teams, three (Denver, Minneapolis/St. Paul/Bloomington and Winnipeg) received replacement teams several years later after building new facilities.

Since demand for an NHL franchise exceeds supply, metro areas have been forced to compete with each other to retain and attract franchises.34 Areas frequently mentioned as serious contenders for a hockey franchise include Quebec, Toronto, Hamilton, Las Vegas, Seattle, Portland, Houston, Oklahoma City, and Indianapolis.35 They either have an NHL–ready arena or have announced plans to build an arena capable of hosting NHL games. We can therefore assume that any of these cities would offer substantial public subsidies and inducements to entice the Panthers or any remnants of the team should it fold.

34 Rappaport, J. and Wilkerson, C. 2001. 35 The Hockey Fanatic. Top 10 Cities that Need an NHL Franchise. Retrieved from TheHockeyFanatic.com: https://www.thehockeyfanatic.com/hockey-lists/top-10-cities-that-need-an-nhl-franchise/. Retrieved December 4, 2013. The Broward County Civic Arena: 36 History, Facts and Opportunities

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37 The Broward County Civic Arena: History, Facts and Opportunities

Part Performance Summary

This section –  summarizes the financial performance of AOC from 1999-2013  reviews the BB&T Center’s sales of tickets to non-sporting events  identifies facility improvements from 1999-2013  discusses AOC’s adherence to contract conditions  lists remaining debt balances; and  describes Project Oz.

Financial Summary

Note: all financial information contained in this section pertaining to the AOC were taken from staff’s review of the AOC’s audited annual financial statements for Fiscal Year 1999 through Fiscal Year 2013.

THE IMPACT OF COMPETITION The BB&T Center is located within the same geographic area as another first tier major league facility - the AmericanAirlines Arena (AAA). With its waterfront location, proximity to Miami Beach, and international appeal, the AAA is a formidable competitor for spectators, events and performances. Competition between the dueling arenas may result in the BB&T Center recovering less than its costs to host performances and events since promoters and entertainers often pit one facility against the other in hopes of “getting the better deal” when selecting a venue. Northern New Jersey experienced a similar situation between the Izod Center (East Rutherford – “the Meadowlands”) and the newer Prudential Center located in Newark. Other NHL cities such as Uniondale, New York (Islanders); Glendale, Arizona (Coyotes); St. Paul, Minnesota (Wild); and San Jose, California (Sharks) are similarly situated.

As detailed later in the section, the AAA has outperformed the BB&T Center since 2010 based on the number of tickets sold to non-sporting events. Its national and international rankings have surpassed the BB&T Center’s during this time as well.

FACILITY OPERATING REVENUES Facility Operating Revenues are defined in Section 1.41 of the Operating Agreement and are presented in AOC’s audited financial statements in two categories:

 Hockey Event Related Revenues  Non-Hockey Event Related Revenues.

The Broward County Civic Arena: 38 History, Facts and Opportunities

HOCKEY EVENT RELATED REVENUES Hockey related events include 41 regular season home games played at BB&T Center, as well as any home playoff games (varies from year-to-year based on playoff qualification, conference seeding, and playoff round advancement up to and including the Stanley Cup Final). These revenues are presented in the AOC’s audited financial as follows:

Club Seat Tickets Includes tickets for ADT Club, Duffy’s, and Club Red Parking Includes general parking, and pass and club parking revenues for hockey events Food and Beverage Includes food and beverage concession commissions for Concessions hockey events Other Includes Panthers rent and completion bond payment, nightly suite revenues, and building reimbursable expenses

In fiscal years 2005 and 2013, the NHL imposed a lock-out whereby the entire hockey season was cancelled (41 home games), and reduced (17 home games) in each year, respectively. The team has advanced to the playoffs four times in its history in 1996, 1997, 2000, and 2012. Additional hockey events include the hosting of the NHL draft in June of 2001 and the NHL All-Star Game in February of 2003.

NON-HOCKEY EVENT RELATED REVENUES Non-hockey related events include concerts, shows, conventions, and private events. These revenues are presented in AOC’s audited financial as follows:

Includes revenues for ticket fees, concession Non-Hockey Event Related commissions, parking, and merchandise Suite Rentals Includes suite rental revenues Sponsorship Includes sponsorship and naming rights, marquee advertising, and event sponsorship revenues Other Primarily includes seat use charges ($1.50 for hockey and $3.75 for concerts), personal seat license revenues, and misc. other revenues

SUMMARY OF REVENUES From FY1999 (first year of facility operations) to FY2013, Facility Operating Revenues totaled $511.4 million, which was divided between hockey related event revenues of $130.1 million (26%), and non-hockey related event revenues of $381.2 million (74%):

Facility Operating Revenues Total 1999-2013 % of Total Club Seat Tickets $55,584,889 11% Parking $21,064,220 4% Concessions $28,391,289 6% Other $25,102,136 5% Sub-Total Hockey Events $130,142,354 26% Non-Hockey Event Related $124,743,785 24% Suite Rentals $104,616,506 20% Sponsorship $86,254,564 17% Other $65,634,313 13% Sub-Total Non-Hockey Events $381,249,165 74% Total Revenues $511,391,512 100% 39 The Broward County Civic Arena: History, Facts and Opportunities

From FY1999 to FY2013, Facility Operating Revenues increased by 27% overall, with revenues associated with hockey events declining by 27% and revenues associated with non-hockey events increasing by 60%:

Facility Operating Revenues FY1999 FY2013 % Change Club Seat Tickets $5,521,670 $5,046,735 -9% Parking $2,668,303 $851,994 -68% Concessions $2,352,166 $1,565,492 -33% Other $1,643,893 $1,491,464 -9% Sub-total Hockey Events $12,186,032 $8,955,685 -27% Non-Hockey Event Related $6,780,515 $11,624,402 71% Suite Rentals $6,450,000 $5,102,072 -21% Sponsorship $5,242,914 $6,268,709 20% Other $972,646 $8,075,258 730% Sub-Total Non-Hockey Events $19,446,075 $31,070,441 60% Total Revenues $31,632,107 $40,026,126 27%

FACILITY OPERATING EXPENSES Facility Operating Expenses are defined in Section 1.40 of the Operating Agreement and are presented in AOC’s audited financial statements as follows:

Includes expenses items such as show catering, Hockey Events security, staffing for parking, and event cleaning Non-Hockey Events Includes expenses for items such as show catering, security, promoter rebates, event staff, marketing and advertising, and event cleaning Repairs and Maintenance Includes expenses for general building and equipment maintenance Utilities Includes expenses for water, sewer, waste removal, electric, and gas Hurricane Related Expenses Expenses charged in FY2006 and FY2007 related to active hurricane seasons Selling, General, and Admin. AOC’s largest expense category which includes items such as full and part-time salaries and benefits, sponsorship trade expenses, property insurance premiums, legal fees, depreciation, County Preferred Revenue Allocation payment, renewal and replacement expenses, TDC payments, and other interest expenses

EXPENSE SUMMARY From FY1999 to FY2013, Facility Operating Expenses totaled $313.7 million. A breakdown by expense category is as follows:

Facility Operating Expense Total 1999-2013 % of Total Hockey Events $24,734,411 8% Non-Hockey Events $85,260,640 27% Repairs and Maintenance $25,100,971 8% Utilities $31,493,619 10% Hurricane and Related Exp. $1,392,051 < 1% Selling, General, and Admin. $144,701,443 46% Total $312,683,134 100%

The Broward County Civic Arena: 40 History, Facts and Opportunities

From FY1999 to FY2013, Facility Operating Expenses increased by 115% overall, with the largest percentage increases in the non-hockey events (395%) and selling, general, and administrative categories (185%):

Facility Operating Expense FY1999 FY2013 % Change Hockey Events $1,659,878 $1,104,599 -33% Non-Hockey Events $2,100,813 $10,396,003 395% Repairs and Maintenance $2,949,771 $687,266 -77% Utilities $1,842,274 $2,292,955 24% Selling, General, and Admin. $5,540,261 $15,801,001 185% Total $14,092,997 $30,281,824 115%

NET OPERATING INCOME Net operating income is defined in Section 1.58 of the Operating Agreement as “to each Fiscal Year during the Term, the net of Facility Operating Revenue for such Fiscal Year less Facility Operating Expenses for such Fiscal Year and less the County Preferred Revenue Allocation distributed by Operator pursuant to Section 5.2 for such Fiscal Year.” Facility Net Operating Income for FY1999 to FY2013 totaled $127.5 million and average $8.5 million on an annual basis.

Facility Net Operating Income Annual Average Revenues $34.0 million Expenses $20.8 million Average Annual Net $8.5 million Operating Income

DISTRIBUTION OF NET OPERATING INCOME Section 4.4 of the License Agreement provides for the sharing of net operating income as follows: “The Revenue Sharing Arrangement provides that the Operator shall distribute the first $14 million of annual Net Operating Income to Team and shall distribute all Net Operating Income in excess of $14 million eighty percent (80%) to Team and twenty (20%) to County. The profit sharing threshold was reduced to $12 million in 2010 in conjunction with the approval of the Seventh Amendment to the Operating Agreement.

 Total distributions to the Team from FY1999 to FY2013 equal $146.6 million.

 The County has received an annual profit share only once in FY1999 in the amount of $331,000 which represents 0.26% of total Facility Net Operating Income since FY1999. Similarly, Miami-Dade received its first revenue sharing distribution from the Miami Heat late last year. Despite the Heat’s success under Pat Riley and three championships, the AAA did not generate any profits until 2013. The Heat presented Miami-Dade County with a check for $257,134 on November 22, 2013.

HISTORICAL PERFORMANCE COMPARED TO PROJECTIONS Overall, actual revenues are in line with the 1996 Pro-Forma Projections. However, expenses far exceeded estimates and County distributions from Net Operating Income (“profits’) have been $331,000 rather than the projected $76.6 million.

41 The Broward County Civic Arena: History, Facts and Opportunities

A comparison of actual financial performance from FY1999-FY2013 with the pro- forma completed in 1996 is below:

% 1996 Projection 2013 Actual (+/-) deviation Revenues $582,953,000 $511,391,512 ($71,561,488) -12% Expenses $216,568,000 $312,683,134 $96,115,134 44% NOI* $366,385,000 $127,511,091 ($208,873,909) -57% County $76,637,000 $331,000 ($76,306,000) -99.6% Distribution *Net Operating Income.

Non-Sporting Events Ticket Sales

Pollstar, a concert trade publication, ranks the world’s arenas based on the number of tickets sold to non-sporting events. Both the AAA and the BB&T Center, along with first tier arenas in Tampa and Orlando are in the top 30 arenas in the United States based on Pollstar’s 2012 list of the world’s top 200 venues. Florida venues ranked by Pollstar in 2012 include:

Venue US Ranking # of Tickets Sold AmericanAirlines Arena, Miami 10 370,968 BB&T Center, Sunrise 18 298,505 Tampa Bay Forum, Tampa 21 277,855 Amway Center, Orlando 26 236,966 Jacksonville Veterans Memorial Arena 39 176,623 Pensacola Bay Center, Pensacola 87 74,384 Germain Arena, Estero 91 69,263

The following table summarizes the BB&T Center’s ticket sales for non-sporting events from 2008 through 2012.

2008 2009 2010 2011 2012 2013 Ticket Sales 362,070 374,275 306,984 383,092 298,505 365,742 US Ranking 11 11 17 10 18 19 Worldwide Ranking 21 27 34 26 46 43

Since 2008, the facility has sold, on average, 348,445 tickets yearly to non- sporting events. This is well below the average attendance for hockey games, which is more than 640,000 for a full hockey season. There has been inconsistency in the number of tickets sold to non-sporting events since 2009. Additionally, the BB&T Center’s U.S. and international rankings have recently slipped and it is being outperformed by other arenas, including the AmericanAirlines Arena. In comparison, the following are the reported Pollstar ticket sales for the AAA:

2008 2009 2010 2011 2012 2013 Ticket Sales 232,786 261,140 317,408 410,496 370,968 451,388 US Ranking 26 24 15 7 10 10 Worldwide Ranking 46 49 32 22 28 31

The Broward County Civic Arena: 42 History, Facts and Opportunities

Since 2010, AAA has outperformed the BB&T Center based on the number of tickets sold to non-sporting events.

The largest single date performance in the venue’s history took place on January 11, 2014, with more than 20,727 attendees for the 8 p.m. Billy Joel concert. Billy Joel, Jimmy Buffett, Bon Jovi, Celine Dion are performers that have repeatedly attracted the largest crowds to the BB&T Center.

Facility Improvements

Now approaching the halfway point of its projected economic life, the BB&T Center appears well maintained and comparable with other NHL arenas. Since 2003, almost $28 million has been spent by AOC, with some County support, on major improvements.

Year Improvement Cost

2013 Scoreboard and Control Room $4,127,547

2012 Club Red, Suite Level and Lodge Improvements $7,744,900 Pantherland $494,315

2011 LED Equipment $1,400,000 Cooling Tower Improvements $790,000

2010 Den Of Honor $287,300 Public Artwork $85,700

2009 Roof Mitigation/Cladding Improvements $150,000 Sound System Upgrade $1,107,000 Outdoor Marquees $2,492,000

2008 Ice/Dehumidifier $448,000 Point of Sale System $514,000

2007 Security System Upgrade $361,800 Captains Club / Duffy’s $1,242,700 Kids’ Corner $83,195 Carpet Replacement $535,875

2006 Cruzan Bar & ADT Club $1,268,750

2005 Sinatra Theatre $504,000

2003 Signage and video upgrades $260,500 Black Velvet Lounge $249,700

Other Projects not listed $3,431,265

Total $27,578,547

Notably, AOC is not contractually obligated to provide the County with a five- year capital improvement plan for approval. Instead, AOC is only required to provide for the County’s review and comment, projected expenses for Additions and Capital Repairs for the next fiscal year.36

36 See section 4.1.2 of the Operating Agreement. 43 The Broward County Civic Arena: History, Facts and Opportunities

Contract Compliance

The AOC’s adherence to the terms and conditions of its agreement with Broward County has been an issue of concern. In a May 2013 report to the Board of County Commissioners, County Auditor Evan A. Lukic, noted the AOC37-

 Overpaid the Panthers $4.2 million  Overpaid Broward County $24,282  Did not fund and maintain the required reserve accounts o CPRA Reserve Account by $2 million o 2012 Loan Reserve Account by $284,000 o Operating Reserve Account by $3.3 million o Renewal and Replacement Account by $5.8 million  Has not complied with financial reporting requirements, noting -- o Incomplete financial reports o Untimely submittal of financial statements and other required reports o Lack of submission of reports

It is important to note that the $4.2 million payment to the Panthers would not have resulted in a profit sharing distribution to Broward County. Instead, the monies would have been retained by the AOC pursuant to its agreement with Broward County. Further, failing to adequately fund reserve accounts is an indicator of the team’s declining financial condition and cash flow issues.

Outstanding Debt Balances

Remaining balances on the various debt payments (principal and interest) owed by the AOC and Broward County thru 2028 are listed below:

County State Sales Debt Type AOC Total TDT Tax Rebate Arena Construction Debt $59,217,822 $120,000,000 $26,000,000 $205,217,822 Arena Completion Debt $9,145,959 N/A N/A $9,145,959 2010 Loan $4,127,251 N/A N/A $4,127,251 2012 Loan $6,685,632 N/A N/A $6,685,632 Total Amount $79,176,664 $120,000,000 $26,000,000 $225,176,664

Project Oz

Project Oz was an attempt by SSE to capitalize on the strength of sporting and performance venues in creating an entertainment and tourism destination. In October 2008, SSE submitted an application to the State Department of Community Affairs for a Development of Regional Impact (DRI) review for a mixed use entertainment district. (The DRI application was titled “The Florida Panthers Entertainment District DRI”). The proposal and concept was brought

37 Broward County Auditor (May 7, 2013). Review of Broward County Civic Arena Operating Agreement. The Broward County Civic Arena: 44 History, Facts and Opportunities

to the County Commission for consideration and entailed the development of 90-acres surrounding the arena. The proposal consisted of creating a “state-of- the-art” mixed-use development expanding upon the existing arena which included residential, retail, restaurant, hotel, office, classroom space, and a theater to create an entertainment district. The proposal was known as “Project Oz”.

The project was proposed to be constructed in two phases. The first phase was to be developed under a Preliminary Development Agreement while the second phase would have required amendments to the City of Sunrise and Broward County Land Use Plans; and, amendments to the existing Broward County Civic Center DRI.

In April 2009, SS&E submitted a “pre-application” for a substantial deviation to the DRI submission and had over the course of two years (through 2011) asked for various extensions, which, according to the City of Sunrise, were granted. They also had applied for a land use change to the City, however, not to the County. Due to inactivity, the City considered the application (DRI) withdrawn.

Summary of revised April 2009 Project Oz proposal:

Land Use Intensity Residential 800 dwelling units Retail/Restaurant 950,000 square feet Hotel 1,450 rooms Office 1,850,000 square feet Classroom Space 30,000 square feet Live Theater 9,200 seats Arena (currently existing) 21,500 seats

In 2011, a slightly scaled down version of the Florida Panther Entertainment District proposal was submitted, however, it was not pursued by SS&E. Despite the County’s approval – nothing materialized. No other formal proposals have been submitted or revised until the current submission.

45 The Broward County Civic Arena: History, Facts and Opportunities

Part Trends in Professional Sports Facilities

This section –  recognizes trends in the development and management of professional sports facilities  reviews the arguments for and against public subsidies for professional sports facilities  presents the three types of development associated with current generation sports facilities  discusses whether a major arena can succeed without professional sports  identifies major facilities with and without major league sports and  describes what happens to facilities that become functionally and economically obsolete following the relocation of an NBA or NHL team.

Current Trends

ECONOMICS 101: SUPPLY VS DEMAND = GROWING PUBLIC SUBSIDIES The four major professional sports leagues have a combined 122 teams that play in 47 metropolitan areas in the United States and Canada. Some areas, like the New York metropolitan area host multiple teams in each sport, and others like Green Bay host only one professional sports team.

Sports League Teams Major League Baseball 30 National Basketball Association 30 National Football League 32 National Hockey League 30

Of the 100 or more new or renovated professional sports facilities since the 1990s, the majority have been publicly financed or subsidized. “The construction of new facilities has led to a great deal of franchise movement, at both the major league and minor league levels, as teams relocate to markets with new venues that offer better financial opportunities.”38 Many professional sports teams are mobile. The mobility of these teams is based on the nature of their relationship with the facility they occupy: this relationship is akin to a landlord – tenant one. As a tenant, with little or no investment in the facility, they can, and often do, test the waters to seek more advantageous business terms. Other areas that are highly motivated to lure a professional team to their facility go to great lengths to offer incentives and subsidies. The competitive fervor between metropolitan areas is what has led to escalating levels of public funding for professional sports facilities.

If local governments are reluctant to provide subsidies, teams will threaten to move. By threatening to relocate to other areas, professional sports teams have successfully extracted subsidies from local and state governments to build new facilities or to allow them to play in new facilities at no cost while keeping

38 Canyon Research Southwest, Inc. (January 2007). Multi-use Arena Market Feasibility Study…Independence, Missouri. The Broward County Civic Arena: 46 History, Facts and Opportunities

almost all revenues.39 Sometimes, they follow through on the relocation. For example, after voters rejected a $400 million bond issue to replace Long Island’s Nassau Veterans Memorial Coliseum, the NHL’s New York Islanders announced their relocation in 2015 to Brooklyn’s Barclays Center. Other NHL communities including Glendale (Phoenix), Columbus, Raleigh, and Tampa renegotiated agreements with their teams in order to retain them. Atlanta was unable to keep its second hockey franchise from relocating to Winnipeg in 2011. Lastly, Major League Baseball’s Atlanta Braves shocked the sporting world with their announced move from Turner Field in downtown Atlanta to a suburban location after failing to obtain funding from the city of Atlanta and Fulton County.

Support for Public Subsidies Former Hillsborough County Property Appraiser’s Office’s Director of Valuation Process, Tim Wilmath, asserts that “Public–private partnerships are a necessity for modern sports arenas to succeed. Sports teams need local government to subsidize the cost and operation of the arena, and local governments need the teams in order to attract an attending audience and create the draw necessary to justify the investment.”40

Proponents of public subsidies for sporting facilities cite a variety of direct and indirect benefits to local communities including economic growth associated with construction and operation of the facility, redevelopment and ancillary development opportunities, creation of new jobs, enhanced marketing and tourism opportunities, increases in property values surrounding a professional sports venue, and increased civic pride and community stature resulting from hosting a major league professional sports franchise. They also contend that economic return is not the only reason for local governments to finance a sports venue.

Mathew Patlow, associate dean and professor of law at Marquette University Law School, has researched sports arenas for more than a decade. He believes that in certain instances using public funds for professional sports facilities is justified. He identifies several characteristics of successful projects warranting public support:41

1) When they have a relatively fair or balanced financing (private and public) and split arena revenues to enable the public sector to cover its debt payments and for the team to improve their profits and thus, the worth of their franchises.

2) When an arena is part of a larger economic development/urban redevelopment plan – that is the local government had planned for other development in and around the arena to build economic synergies.

39 Siegfried, John and Andrew Zimbalist (2000). The Economics of Sports Facilities and Their Communities. Journal of Economic Perspectives, pp. 95-114. 40 Wilmath, Tim (2004). Estimating the Market Value of Major League Sports Facilities. Guide to Property Assessment. 41 Ellington Blake (August 27, 2013). “Arena expert says Sacramento’s plan will boost city’s economy. http://www.sactownroyalty.com/2013/8/27/4658884/downtown-sacramento-arena-kings. 47 The Broward County Civic Arena: History, Facts and Opportunities

3) When the arena deal has protections for the local government to recap or protect against cost overruns or yearly debt repayment obligations. Such protections help ensure that the local government does not need its general fund to finance cost overruns or greater-than-expected debt financing payments.

Charles Santo of Portland State University disagrees with opponents of subsidies and believes that previous economic and academic studies that allege little economic benefit of public subsidies are based on outdated data and that current generation facilities are different in character than facilities built in the 1960s and 1970s42. He argues that the newest generation of sports facilities serves as architectural symbols with tourist appeal and are often built into the urban fabric to facilitate synergy.

Opposition against Public Subsidies Opponents of public subsidies point to numerous economic studies that suggest that the benefits of professional sports teams are much less than the amount of public subsidy given.43 In “Sports Facilities, A New Arena in Edmonton, and the Opportunities for Development and a City’s Image: Lessons Learned from Successful Experiences,” sports economist Mark S. Rosentraub wrote: “Independent assessments of the benefits from these facilities, predictably found no economic development enhancements, and no real shift in a city’s image. This meant that public expenditures for a sports facility or for the infrastructure required…became little more than subsidies which substantially increased the value of teams, enhanced profit levels, and indirectly helped to increase players’ salaries.”

Oklahoma’s Legislative Research Bureau quotes a sports economist, Andrew Zimbalist, who found that most national studies have not supported the notion of a sports team boosting its host community’s economy with one exception: “Dr. Zimblast agrees that cities and counties may receive some level of economic benefit in deals where the sports teams agree to invest in development projects around the stadiums or arenas.” 44

Finally, opponents argue that public funds should not be used to enrich wealthy professional athletes and even wealthier team owners. They believe that scarce public funds should be redirected to more pressing purposes. A 1996 Sun- Sentinel article quotes an economics professor from Pepperdine University:

42 Santo, Charles (2005). The Economic Impact of Sports Stadiums: Recasting the Analysis in Context. Journal of Urban Affairs. V.27, Number 2, pp. 177-191. 43 Rapport, Jordan and Chad Wilkerson (2001). “What are the benefits of Hosting a Major League Sports Franchise? Federal Reserve Bank of Kansas City Economic Review. Pp.55-86. 44 State of Oklahoma Legislative Research Bureau (April 2013). Review of Economic Impact of Selected Sports Venues and Downtown Revitalization Efforts in Oklahoma City. The Broward County Civic Arena: 48 History, Facts and Opportunities

“People are fed up with teams wanting someone else to put up the money, build the arena, cover the debt and let the team keep the revenues.”45

Arguments can be made on both sides of the issue and this argument usually takes place before a facility is built. In Broward County’s case, the County has already built the facility for a major league sport, and is less than halfway through the economic life of this investment.

SPORTS TEAMS AS FACILITY OPERATORS During the growth in construction of new professional sports facilities since the late 1980s, professional sports teams have ventured into the operation and management of these new facilities through affiliated companies. Revenues generated by the venue or ancillary development are not subject to revenue sharing and are retained by team owners. Our research shows that most (in excess of 77%) of NHL facilities are managed by the NHL tenant team or a related entity. Of the ten NHL franchises we compared to the Florida Panthers, nine were affiliated with the company overseeing the management and operations of the venue. One arena, Nationwide, was managed by a separate group.

INCREASING RELIANCE ON REAL ESTATE DEVELOPMENT PARTNERSHIPS Professional sports teams generate revenue from a variety of sources including ticket sales, suites, premium seating sales, concessions, retail and merchandise sales, broadcasting rights, advertising, parking, and league revenue sharing. Typically, revenue generated as a result of a game are subject to league revenue sharing rules. Revenues generated by the venue or ancillary development are not subject to revenue sharing and are retained by team owners. Teams have turned to real estate development as a new source of revenue. According to one study “such development is a practical necessity for owners in order to keep their teams economically viable.”46

However, as a result of the recent recession and growing opposition to public funding of professional sports facilities, there has been a trend toward more private sector participation in financing the development of these facilities. Real estate development adjacent to these sports facilities has become a central component of private sector participation in sports facilities development.47 As a result, team owners and local governments have partnered on projects that capitalize on the venue’s ability to spark development.

We found numerous examples across the U.S. and Canada of these types of public-private partnerships. Although local governments contributed financial resources, infrastructure or land towards the construction of sports facilities, team owners and other private investors have also made investments in

45 Benedick, Robin (January 26, 2996). “Broward’s Playing Hardball with Teams.” Sun-Sentinel. 46 Greenberg, Martin J and Dennis Hughes, Jr. (2011). Sports.Comm: It takes a Village to Build a Sports Authority. Marquette Sports Law Review. Vol.22, pp. 91-186. 47 ibid 49 The Broward County Civic Arena: History, Facts and Opportunities

development surrounding the facilities, leading to redevelopment, increased employment, and enhancements to the tax base.

We identified three trends associated with the construction of sports and entertainment venues:

 Sports venues as entertainment and shopping destinations  Sports venues as development catalysts  Sports venues as “Live, Work, Play and Shop Districts” or master- planned communities.

These development trends are not confined to the major professional leagues, but extend into minor league and collegiate sports facilities as well. In almost all cases, these projects received direct public support in the form of infrastructure, financing, land assembly, land leases, and/or arena construction.

Arenas as Entertainment and Shopping Destinations Professional sports facilities have become major entertainment and tourist destinations by incorporating restaurants, retail, entertainment, and outdoor public gathering spaces. RTKL, an architectural design firm of sports venues, describes the current sporting venue concept as “Extended Play” consisting of 24-hour entertainment districts anchored by sports facilities offering a dynamic mix of uses in a pedestrian-friendly well-planned environment.48 Notable examples include HarborCenter in Buffalo, Patriot Place in Massachusetts, and xfinity Live! in Philadelphia. Appendix A contains a summary for each of these projects.

Arenas as Development Catalysts Successful sports facilities contribute to the “the phenomenon of planned or happenstance real estate development occurring near or adjacent to constructed or renovated sports facilities, attracting businesses to the neighborhoods surrounding the sports facilities, which creates additional jobs and consumer spending.”49 For example, “prior to the construction of PETCO Park in San Diego (home of the MLB’s San Diego Padres), 70% of the area surrounding the site for the stadium was either vacant, surface parking or outdoor storage. Since the construction of PETCO Park, private investment in the area now exceeds $4 billion and generates more than $30 million annually in property taxes – a fifteen fold increase over 1998.”50

The following three projects are examples where professional sports facilities have sparked considerable development or redevelopment either in conjunction with the sports team or with other developers:

 Honda Center and the Platinum Triangle; Anaheim, California

48 RTKL Associates, Inc. ThoughtHubs. http://www.rtkl.com/ThoughtHubs/index.aspx. 49 Greenberg, Martin J. (June 15, 2002). “Current Issues in Sports Law.” Powerpoint presentation. 50 HOK Sport (2008). Hartford Downtown Arena Feasibility Study). The Broward County Civic Arena: 50 History, Facts and Opportunities

 Pinnacle Bank Arena and the West Haymarket District; Lincoln, Nebraska  Sprint Center; Kansas City, Missouri Additional information on these projects is provided in Appendix B.

Arena-Based “Live, Work, Play and Shop” Districts / Master Planned Sports- Based Communities The third type of arena based development activity results in creating a preplanned “sports community.” “Tying in a sports arena into an urban mixed- use development (rather than surrounding it by a large surface parking lot) has become a model for new arenas …51 Martin J. Greenberg, a frequent author on the economics of sports, defines a “Sports Community as a preplanned sports community where the sports facility is the anchor for mixed-use real estate development – a place where people can live, work, eat, watch, learn, congregate, buy and socialize”.52

Completed or recently announced projects illustrating the trend toward these pre-planned sports communities include:

 Staples Center and LA Live!, Los Angeles  TD Garden and Causeway Street Redevelopment, Boston  Barclays Center and Atlantic Yards, Brooklyn  American Airlines Center and Victory Park, Dallas  Air Canada Center and Maple Leaf Square, Toronto  Red Wings Arena and Entertainment District/Catalyst Development Project, Detroit

More information on these projects is in Appendix C.

51 John Glenn School of Public Affairs (July 2008). Assessment of the Gross Impact of the Arena District on Greater Columbus. Oho State University. 52 Greenberg, Martin J. and Hughes, Dennis Jr. Sports.Comm: It takes a Village to Build a Sports Facility. Marquette Sports Law Review. Vol. 22:1. 51 The Broward County Civic Arena: History, Facts and Opportunities

Part Foundational Analysis: Can a Major Arena Succeed without Major League Sports?

This section –  attempts to determine: Can a Major Arena Succeed without Major League Sports?  reviews key factors to a venue’s success  identifies major arenas without the NBA or NHL  discusses the challenges facing arenas that lose a major sports tenant  identifies major arenas that have lost an NBA or NHL team

Venue Success Factors

A professional sports tenant does not guarantee financial success for a venue. We have seen numerous examples of arenas faltering with a major league sports team and without one. It is important to identify the measure of success for a particular community. Therefore, success for a venue with a major league team is driven by the agreements in place among the arena’s owner, the arena operator, and the sports team. For example, in certain communities we surveyed, such as Pittsburgh and Glendale, success is defined not by the performance of the hockey team or the venue, but in the resulting redevelopment of lands adjacent to the facility.

The evidence suggests that a major arena in a large metropolitan area with multiple competing venues may not be financially viable following the loss of a major league sports tenant. Further in-depth economic analysis to determine the magnitude of this is beyond the scope of Broward County staff’s expertise and requires third party assistance.

It is widely accepted within the professional venue management industry, there are several demographic, social and economic factors that determine whether a venue will succeed, with or without professional sports. These factors are:

POPULATION (OVERALL AND PER SPORTS TEAM) An area must have a critical population base within its primary market area in which the majority of its patrons will be drawn from. A large population of potential spectators is necessary to support a venue or a professional sports team. A large population usually results in high attendance as evidenced by the number of teams found in the largest metropolitan areas.

There is also a limit to the number of professional sports teams a metropolitan area can economically support. As the 8th largest metropolitan statistical area (MSA), South Florida is home to four major league teams and facilities: MLB’s Marlins (Marlins Park), NFL’s Dolphins (Sun Life Stadium), NBA’s Heat (AAA), and the NHL’s Panthers (BB&T Center). These four teams and venues all compete for corporate and fan support.

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The Houston metropolitan area is the only MSA larger than the Miami MSA without a major league hockey team. Other large MSAs vying for a team include Seattle (football and baseball), Portland (basketball), and Kansas City, Missouri (football and baseball).

AGE PROFILE Sports and entertainment events attract a younger audience. The 18-34 age group is most likely to attend sporting and spectator events. Males within this age group is the coveted demographic for the NHL.53 This age group is followed by the 35-54 age group which has higher spending patterns. 54

HOUSEHOLD INCOME Household income determines a person’s ability to spend on sporting and entertainment events. The NHL has one of the most affluent and educated fan bases of the major sports.55

CORPORATE SUPPORT The number of large corporations helps drive sales of luxury suites, club seats, season tickets, advertising sponsorships and naming rights. However, there is a limit to the number of professional sports teams that can be financially supported in a given geographical area.

SIZE OF THE LOCAL MEDIA MARKET Arbitron’s Dominant Market Area and Nielson Media’s Continuous Market Area determine how many people can watch a television broadcast or listen to a sporting event on the radio. The larger the media market, the greater the potential for a venue and the team’s success. The Miami-Fort Lauderdale radio market is the 12th largest, and its television market is the 17th largest. In addition, the West Palm Beach market, which is separate from Miami-Fort Lauderdale, is the 49th largest radio and 38th largest television markets.

PERFORMANCE QUALITY/TEAM PERFORMANCE Spectators will attend live events or performances for the sensory experience or emotional connection to the performer(s). Sports fans will attend sporting events if their particular team is winning. Poor playing performance has a direct influence on attendance to sporting events.

Experience of Arenas without NHL or NBA Teams

We attempted to identify arenas that either do not have an NBA or NHL team, and venues that once hosted teams to determine whether these venues were profitable. Using Pollstar’s 2012 list of the top 200 arenas worldwide, we identified the 50 busiest arenas in the U.S. based on the total number of tickets sold to non-sporting events.

53 Klayman, Ben (October 8, 2010). “NHL Pushes for Growth on TV.” Reuters. www.reuters.com/article/isUSTRE6974VM20101008. 54 Ibid. 55 Ibid. 53 The Broward County Civic Arena: History, Facts and Opportunities

Arenas with and without the NBA or NHL

2%

Arenas with NBA or NHL 40% Tenants Arenas without the NBA 58% or NHL Gaming Facility

Of these 50 facilities, 29 host an NBA or NHL team. In certain cases they host both an NHL and NBA team. The Staples Center in Los Angeles hosts two NBA teams and an NHL team. Twenty venues did not have a major league sports tenant. One facility, the Mohegan Sun Arena, was part of a gaming facility (note the Mohegan Sun was ranked 19th by Pollstar in the number of tickets sold to non-sporting events. The 10,000 seat facility sold 2,800 tickets less than the BB&T Center, which is a 20,000 seat facility). We focused on the 20 venues without a professional team to assess their viability. We then narrowed down the list to include only those facilities that met the following criteria to ensure a fair comparison with the BB&T Center:

(1) Located in metropolitan area with a population near or exceeding one million (2) Without a major league sports tenant (NBA/NHL) (3) Without a major collegiate sports tenant (4) With no less than 15,000 seats

Only four venues met our criteria. They are:

 U.S. Bank Arena, Cincinnati  Sprint Center, Kansas City  BOK Center, Tulsa  Jacksonville Memorial Arena, Jacksonville

U.S. BANK ARENA, CINCINNATI, OHIO Metropolitan Area Population: 2,114,580 (#28) 2012 Pollstar Rating: #28 Year Opened: 1975 Ownership: Private Operator: Anschultz Entertainment Group (AEG) Naming Rights: $3 million over 10 years ($300,000 yearly) Most Recent Profit: Undetermined

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At almost 350,000 square feet, the U.S. Bank Arena is less than half the size of Broward’s BB&T Center. We were unable to obtain financial or performance data for this privately-owned venue.

SPRINT CENTER, KANSAS CITY, MISSOURI Metropolitan Area Population: 2,009,342 (#30) 2012 Pollstar Rating: #6 Year Opened: 2007 Owner: City of Kansas City, Missouri Operator: AEG Naming Rights: $25 million over 25 years ($1 million annually). Most Recent Profit: $1,475,503 (2013). Note: debt service is not included in the calculation of income to be returned to the City.

Earlier, we identified this venue as an example of a sports facility that has sparked considerable redevelopment in downtown Kansas City. In terms of its performance, the facility is profitable, excluding debt service payments, without a major league team. Funding for the $276 million arena was paid with bonds financed through rental car and hotel taxes. The city entered into a 35-year operating agreement with AEG, which contributed $54 million towards its construction. AEG retains the first 16% of profits. After profits exceed 16%, the city receives half of that additional amount. The amounts the city received from AEG for profit sharing above 16% percent are: 2008: $ 277,584 2009: $1,853,387 2010: $2,139,255 2011: $1,024,102 2012: $1,855,295 2013: $1,475,503

The city is aggressively attempting to lure an NHL or NBA franchise.

55 The Broward County Civic Arena: History, Facts and Opportunities

JACKSONVILLE VETERANS MEMORIAL ARENA; JACKSONVILLE, FLORIDA Metropolitan Area Population: 1,345,596 (#40) 2012 Pollstar Ranking: 39 Year Opened: 2003 Owner: City of Jacksonville Operator: SMG Naming Rights: None Most Recent Profit or Loss: $9.8 million loss (2012)

This $130-million venue was funded by ½ cent sales tax under the “Better Jacksonville Plan.” According to the city’s 2012 Comprehensive Annual Financial Report (CAFR), the facility operated at a loss of $9.8 million in 2012 and $9.5 million in 2011.

BOK CENTER; TULSA, OKLAHOMA Metropolitan Area Population: 937,478 (#55) 2012 Pollstar Ranking: #17 Year Opened: 2008 Owner: Tulsa Public Facilities Authority Operator: SMG Naming Rights: Bank of Oklahoma paid $11 million over 20 years ($550,000 yearly) Most Recent Profit: $1,724,600 (2013)

Tulsa, Oklahoma’s city-owned BOK Center, or Bank of Oklahoma Center, is a 19,199-seat sports and event venue in Tulsa’s downtown. Construction of the facility was funded in part by a one-cent sales tax, the facility was designed to accommodate arena football, hockey, basketball, concerts, and similar events,

The Broward County Civic Arena: 56 History, Facts and Opportunities

the facility was built at a cost of $178 million in public funds and an additional $18 million in private contributions. The city has a five-year management contract with SMG. It is home to three minor league professional sports teams.

2011 2012 2013 Operating Income $8,272,900 $7,433,600 $8,102,300 Operating Expense $6,683,100 $6,007,800 $6,377,700 Net Income $1,589,700 $1,425,800 $1,724,600 Note: These numbers do not include debt service payments.

Lessons from Venues that have Lost NBA or NHL Teams

Many venues across the United States have dealt with the loss of a professional sports team due to team relocation or functional obsolescence. Functional obsolescence occurs when the facility can no longer meet its present day customer demands, such as parking, egress, ADA, etc. This usually happens with older facilities and forms the basis for the argument for a new venue.

A facility such as a large multi-purpose arena faces numerous challenges if it is not used for its intended purpose. In the case of Broward’s BB&T Center, its primary purpose was major league hockey. The following are several lessons learned from communities and facilities that have lost an NBA or NHL team.

DEMAND FOR ALTERNATE EVENTS The bottom line after losing a professional sports team: is there enough events and demand for these events to fill the 44 days a year normally reserved for a major league hockey team? David C. Peterson, author of Developing Sports, Convention, and Performing Arts Centers,56 notes that there are fewer touring acts and the length of tours are shorter. We also find a reliance on “legacy acts” such as Billy Joel, Madonna, Cher, and the Harlem Globetrotters, among others for major arenas.

In this geographic area, the BB&T Center competes with several venues for live performances. Only a thorough market analysis can provide the necessary insight to this question. However, the experience of others suggests that it might be a challenge for the BB&T Center to compensate for the loss of major league hockey especially with the competition it faces. Leib Advisors found that “experiences in other markets show that facilities that had recently lost an NBA or NHL tenant including Key Arena in Seattle, Phillips Arena in Atlanta, Izod Center in New Jersey and Vancouver’s Rogers Arena were able to fill some of the vacated event dates; however, when compared to an average Predators’ [hockey] game, these substitute events receive less attendance and lower cap spending on merchandise and concessions.” The firm also cites the costs experienced by other arenas to convert former suites, which are prevalent in sports venues, to general seating for performances.

56 Third Edition. 2001. Urban Land Institute. 57 The Broward County Civic Arena: History, Facts and Opportunities

IMPACT ON ARENA REVENUES In a 2011 Press Release, the City of Glendale and the Phoenix Coyotes stated: “the economics of an arena are focused on corporate sponsorships – advertising, suites, etc. All of those factors are negatively altered without a professional sports franchise as a primary tenant…Sponsors spend a lot of money to buy suites only at venues that have consistent events, concerts and professional sports.57

Leib Advisors also concludes “the loss of an anchor tenant generally results in a reopener of the many agreements for no other reason than adjusting the annual fee to reflect the elimination of game tickets, and the related reduced value of luxury suites, premium seating and media impressions typically made part of the naming package.”58

When the New Jersey Devils and New Jersey Nets left the former Continental Airlines Arena, the airline (which paid $2.4 million annually for the naming rights to the facility) opted out of the naming rights contract. Izod then purchased the naming rights at a significantly reduced cost - $750,000 per year – 69% less than when a professional sports team was present.

In Seattle, Key Bank paid $3 million annually for naming rights to the facility that once hosted the Seattle SuperSonics NBA team. Once the arena lost the team, Key Bank renegotiated the naming rights from $3 million to $300,000 annually until the expiration of the naming rights agreement on December 31, 2010 – a 90% reduction. Since then, the City has been unable to land a succeeding naming rights deal.

Our research finds:

. Revenues generated from facility naming rights are significantly less for venues without an NBA or NHL anchor team when compared to a venue with such teams.

. Average annual naming rights fee for venues with an NHL team is $3 million.

. The average for venues without an NHL team is $1 million.

. The maximum annual naming rights fee for a venue without a team is $3.5 million (Webster Bank Arena in Bridgeport, Connecticut).

57 March 24, 2011. Frequently Asked Questions. 58 Leib Advisors, LLC (2012) Economic Impact Report. Nashville Predators The Broward County Civic Arena: 58 History, Facts and Opportunities

ECONOMIC OBSOLESCENCE Economic obsolescence occurs when a venue operates far below its revenue generating potential. Former Director of Valuation Process for the Hillsborough County Property Appraiser’s Office Tim Wilmath, concludes in his article “Estimating the Market Value of Major League Sports Facilities:”

. The economic viability of a special purpose property [such as sports arenas] is measured by the ability of the improvements to achieve their intended purpose, (i.e., highest and best use).

. When external factors cause the improvement to perform at an inferior level, economic obsolescence exists.

. a major league sports facility cannot achieve highest and best use without the presence of a major league sports team.”59

The City of St. Paul, Minnesota, and Minnesota Hockey Ventures Group, LP (owner of the NHL’s Minnesota Wild) acknowledge the team’s value to the Xcel Energy Center in the Hockey Playing Agreement between the parties. They recognize that in the event of the team’s breach or termination of the Agreement, there is a reduction in value of the arena arising from the absence of the team.60 This diminution in value is validated by CBRE’s May 2013 valuation of the BB&T Center which ascribes a $160 million addition to value for the arena as a result of a professional sports team, for a total value of $220 million. Without a professional sports team, the arena is valued at $60 million.

Lastly, the former mayor of San Jose, California concluded in a memorandum to the city council: “An arena without a major tenant such as the Sharks [San Jose’s professional NHL hockey team] has little hope of being profitable or successful for any operator – public or private.”61

THE EFFECTS ON THE LOCAL ECONOMY The city of Glendale, Arizona considered the consequences of losing its NHL team on the sustainability of their facility and upon the local economy. For example, in 2012, the City of Glendale hired an economic and real estate consulting firm to estimate the impact on the Jobing.com Arena’s operating expenses and revenues should that facility lose its NHL team. In a report to the Glendale City Manager, the firm concluded that the loss of the team: 62

 Is “the worst of all possible scenarios”

59 November/December 2004. Guide to Property Assessment 60 Minnesota Hockey Ventures Group LP, City of St. Paul and Civic Center Authority (January 15, 1998). Hockey Playing Agreement. 61 Gonzales, Ron (December 15, 2000). Amended and Restated Arena Management Agreement. Memorandum to City Council. City of San Jose, California. 62 Pollack, Edward (May 31, 2012). “Analysis and Comparison of the Phoenix Coyotes and Jobing.com Arena.” Confidential Negotiations. Edward D. Pollack & Company. 59 The Broward County Civic Arena: History, Facts and Opportunities

 Would have harmful effects on the retail and restaurant uses which depend on game day revenues to sustain their operations during non-event times  Could lead to significant retail and restaurant vacancies in the adjacent WestGate entertainment district with negative spillover effects  It is unlikely that other events could completely fill the void  Would result in a reduction in retail and tax revenues  Have a significantly negative effect upon the City’s finances since the City would still be obligated to repay bonds

UNDERESTIMATING THE PUBLIC’S SUPPORT FOR PROFESSIONAL SPORTS TEAMS According to an economic impact analysis commissioned by the Nashville Predators and conducted by Leib Advisors, LLC, “replacing a major league tenant is difficult given the scarcity of moveable teams. In addition, typically communities that have lost teams find it more costly to lure another team into relocation than it would have cost to retain its former home team.”63 Rappaport and Wilkerson64 describe the extent to which communities were willing to provide more funding support following the loss of a major league sports team. For example, St. Louis’ NFL Cardinals left after the City refused to provide $120 million toward the construction of a new stadium. Less than three years later, voters approved spending $280 million to build a new stadium even though they did not have a team that would play in it. This was repeated in Cleveland after the Browns departed for Baltimore. The team’s owner had requested $170 million in public funding to renovate the team’s stadium. Ultimately, voters approved spending $214 million for a new stadium for a new expansion team. Similarly, the Minneapolis-St. Paul area could have kept the NHL’s Minnesota North Stars for $17 million, but declined. Six years later it spent in excess of $130 million to attract a new NHL team.

 CURRENTLY OPERATING VENUES We found five currently operating venues that have lost an NBA or NHL team:

. Phillips Arena; Atlanta, Georgia . Izod Center; East Rutherford/”The Meadowlands” New Jersey . XL Center; Hartford, Connecticut . Key Arena; Seattle, Washington . Valley View Casino Center; San Diego, California

Philips Arena; Atlanta, Georgia Atlanta lost its second NHL hockey team, most recently the Thrashers, to Winnipeg in 2011. However, the arena remains the home of the NBA’s Atlanta Hawks and despite the loss of the Thrashers is a busy entertainment venue. It was the 8th busiest arena in terms of tickets sold for non-sporting events according to Pollstar. It is owned by the Atlanta/Fulton County Recreational Authority and operated by the owner of the NBA’s Hawks, the Atlanta Spirit,

63 Leib Advisors, LLC (2012). Economic Impact Report. Nashville Predators. 64 Rappaport, Jonathan and Wilkerson, Chad. (First Quarter 2001). “What are the Benefits of Hosting a Major League Sports Franchise?” Federal Reserve Bank of Kansas City Economic Review. The Broward County Civic Arena: 60 History, Facts and Opportunities

LLC. According to Violet Ricks, executive director of the Atlanta/Fulton County Recreation Authority, there was an appreciable reduction in facility revenues following the loss of the Atlanta Thrashers; however, almost a year and a half later, the facility has been able to recoup most of the losses through other events. Unlike the Miami-Fort Lauderdale metropolitan area, the Atlanta area does not have another major arena to compete with the Philips Arena for concerts and performances.

Izod Center; East Rutherford, New Jersey

New Jersey’s Izod Center is owned and operated by the New Jersey Sports and Exposition Authority. This facility has been known as the Brendan Byrne Arena and the Continental Airlines Arena. After losing both the New Jersey Devils (NHL) and New Jersey Nets (NBA) to Newark’s Prudential Center and Brooklyn’s Barclays Center, respectively, the 32-year old venue has struggled after facing competition for events from the Prudential Center, forcing the involvement of the New Jersey Governor’s Office, which brokered an agreement in which the Izod Center would host concerts and family shows while the Prudential Center would host sporting events. All bonds associated with facility have been satisfied. 2010 2011 2012 Events 151 119 128 Total Attendance 968,600 778,500 865,000 Net Revenue $5,278,500 $5,111,900 $5,829,100

61 The Broward County Civic Arena: History, Facts and Opportunities

XL Center; Hartford, Connecticut

Formerly the Hartford Civic Center, this facility located in downtown Hartford was home to the NHL Whalers from 1980 to 1997 when the franchise relocated to North Carolina and became the Carolina Hurricanes. Owned by the City of Hartford, the City leases it to the state of Connecticut’s Capital Region Development Authority, which now operates the facility in partnership with Global Spectrum. The city receives an annual payment of $2.6 million if net revenues are available.

The venue is home to the University of Connecticut’s college basketball teams. However, the almost 40-year old arena is losing events to the Mohegan Sun Arena at the Mohegan Sun Casino. The City has explored the feasibility of replacing the facility in hopes of attracting the NHL’s return to Hartford.

Key Arena at Seattle Center; Seattle, Washington

This former home of the NBA’s Seattle SuperSonics, which relocated to Oklahoma City in 2008 where it became the Oklahoma City Thunder, is owned and operated by the City of Seattle and used for entertainment concerts, ice shows, circuses, and sporting events. The City is proceeding with plans to build a new downtown arena to replace the Key Arena in hopes of attracting a major league sports tenant. It is considered by many to be a front runner for an NHL franchise.

The Broward County Civic Arena: 62 History, Facts and Opportunities

Valley View Casino Center; San Diego, California

Formerly the San Diego Sporting Arena, the city- owned facility once hosted the NBA’s San Diego Rockets from 1967 to 1971 and the San Diego Clippers of the NBA from 1978 to 1984. In 2010, the city, the arena’s operator AEG, and the San Pasqual Band of Diegueno Mission Indians reached a $1.5 million, five-year naming rights agreement ($300,000 yearly).65

REPURPOSED VENUES We found three former sports venues that have found new life as something other than a sports venue following the loss of a professional sports team:

. The former Forum; Inglewood, California; . Pyramid Arena; Memphis, Tennessee; and . The Summit; Houston, Texas.

The Forum; Inglewood, California

The former Forum, now known as the Forum Presented by Chase, has found new life as a concert hall. Located in a suburb of Los Angeles, it previously hosted the NBA's Los Angeles Lakers and the NHL's Los Angeles Kings, until 1999, when the teams moved to the new Staples Center.

In 2000, it was acquired by a church, which used it for church services, while also leasing the building for sporting events, concerts and other events. Twelve years later, The Madison Square Garden Company (MSG), owners of New York's Madison Square Garden, purchased it for $23.5 million. MSG reopened the building as a concert venue in January 2014 after a $110 million renovation.

65 http://signonsandiego.com/news/2010/oct/12/sports-arena-gets-new-name-valley-view-casino-cent/ 63 The Broward County Civic Arena: History, Facts and Opportunities

Pyramid Arena; Memphis, Tennessee

Memphis’ Pyramid, formerly the home of the NBA’s Grizzlies, opened in 1991 and closed 13 years later after the Grizzlies moved to the new Fedex Forum. It is owned by the city of Memphis and is currently being converted into a Bass Pro Shops “megastore” after sitting vacant for almost ten years.

The Summit; Houston, Texas

From 1975-2003 this former arena was the home of the NBA’s Houston Rockets. When the team moved to the new Toyota Center in 2003, the City of Houston leased the arena to Lakewood Church, which invested $95 million in renovations. In 2010, the church purchased the facility from the city for $7.5 million.

VENUES AWAITING DEMOLITION

Due to functional and/or economic obsolescence, these five facilities are unable to economically sustain themselves and are awaiting demolition:

. Astrodome; Houston, Texas . Kemper Arena; Kansas City, Kansas . Nassau Veterans Memorial Coliseum . Los Angeles Memorial Sports Arena . Silverdome; Pontiac, Michigan

Astrodome; Houston, Texas

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The world’s first multi-purpose domed stadium is now shuttered. Opened in 1965, it hosted sporting events, professional sports, concerts, rodeos, and political conventions. As time passed, newer venues throughout Houston lured away its professional sports teams. Despite numerous redevelopment plans, none have panned out. Partial demolition has already occurred.

Kemper Arena; Kansas City, Missouri

Once home to the NHL’s Kansas City Scouts from 1974-1976, the Kemper Arena is rarely used given the success of the Sprint Center

Nassau Veterans Memorial Coliseum; Uniondale, New York

As we described earlier, the New York Islanders will leave Long Island’s Nassau Coliseum in 2015 for Brooklyn’s Barclays Center. As a result, Nassau County recently selected Forest City Enterprises, the owner of the Barclays Center, to renovate and redevelop the site to include a smaller entertainment venue with theaters, retail, bars, and restaurants.

Los Angeles Memorial Sports Arena; Los Angeles, California Opened in 1959, the Los Angeles’ Memorial Sports Arena was the previous home of the NBA’s Los Angeles Lakers from 1960 to 1967 and the NHL’s Los Angeles Kings, briefly in 1967. It is owned by the State of California, Los Angeles County and the City of Los Angeles. Since 2013, the University of Southern California has operated the facility

65 The Broward County Civic Arena: History, Facts and Opportunities

under a lease agreement with the Los Angeles Memorial Coliseum Commission. Reports are that the university is investigating replacing the facility with a soccer stadium.66

Silverdome; Pontiac, Michigan

Once the largest stadium in the NFL, the Pontiac Silverdome was built in 1975 and was the former home of the NFL’s Detroit Lions and NBA’s Detroit Pistons. By 2001, both franchises moved out of the suburban Detroit location for downtown facilities. Completed at a cost of $55.7 million, the 80,311 seat facility sold in 2009 to a Canadian real estate developer for $583,000. Unable to attract enough events to sustain the venue economically, the facility has fallen into disrepair and its roof has collapsed. Since 2009, a variety of redevelopment ideas floated, to no avail.

 GONE AND FORGOTTEN

In most instances, facilities were demolished after becoming unsustainable as a result of the loss of a sports team. In some cases, the venue was replaced with a newer one to retain the team. In others, the facility was torn down and redeveloped, used for parking, or remained vacant land. We found 13 venues that were torn down after the NBA or NBA team relocated. All of them are identified in this section, but we felt it important to highlight two arenas in the state:

. Miami Arena . Amway Arena (Orlando)

66 Markazi, Arash (September 5, 2013). “USE to operate, restore Coliseum” ESPN>com. http://espn.go.com/espn/print?id=9638471&type=story The Broward County Civic Arena: 66 History, Facts and Opportunities

Miami Arena; Miami, Florida

The Panthers’ first home from 1993-1998 lost its two professional sports tenants by 1999. Opened in 1988 and at a cost of $55 million, it officially closed in 2008. As a result of competition from the BB&T Center, the AmericanAirlines Arena, and the Hard Rock Live, the Miami Arena was unable to succeed as a concert and entertainment venue. In 2004 it was sold to a local developer for $28 million and demolished in 2008. The vacant property sold for $35 million in 2013, but remains an undeveloped five-acre parcel. 67

Amway Arena; Orlando, Florida Orlando’s Amway Arena was the former home of the NBA’s Orlando Magic from 1989-2010. Built at a cost of $110 million, it opened on January 29, 1989 and closed on September 30, 2010. The building was demolished in 2012.

Year Venue and Location Sports Tenant Operating Years Current Status Demolished Amway Arena NBA Orlando Magic 1989-2010 2012 Vacant Land Orlando, Florida Miami Arena NHL Panthers 1988-2008 2008 Vacant Land Miami, Florida NBA Heat Capital Center NHL Washington Capitals 1974-1997 2002 Retail center Landover, Maryland NBA Washington Wizards Wachovia Spectrum NHL Philadelphia Flyers 1967-2011 2011 Xfinity Live! Philadelphia, Pennsylvania NBA Philadelphia 76ers Chicago Stadium NHL Chicago Blackhawks 1929-1994 1995 Parking Chicago, Illinois NBA Chicago Bulls Reunion Arena NHL Dallas Stars 1980-2009 2001 Vacant Land Dallas, Texas NBA Dallas Mavericks McNichols Sports Arena NHL Rockies and Avalanche 1975-2000 2000 Parking Denver, Colorado NBA Denver Nuggets Met Center NHL Minnesota North Stars 1967-1993 1994 IKEA Bloomington, Minnesota Charlotte Coliseum NBA Carolina Bobcats 1986-2005 Mixed-use 2007 Charlotte, North Carolina development Coliseum at Richfield NHL Cleveland Barons Cuyahoga 1974-1994 Richfield, Ohio NBA Cleveland Cavaliers 1999 Valley National

Park Market Square Arena NBA Indiana Pacers 1974-1999 2001 Parking Indianapolis, Indiana Hemisphere NBA San Antonio Spurs 1968-1995 Convention 1995 San Antonio, Texas Center Salt Palace NBA Utah Jazz 1969-1994 Convention 1994 Salt Lake City, Utah Center

67 Walker, Elaine (October 9, 2012). “Former Miami Arena Site Has a New History. Miami Herald. 67 The Broward County Civic Arena: History, Facts and Opportunities

Part Review of SSE’s Contract Modification Requests

This section –  identifies the major elements of SSE’s request for contractual changes  provides the County Administrator’s remarks on these requests.

The estimated financial impact on Broward County of SSE’s proposal is a minimum of $5.6 million annually, or $78.4 million over the remaining term of the agreement.

ARENA OPERATING AGREEMENT REQUEST REMARKS Rebate SSE’s annual contribution to arena bond (1) Existing arena debt is secured by TDT pledge. payments by using $4.5 million of the County’s tourist Today there are sufficient funds generated by the development tax proceeds to fund arena operations. two cents to cover existing debt service and other tourism related priorities of the Board.

(2) Places the arena first in the queue for funding from TDT not committed to debt service. This requires a reallocation of the Board’s funding priorities with respect to TDT funding.

(3) Detailed information regarding the programming of TDT funds for non-arena purposes over a five-year period are provided in Section 8.

Cap SSE’s costs for the arena’s annual windstorm (1) Results in approximately $600,000 increase to the insurance premiums to the first $1 million of premiums, County based on AOC's 2013/2014 premium with the County responsible for all additional costs. (2) NHL program more competitive than County’s: - NHL deductible = $50,000; County’s = $250,000 per occurrence - NHL Windstorm deductible = $5 million; County’s = $50 million - NHL limits = $150 million; County’s = $50 - $75 million (County’s max for all properties is $350 million).

(3) Three of the 10 arenas we surveyed provide property insurance rather than the arena operator/team.

Require the County to pay the first $500,000 of arena (1) Results in a $500,000 increase to the County. repairs and maintenance annually. (2) In two of the 10 arenas we compared to the BB&T Center, the public entity owning the facility is responsible for routine repairs and maintenance.

Eliminate capital expenditure reserve. (1) This requirement was added during the most recent amendment (#8, 2012) for a five-year period.

(2) Fiscal Impact on AOC = $2.5 million ($500,000 deposit due annually on July 1 through 2017);

(3) In seven of the 10 arenas in our comparison group,

The Broward County Civic Arena: 68 History, Facts and Opportunities

the public arena operator contributes toward capital improvements.

Limit SSE’s annual contribution to the Renewal and (1) Presents a significant decrease to the AOC. Replacement Account to $250,000. (2) Based on the formula within the Operating Agreement this contribution is estimated at approximately $900,000 for FY2013.

(3) The BB&T Center is an aging facility and is likely to require funding contributions at levels equivalent to the amounts originally contemplated in the Operating Agreement.

(4) AOC has not provided the County with a long-term Renewal and Replacement Schedule; therefore, this request is difficult to assess.

Modify the classification of certain operating revenues (1) Proposed changes to the classification of premium and expenses for the purpose of revenue sharing seating versus general seating would result in distribution. reduction in AOC revenues, but increases in Team revenue.

(2) Has a negative effect on the County’s ability to receive Net Operating Income (NOI) anytime in the future - which could result in a loss for the County.

(3) Existing language on classification of revenues and expenses is complicated and this proposed change adds to the complexity.

Eliminate Operating Reserve account. (1) Equivalent to three months of facility operating expenses.

(2) Present cash flow needs between SSE’s subsidiaries dictate an immediate availability of funds for various operating accounts. This requirement ties up an estimated amount of $6.4 million for the AOC.

(3) AOC has not funded this reserve.

(4) Broward County requires the most number of accounts (6) compared to the comparison group.

Delete monthly financial reporting requirements and (1) Based on our review of other arenas provide additional time for the submission of quarterly - 4 require monthly reports (so does Broward) and annual financial reports and statements. - 2 require quarterly reports (so does Broward) - 1 requires a semi-annual and

- 6 require an annual report (so does Broward)

(2) A typical audit submission timeframe is 180 days. We currently require AOC to submit within 60 days. Also, other venue owners require programmatic data in addition to financial performance information. Broward County requires only financial data, consistent with the financial terms of the relationship.

69 The Broward County Civic Arena: History, Facts and Opportunities

Limit the County’s right to audit the AOC’s financial Existing contractual language is consistent with the records to twice yearly. comparison group. Retitle the agreement as an Operating Lease. Allows AOC and Broward County to use the recently amended Florida Statutes regarding lease negotiations. §125.35(1) (b) 3, F.S. authorizes the County “to lease a professional sports franchise facility financed by revenues received pursuant to s. 125.0104 [tourist development tax] or s. 212.20 [professional sports franchise sales tax rebate] which may include commercial development that is ancillary to the sports facility if the ancillary development property is part of or contiguous to the professional sports franchise utility. The board’s authority to lease the above described ancillary commercial development in conjunction with a professional sports franchise facility lease applies only if at the time the board leases the ancillary commercial development, the professional sports franchise facility lease has been in effect for at least 10 years and such lease has at least an additional 10 years remaining in the lease term.”

Revise definitions, replace or eliminate outdated Regardless of SSE’s proposal, clarifying language and provisions, and add clarifying language. other updates are necessary.

Authorize the use of Seat Use Charge for debt payments 1) Paragraph 1.84 of the existing operating agreement associated with roadway improvements (Sawgrass allows the AOC (in its sole discretion) to impose a Expressway ramps from Panther Drive/Pat Salerno surcharge. Since 2009, AOC has imposed a “seat Drive). use charge” of $1.50 for hockey games and $3.75 for non-hockey events. This seat use charge is required to be used for capital improvements or traffic access improvements/roadways.

2) Panther Drive/Pat Salerno Drive is an open access roadway not exclusive to the Arena and connects the Sawgrass Expressway with N.W. 136th Avenue and the Sawgrass Mills Mall.

ARENA USE AGREEMENT (LICENSE AGREEMENT) REQUEST REMARKS The proposed changes to the License Agreement Any changes to the Operating Agreement must be between the County, the Panthers, and the AOC reflect reflected in the County’s License Agreement with the the changes proposed to the Operating Agreement to Florida Panthers Hockey Club, LTD. make these documents consistent with the one another.

DEVELOPMENT AGREEMENT REQUEST REMARKS Expand and raise the company’s certain development (1) The 22-acre parcel on the north side is currently rights by exchanging 12 acres south of the arena for 22 designated “Industrial” on the City of Sunrise’s land acres on the north side for future development. use plan and the Broward County Land Use Plan. Any development proposal must be reviewed to determine if a land use plan amendment, and associated rezoning will be required.

(2) Any residential use will require a land use plan amendment.

(3) A plat note change and site plan will be required for

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any proposed development.

(4) Other approvals, such as environmental reviews, will also be required.

(5) Last, the “Industrial” land use plan classification permits commercial, retail, hotel and commercial recreation uses, but such uses are subject to restrictions. A specific development proposal should be submitted for review and determination concerning whether a land use plan amendment, and associated approvals, are required.

SSE’S PROPOSED CONSIDERATIONS REQUEST REMARKS Develop the north parcel as a mixed-use project with (1) The BB&T Center site is a missed economic entertainment, restaurants, retail, office, casino, development opportunity and an underutilized asset. residential, hotel and related uses. (2) In its present form, it is slowly becoming economically obsolete as a sports and entertainment venue.

(3) Current level of development of the Arena site has provided significantly less revenue than projected for the County, thus requiring an enhanced focus on maximizing the site’s economic and tourism development potential.

(4) The site has the potential to include additional entertainment and tourism related attractions to turn it into a year-round destination.

(5) Section 5 identified the types of development activity accompanying current sports facilities which could be incorporated into the Arena site.

(6) Although a previous attempt to pursue development of some of the land surrounding the arena facility did not proceed, the best strategy going forward should be to seek higher density, mixed-uses. This would add economic value as a compliment to the existing arena.

(7) The 22-acre parcel on the north side is currently designated “Industrial” on the City of Sunrise’s land use plan and the Broward County Land Use Plan. Any development proposal must be reviewed to determine if a land use plan amendment, and associated rezoning will be required.

(8) Any residential use will require a land use plan amendment.

(9) A plat note change and site plan will be required for any proposed development.

(10) Other approvals, such as environmental reviews, will also be required.

(11) Last, the “Industrial” land use plan classification permits commercial, retail, hotel and commercial

71 The Broward County Civic Arena: History, Facts and Opportunities

recreation uses, but such uses are subject to restrictions. A specific development proposal should be submitted for review and determination concerning whether a land use plan amendment, and associated approvals, are required.

(12) Section 8 provides examples of potential TDT revenue that could be generated by a hotel and potential property tax revenue generated by the site.

Repay existing outstanding loans from Broward County (1) As of January 10, 2014, AOC has paid $2,500,000 in 2014 – three years ahead of schedule. in principal and $106,394 in ratable interest on the 2010 debt relief loan. If the remaining principal balance on the loan of $4,000,000 was paid off early on January 31, 2014, the County would receive the remaining ratable interest due in the amount of $106,394, as well as additional accrued interest through January 31, 2014 of $14,054. The remaining estimated interest earnings that would otherwise have accrued from February 1, 2014 through the original final maturity date of September 1, 2015 equal approximately $30,000. This amount assumes the average monthly rate of return on the County’s pooled cash investments remains flat at 65 basis points (less than1% interest).

(2) As of January 10, 2014, AOC has paid $1,563,737 in principal and $436,263 in interest on the 2012 capital project loan. If the remaining principal balance on the loan of $6,136,263 would have been paid off early on January 31, 2014, the County would receive additional accrued interest in the amount of $143,908. The remaining interest earnings that would otherwise have accrued from February 1, 2014 through the original final maturity date of July 1, 2017 equal approximately $400,000.

Continue supporting small businesses at the BB&T SSE can play a prominent role in the promotion of small Center through their relationship with BB&T. business development in Broward County. We encourage SSE to collaborate with the County’s Office of Economic and Small Business Development (OESBD) to learn more about the small business community in Broward County, and to seek further opportunities to support small business through the procurement of goods and services.

Pursue additional events at the arena. It is critical that the AOC pursue additional events in close collaboration with the Greater Fort Lauderdale Convention and Visitors Bureau with an expanded focus on increasing the number and diversity of events during the summer non-hockey season to increase the utilization of area hotels during this time.

Improve the competitiveness of the hockey team. There is a direct correlation between a team’s winning performance, attendance, and revenue generation.

Provide a workforce training and college scholarship (1) The uniqueness of the sports and entertainment program. industry provides SSE an opportunity to provide

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substantial support for workforce development and educational scholarship in Broward County through partnership with Broward County's workforce and educational institutions. For example, Broward College offers Associate and Bachelor's Degree- level programs in hospitality and tourism management. Florida Atlantic University's School of Business offers a Bachelor's Degree program in Hospitality Management, as well as an MBA program in Sports Management. These programs provide students with the skills required for success in South Florida's diverse hospitality, event and sports management industries.

(2) Another opportunity includes working closely with CareerSource Broward, in support of workforce training. CareerSource Broward sponsors training and educational opportunities, partnering with organizations such as the Opportunities Industrialization Center, the School Board, the Urban League and others, to provide job readiness training, skills development and work experience to residents.

(3) CareerSource Broward's Internship and Summer Youth Employment programs also provide excellent opportunities for SSE to support workforce training, educational, and employment opportunities for youth.

Relocate the exploration vessel Nautilus to Fort (1) The exploration vessel Nautilus (E/V Nautilus) is a Lauderdale during the winter months in partnership with 211-foot research vessel equipped with exploration Nova Southeastern University. technology, including remotely operated vehicles, which are used to view the seafloor with high definition video, take environmental measurements, and collect geological and biological samples.

(2) The vessel is currently based in Bodrum, Turkey.

(3) It is operated by the Ocean Exploration Trust under the direction Dr. Robert Ballard, who discovered the wreck of the Titanic and the German military ship Bismarck.

(4) The Nautilus Corps of Exploration includes a rotating team of more than 150 scientists, engineers, educators and students as they explore the world’s oceans.

(5) Video feeds from the ship and under the sea are broadcasted live on the internet.

(6) The Nautilus Exploration Program has received funding from the National Oceanic and Atmospheric Administration (NOAA), Ocean Exploration Trust (OET), Bechtel, Sea Research Foundation, National Geographic Society, Office of Naval Research, and the University of Rhode Island.

73 The Broward County Civic Arena: History, Facts and Opportunities

Impact of Increasing the County’s Contribution to Arena Debt Part Service

CURRENT USES OF TDT To understand the impact of increasing the County’s contribution to the Arena, the following summarizes the current and planned uses for the Tourist Development Taxes (TDT). The County currently levies 5% of TDT on hotel room rental and other short-term rental lodging. The fourth and fifth pennies of the TDT generate approximately $9 million each. For FY14, the County budgeted approximately $46 million in TDT which is allocated for the following recurring uses:

⋅ $19 million for the CVB Marketing Advertising Promotions and Operations ⋅ $8 million for Arena Debt Service ⋅ $5.5 million for Convention Center Operations (excluding portion funded with Convention Center Revenue) ⋅ $2.4 million for Convention Center Capital Maintenance and Reserve for Capital Maintenance ⋅ $1 million in miscellaneous costs for items such as staffing for TDT collection, management of beach renourishment projects and debt service administration costs. ⋅ $600,000 for Cultural Tourism Grants

The above “recurring” uses of TDT total approximately $36.5 million for FY14. For FY14, the approximately $9.5 million remaining is allocated for non- recurring uses such as:

⋅ $6.8 million for Beach Renourishment (excluding portion funded with City and State Reimbursements, Fund Balances and Arena Operator Loan Repayments) ⋅ $1 million for Convention Center Expansion/Hotel Pre-Development Costs ⋅ $1 million for Capital Grant Program ⋅ $400,000 for next year’s Centennial Event ⋅ $300,000 for Broward Center for the Performing Arts

LONG TERM AVAILABILITY OF TDT FUNDS TO INCREASE COUNTY CONTRIBUTION TO ARENA DEBT SERVICE A five-year projection of revenues and expenses for TDT programs based on the FY14 Adopted Operating Budget and FY14-18 Adopted Capital Program will be provided under separate cover. However, to assess the availability of recurring resources to increase the County’s contribution to Arena debt service, it is important to look beyond the five-year timeframe. Beginning in FY18, once the Segment II Beach Renourishment and Inlet Sand Bypass projects have been completely funded, after the cities have reimbursed their share, and after the Arena has repaid its loans, it is projected that there will be approximately $12 million available on a recurring basis for projects and additional debt service costs. This estimate could grow incrementally depending on whether the annual

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growth in the TDT sufficiently offsets increases in recurring programs such as the CVB and Convention Center operations and capital maintenance. The projects competing for the $12 million include:

⋅ County’s Share of Segment III and future beach renourishment projects ⋅ Annual Cultural Capital Grant Program ⋅ Debt Service for Convention Center Expansion (Example - $100 million borrowed for 25 years results in approximately $7 million in annual debt service costs) ⋅ Increase in County Contribution for Arena Operations/debt service /capital.

POTENTIAL FUNDING GENERATED FROM ARENA SITE DEVELOPMENT Although we do not have the specifics of any proposed development, we have provided the following revenue generation estimates based on:

⋅ a range of potential values for the development ⋅ various assumptions on a hotel ⋅ other potential payments to be negotiated, such as a Payment in Lieu of Taxes (PILOT).

Potential Annual Property Tax Revenue Generated By Development (Excluding Land)

ASSESSED POTENTIAL ANNUAL VALUE TAX RATE REVENUE

100,000,000 5.7230 572,300

250,000,000 5.7230 1,430,750

500,000,000 5.7230 2,861,500

750,000,000 5.7230 4,292,250

Potential Annual TDT Revenue Generated By Hotel

Hotel Rooms 1,000 500 Average Room Rate $175 $175

Occupancy 70% 70%

TDT Rate 5% 5% Estimated Annual Revenue $2,235,625 $1,117,813

Potential Annual Payment in Lieu of Taxes Based on Value of Land

ASSESSED POTENTIAL ANNUAL VALUE TAX RATE REVENUE

15,000,000 5.7230 85,845

25,000,000 5.7230 143,075

50,000,000 5.7230 286,150 75,000,000 5.7230 429,225

75 The Broward County Civic Arena: History, Facts and Opportunities

Part Decision Options

This section –  Identifies the two options available to the County Commission with respect to SSE’s request  describes the opportunities and challenges of each option

SSE’s proposal identifies some issues that could serve as the basis of a new agreement. However, our review of comparable franchises suggests that their request in its totality may not be warranted. Further, there are additional provisions that should be included for the public’s benefit.

Option 1: Negotiate new terms. Opportunities -

(1) Provides the County an opportunity to incorporate further performance-based changes to the agreement, such as including a specific revenue threshold for requiring financial contributions for major capital improvements, to be held by the County in trust. Further, such concessions providing financial contributions to SSE must include an equity investment from SSE.

(2) Additional economic development of the arena site must be paramount to any considerations. Any amendment, should the Board decide to pursue this further, to the Development Agreement with ADC must include timeframes for presenting the County Commission with a specific development proposal within 24 months and with a specific development phasing plan, which are mutually acceptable to all interested parties, including the City of Sunrise.

(3) New development – ⋅ Provides an opportunity to generate increased public revenues such as lease payments, sales taxes, license fees, etc. to offset any additional subsidies if provided by Broward County; ⋅ Takes advantage of interest in private sector investment in ancillary development. ⋅ Provides an opportunity to assure that the arena is integral to any new development in the future. ⋅ Compliments the investments being made at Sawgrass Mills ⋅ Is compatible with adjacent land uses.

(4) In exchange for financial considerations, a new contract provision that requires SSE to pay back all or a portion of assistance provided should SSE not satisfy the performance-based milestones contained within the agreement should be included in any new agreement. In other words, SSE should be required to return all or a portion of financial support provided by the County if they fail to meet the milestones.

(5) The County should expand its focus on the operational performance of the arena in addition to financial performance.

(6) The Document should be streamlined for administrative efficiency.

(7) New agreement terms may stabilize the finances of the hockey franchise to allow the new owner an opportunity to restructure the organization, improve SSE’s financial condition, and improve the competitiveness of the hockey team potentially leading to increased attendance and increased revenues.

(8) Retains a valuable and existing major league franchise.

Note: Additional expertise from third parties is needed for the negotiation of a perspective Development Agreement.

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Challenges or Risks

(1) Provides funding and contractual concessions to a hockey franchise with a history of financial losses and poor performance, which could be offset by additional development at the arena site.

(2) Additional recurring TDT funds allocated for the Arena cannot be made available for other tourism-related programs unless there is a strong emphasis by SSE on increasing tourism generating opportunities during the summer off-season.

(3) Economic structure of the NHL, which places greater reliance on local market support for the team, creates franchise instability.

(4) New contractual terms may increase the team’s overall value as a result of increased public subsidies, thus inadvertently making it more attractive for future sale.

(5) Currently unknown if market demand exists for the type of development that will ultimately be pursued.

(6) Future economic conditions, such as a recession or increases in interest rates, may delay or prevent any proposed development from occurring.

(7) Regardless of any new terms or development that occurs, it is possible that that hockey team’s on-ice and financial performance may not improve. Option 2: Decline SSE’s request. Opportunities

(1) New ownership succeeds in stabilizing the team and the SSE without additional public assistance.

(2) TDT revenues in excess of arena debt service would be retained for other tourism related programs.

(3) Should AOC default on its agreement, this provides an opportunity to develop a Master Plan for the overall site and seek a new arena operating partner. Challenges or Risks

(1) Arena faces intense competition from other venues for concerts, performances, etc., with or without a professional sports anchor.

(2) BB&T Center is too large to efficiently host minor league sports and smaller performances.

(3) Competition from other metropolitan areas seeking a professional sports franchise through franchise relocation may entice the team to relocate.

(4) Lack of a multi-year capital improvement plan.

(5) Insufficient funding for capital improvements.

(6) Lack of revised financial terms could result in relocation, bankruptcy or default of the Panthers, AOC or ADC.

(7) May place the franchise in the position to seek relocation to a new location with more advantageous terms.

(8) May place the franchise in the position of being contracted by the NHL.

(9) Could place the BB&T Center in a position to lose its anchor tenant.

(10) If the team relocates, folds or defaults, the County would be responsible for the entire $14 million debt service payment plus any outstanding arena completion bonds owed by ADC.

(11) If the team relocates, folds or defaults, the County is ineligible to continue to receive $ 2 million in annual sales tax rebates that are used to pay a portion of the arena bonds.

(12) Relocation, folding or default of the Panthers and/or AOC will likely result in a reduction of revenues associated with naming rights, sponsorships, advertising, parking, concessions, sales taxes, etc.

77 The Broward County Civic Arena: History, Facts and Opportunities

Part Conclusion

“The old paradigm of the stadium or arena in a sea of parking doesn’t work anymore. The franchise can’t afford it and neither can the city. They need each other.”68

As an auto centric facility surrounded by vast open parking areas with easy access to the Sawgrass Expressway, the BB&T Center offers little in terms of creating an engaging experience (other than the event itself) or capturing additional economic benefits (i.e., spending) from attendees prior to or after an event. However, with plenty of underutilized land currently used for surface parking, the facility is in an ideal position to anchor a new phase of economic development and to establish itself as an expanded destination for entertainment and tourism.

Therefore, we conclude –

 The BB&T Center is a missed economic development opportunity and an underutilized asset.

 The BB&T Center in its present form is slowly becoming economically obsolete as a sports and entertainment venue unless additional development is introduced to provide enhanced entertainment options and increase the site’s attraction for tourism.

 The best strategy going forward should be to seek higher density, mixed-use use. This would add economic value either as a compliment to the existing arena or as a total redevelopment without the arena.

 A major league professional sports franchise is a prized corporate and community commodity with communities willing to entice teams to relocate.

 The County has made a large investment in a sports and entertainment facility that is only mid-way through its anticipated economic life cycle.

 The loss of the team as an anchor tenant would require at least 44 days each year of replacement programming.

 Sports play a major role in the development of communities from ancient Rome to today’s South Florida.

68 (Craft, Kevin) Sports and the City. Dialogue with Gensler. www.gensler.com The Broward County Civic Arena: 78 History, Facts and Opportunities

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79 The Broward County Civic Arena: History, Facts and Opportunities

Appendix A Part Entertainment and Shopping Districts Project Summaries

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Buffalo, New York; First Niagara Center and HarborCenter

Buffalo’s HarborCenter is a hockey-themed development financed by the owner of the Buffalo Sabres NHL team. The Team was granted development rights to 1.7 acres directly across from the First Niagara Center. According to Richard Tobe, Deputy Chief Executive for New York’s Erie County, the project is one of the most expensive private developments in the City’s history. Across the Erie Canal Harbor, HarborCenter is part of a larger effort to redevelop the city’s waterfront. It contains a 750-space parking garage, two indoor ice rinks, a 205-room Marriott Hotel, retail and restaurant spaces.

81 The Broward County Civic Arena: History, Facts and Opportunities

Foxborough, Massachusetts; Gillette Stadium and Patriot Place

Located adjacent to Gillette Stadium, a privately-financed facility that is home to the NFL’s New England Patriots, Patriot Place is a 1.3 million square feet shopping, dining, and entertainment complex developed by the owners of the Patriots. It also contains a four-star hotel, a theatre, and an interactive sports museum.

The Broward County Civic Arena: 82 History, Facts and Opportunities

Philadelphia, Pennsylvania; Wells Fargo Center and Xfinity Live!

Philadelphia’s NHL’s Flyers and the NBA’s 76ers play in the Wells Fargo Center, part of the South Philadelphia Sports Complex, which includes Lincoln Financial Field (home of the NFL’s Philadelphia Eagles), Citizens Bank Park (baseball’s Phillies) and Xfinity Live! Xfinity Live! is a $50 million dining and entertainment complex opened in 2012 consisting of 60,000 square feet of commercial space, 40,000 square feet of outdoor event space, restaurants and bars. Outdoor spaces project games and movies, and host outdoor activities and free concerts.

83 The Broward County Civic Arena: History, Facts and Opportunities

Part Appendix B Development Catalyst Project Summaries

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Anaheim, California; Honda Center and the Platinum Triangle

The area adjacent to the Honda Center, home of the NHL’s Anaheim Ducks, is known as the “Platinum Triangle.” It is undergoing redevelopment to include high-density residential, office, and retail space. Major League Baseball’s Anaheim Angeles and Angeles Stadium are also located in the Platinum Triangle. Anaheim Arena Management, LLC., an affiliated company of the Anaheim Ducks, has development rights to parking areas immediately adjacent to the Honda Center. Elsewhere in the Platinum Triangle, 16 projects are either planned or under construction. A total of 18,363 residential units, 5.7 million square feet of commercial and 16.8 million square feet of office space are envisioned for the area.

Graphic Source: Orange County Register

85 The Broward County Civic Arena: History, Facts and Opportunities

Lincoln, Nebraska; Pinnacle Bank Arena and the West Haymarket District

The City of Lincoln, Nebraska opened its $181 Million, 15,147-seat arena located in the West Haymarket district of downtown Lincoln in August 2013. The arena is the anchor for the larger $344 million West Haymarket Redevelopment Project. New apartments, two new hotels, bars and restaurants have been built around the new arena. Although the facility is not home to a major league sports franchise, it is home to the University of Nebraska’s men’s and women’s collegiate basketball teams.

The Broward County Civic Arena: 86 History, Facts and Opportunities

Sprint Center; Kansas City, Missouri

Located in downtown Kansas City, the $237 million Sprint Arena hosts concerts, college basketball tournaments, religious events, arena football, and preseason professional hockey and basketball games. In 2012, Pollstar ranked the Sprint Center 6th in the US and 22nd in the world in terms of ticket sales to non-sporting events – well ahead of other facilities such as Madison Square Garden, BB&T Center, Verizon Center and others.

The Sprint Center has sparked more than $3 billion in adjacent development. One major project is the $850 million Kansas City Power & Light District developed by the Cordish Company of Baltimore.

This mixed-use district is one of the largest development projects in the Midwestern United States.69 A one-block area within the district is called Kansas City Live! and contains two floors of bars, restaurants, and nightclubs, as well as a large, partially enclosed courtyard and concert venue.

The district also contains the world headquarters of H&R Block, a historic 213-room Hilton hotel, and a concert and live music venue. Residential development includes four high-rise apartment buildings, one of which is under construction and scheduled to open in 2015.

69 .Jump up . The Cordish Company announces lead design team for Kansas City LIVE!, press release. 87 The Broward County Civic Arena: History, Facts and Opportunities

Part Appendix C Live, Work, Play, and Shop Districts Project Summaries

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Boston, Massachusetts; TD Garden and Causeway Street Redevelopment

Boston’s TD Garden is the home arena for the Boston Bruins of the NHL and Boston Celtics of the NBA. The $160 million arena opened in 1995. According to the Boston Globe, in May 2013, the owner of TD Garden has proposed to construct a 1.7 million square feet mixed-use development adjacent to the arena. The development will contain 300,000 square feet of retail, 600,000 square feet of commercial, 500 residential units, a 200-room hotel, and an underground parking garage.

89 The Broward County Civic Arena: History, Facts and Opportunities

Brooklyn, New York; Barclays Center and Atlantic Yards

Brooklyn’s Barclays Center is home to the NBA’s Brooklyn Nets and will soon be home ice for the New York Islanders in 2015.

The arena is part of a larger development known as Atlantic Yards. Built by Forest City Ratner Companies/Forest City Enterprises from Cleveland, Ohio, Atlantic Yards is a planned mixed- use commercial and residential development under construction. Consisting of 4.5 million square feet of additional development on a 22-acre site, the project will include up to 16 mixed-use buildings for rental housing, residential condominiums, office space, and retail space. This is a phased development project with the following development sequence:

> Phase I - 1.5 million square feet to be built in 12 years, with the construction of the first building within the first four.

> Phase II – 2.9 million square feet within 25 years along with 8 acres of open space.

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Columbus, Ohio; Nationwide Arena and the Arena District

Built on the site of the former Ohio State Penitentiary, the Arena District in downtown Columbus is a 75-acre development adjoining the Nationwide Arena, home of the NHL’s Columbus Blue Jackets. Nationwide Insurance and its real estate development subsidiary - Nationwide Realty Investors was selected as master developer of the arena and surrounding area. The Nationwide Arena was built without public assistance; however in 2013 it was purchased by the Franklin County Convention Facilities Authority well below market value. The Arena District consists of the arena, multiplex theater, restaurants, and retail. It has spurred the construction of new residential units and commercial office development resulting in more than one million square feet of new development. The Ohio State University’s John Glenn School of Public Affairs observed “where there was once a crumbling state prison and little of economic or community value, there is now a thriving economic engine…”70

70 John Glenn School of Public Affairs (July 2008). “Assessment of the Gross Impact of the Columbus Blue Jackets and Nationwide Arena on the Greater Columbus Area.” Ohio State University. 91 The Broward County Civic Arena: History, Facts and Opportunities

Dallas, Texas; American Airlines Center and Victory Park

The American Airlines Center (2012 Pollstar Ranking #3) along with its two sports tenants – the NBA’s Dallas Mavericks and the NHL’s Dallas Stars, are located in the Victory Park neighborhood of Dallas, Texas. The publicly-owned $420 million facility opened in 2001 and was the first project in the larger Victory Park development built by Ross Perot, Jr. Consisting of 75 acres, the $3 billion project is planned to include more than 4,000 residential units, office space, retail, restaurants, and the W Dallas-Victory Hotel.

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Detroit, Michigan; Red Wings Arena and Entertainment District/Catalyst Development Project

In June 2013, the owners of the NHLs’ Detroit Red Wings along with the Detroit Downtown Development Authority announced plans for a $650 million arena and entertainment district. The new development will include a $450 million arena for the team, and $200 million of residential, retail and office space surrounding the new arena. The new arena will replace the Joe Louis Arena as the team’s home.

Graphic source: gregghenson.com

93 The Broward County Civic Arena: History, Facts and Opportunities

Los Angeles, California; Staples Center and L.A. Live!

One of the most successful arena-related developments to date is Los Angeles’ Staples Center and LA Live! development. Staples Center (ranked #1 by Pollstar in 2012) replaced the Forum as the home of the Los Angeles Lakers (NBA), Los Angeles Clippers (NBA) and the NHL’s Los Angeles Kings. It has led to a $3 billion commercial, entertainment, retail and residential development in downtown Los Angeles. At 5.6 million square feet on 27-acres, it contains a performing arts venue, 140,000 square feet Regal Entertainment movie complex, 879-room JW Marriott Hotel, 123-room Ritz-Carlton hotel, a 40,000 square feet open-air plaza known as the Nokia Plaza, and an ESPN broadcasting studio, among other tenants. “Ten years after the grand opening of the Staples Center there has been $5 billion worth of development in the four block radius of the arena, half of which was generated by LA Live.”71

71 Greenberg, Martin J. and Dennis Hughes, Jr. (2011). Sports.Comm: It takes a Village to Builds a Sports Community . Marquette Sports Law Review. Vol. 22. PP 91-186. The Broward County Civic Arena: 94 History, Facts and Opportunities

Toronto, Canada; Air Canada Center and Maple Leaf Square

Opened in 2010, Maple Leaf Square is a residential, office, retail, entertainment and hotel complex next to downtown Toronto’s Air Canada Centre (home of the NHL Maple Leafs). The $500 million development was jointly developed by the owner of the Air Canada Centre and the Toronto Maple Leafs NHL hockey team, and Canadian developers. The 1.8 million square feet complex covers 2.1 acres and includes restaurants, hotels, retail, and two 54-story condominiums.

95 The Broward County Civic Arena: History, Facts and Opportunities

Part Appendix D Comparative Analysis of NHL Teams

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NHL Team Comparisons

The Panthers claim their annual occupancy costs of $14.6 million are higher than all but one team they consider within their comparison group. They note $9.4 million in annual arena costs:

Required Payment Annual Amount Rent/Arena Bond payments $3,900,000 Rent to support completion bonds $500,000 Payment to Convention & Visitors Bureau $500,000 Payment to FDOT for toll ramps $800,000 Repairs, Maintenance, and Capital $2,000,000 Property Insurance $1,700,000 Operating costs $5,200,000 Total 14,600.000

We compared the Team’s agreement terms with Broward County to 10 other similarly-situated NHL franchises: Anaheim Ducks, Arizona Coyotes, Buffalo Sabres, Carolina Hurricanes, Columbus Blue Jackets, Minnesota Wild, Nashville Predators, Pittsburgh Penguins, San Jose Sharks, and Tampa Bay Lightning.

METROPOLITAN AREA POPULATION Earlier, we identified how population is one of the critical success factors for a sports and entertainment venue. In comparison to the ten other franchises:

 The Anaheim Ducks play in a larger metropolitan area – Los Angeles- Long Beach-Anaheim MSA, which is the second largest MSA in the U.S. with 12,828,837 inhabitants.

 The Miami-Fort Lauderdale-West Palm Beach MSA is the 8th largest at 5,564,635 residents.

 The Houston-Woodlands-SugarLand, Texas MSA is the only MSA larger than the Miami-Fort Lauderdale-West Palm Beach MSA without an NHL hockey team.

 Of the top 20 MSAs, Houston, Atlanta, San Francisco, Riverside, Seattle, San Diego, and Baltimore do not have an NHL hockey team.

 The smallest MSA with an NHL hockey team is Buffalo-Niagara Falls, New York.

 The New York-Newark-Jersey City MSA hosts three NHL teams (two of which have their own financial and attendance issues).

97 The Broward County Civic Arena: History, Facts and Opportunities

OWNERSHIP STABILITY With five ownership changes in its 20-year history, the Panthers are above the average for the comparison group in this category, averaging an ownership change every four years, same as the Tampa Bay Lightning. In contrast:

 Carolina and Columbus, even with their financial issues, have each had only one owner in their history (both franchises are younger by six to seven years than the Panthers).

 Anaheim, which was established the same day as the Panthers, has had only two owners in its 20-year history.

 Only Arizona experiences more ownership turnover than the two Florida teams at an average of three years.

FRANCHISE VALUE At $240 million, the Panthers have the 5th highest value of the comparison group. Pittsburgh’s value ($480 million) is the highest and Columbus ($175 million) the lowest.

2013-2014 SEASON AVERAGE ATTENDANCE Florida’s average game attendance for 21 games through December 31, 2013 of 14,658 is below the average of the comparison group of 16,390 per game. Arizona and Columbus both draw less on average than the Panthers. Pittsburgh at 18,592 is the highest. Tampa Bay is among the highest in the comparison group at 18,368 per game.

AGREEMENT TERM The Arena Operating Company’s 30-year agreement term length is comparable with the other teams. Arizona has the shortest term at 15 years. Columbus, at 39 years, is the longest.

RENEWAL PROVISIONS Besides the AOC, six arena operators have unilateral options to extend their agreements. The AOC may extend for two five-year terms (10 years in total). Anaheim’s arena operator can extend for four five-year terms (20 years). San Jose allows only one five-year extension. Carolina, Nashville and Pittsburgh do not provide for an extension.

EARLY CONTRACT TERMINATION Arizona, Columbus, Minnesota and Nashville have the ability to terminate their agreement for convenience. However, Columbus, Minnesota, and Nashville charge a termination fee that requires the arena operator to pay all or a portion of the balance of the remaining debt. Nashville imposes a $10 million early termination fee plus 50% of the capital debt balance. Minnesota’s fee is not clearly identified, but is based on a formula that imposes liquidated damages based on the amount of outstanding bonds and the reduction in the value of the

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Xcel Energy Center arising from the loss of the team. Columbus requires the team to pay $36 million if they terminate prior to the end of the contract term.

NON-RELOCATION TERMS The Panthers have limited contract language regarding non-relocation through a covenant to play. Similar arrangements are found in Tampa and San Jose. Buffalo, Carolina, Columbus, and Pittsburgh appear to have stronger provisions in separate non-relocation agreements. Anaheim, Arizona, Minnesota, Nashville do not address the issue.

OWNER’S SUITE Five of the ten arena operators provide the public owner with a suite. Three do not and two were unresponsive to our information request. The AOC is not contractually obligated to provide Broward County with an owner’s suite, although it does provide one to the City of Sunrise.

PUBLIC USE/COMMUNITY EVENTS DATES Many of the comparison facilities are required to reserve a certain number of days for public use. Broward County, at 15 days, is the highest of all the arenas we compared.

⋅ Arizona – ten days ⋅ Minnesota – five days ⋅ Pittsburgh – six days ⋅ San Jose – ten days ⋅ Tampa – six days ⋅ Anaheim – five days

Nashville requires the arena operator to “make commercially reasonable efforts to make the arena available for community events.”

PENALTIES FOR HOCKEY GAMES NOT PLAYED The AOC does not charge the Panthers a penalty for each hockey game that is not played, for example as a result of a strike or lockout. Arizona charges $60,000 for each regular season hockey game not played at the Jobing.com arena. Nashville charges based on a formula.

FACILITY DEBT PAYMENTS In all of the venues we examined, the public sector is responsible for ensuring the payment of outstanding arena construction bonds.

MANAGEMENT FEE In addition to the Florida Panthers, only the Arizona and Nashville venues pay the arena operator a management fee. BB&T Center is the lowest at $367,709 (2013), followed by Nashville at $1 million (excluding a possible $2.7 million incentive fee), then by Arizona at $15 million annually (this is not a typo, it is $15 million).

99 The Broward County Civic Arena: History, Facts and Opportunities

RESPONSIBILITY FOR CAPITAL IMPROVEMENTS

Arena Arena Operator Arena Owner BB&T Center, Sunrise  Honda Center, Anaheim   ($12 million) Jobing.com Arena  ($500,000/yr) First Niagara Center,  Buffalo PNC Center, Raleigh  Nationwide Arena,  Columbus Xcel Energy Center, St.  Paul Bridgestone Arena,  Nashville Consol Energy Center,   PBurgh SAP Center, San Jose ($1.5 million/yr) ($1.25 million/yr) Tampa Bay Times Forum ($1.3 million x 30 years)  ($1.23 million/yr x 30 years)

RESPONSIBILITY FOR OPERATING EXPENSES

Arena Arena Operator Arena Owner BB&T Center, Sunrise  Honda Center, Anaheim  Jobing.com Arena  First Niagara Center, Buffalo  PNC Center, Raleigh  Nationwide Arena,  Columbus Xcel Energy Center, St. Paul  Bridgestone Arena,  Nashville Consol Energy Center,  PBurgh SAP Center, San Jose  Tampa Bay Times Forum 

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INSURANCE

Arena Arena Operator Arena Owner BB&T Center, Sunrise  Honda Center, Anaheim  Jobing.com Arena  First Niagara Center, Buffalo  PNC Center, Raleigh  Nationwide Arena,  Columbus Xcel Energy Center, St. Paul  Bridgestone Arena,  Nashville Consol Energy Center,  PBurgh SAP Center, San Jose  Tampa Bay Times Forum 

101 The Broward County Civic Arena: History, Facts and Opportunities

OTHER FUNDING OBLIGATIONS

Arena Arena Operator Arena Owner BB&T Center,  AOC must pay FDOT Sunrise $800,000 annually for debt related to the ramps to Sawgrass Expressway  AOC must pay $500,000 yearly tourism promotion payment  AOC must pay outstanding loan payments Honda Center, $12 million capital Anaheim improvements reserve Jobing.com Arena City of Glendale paid the operating losses of the Coyotes at a cost of $25 million annually for two years First Niagara Center, Buffalo PNC Center, Raleigh Nationwide Arena, Columbus Xcel Energy  Arena operator must Center, St. Paul contribute $500,000 yearly into Repair and Replacement Fund  Arena operator must contribute to efforts to promote youth hockey Bridgestone  City of Nashville paid $25.2 Arena, Nashville million of the NHL franchise fee  City is responsible for Arena operating losses  Must deposit $750,000 annually into a Working Capital Fund yearly Consol Energy Center, PBurgh SAP Center, San  Arena operator must ⋅ $750,0000 yearly into Jose contribute $375,000 yearly reserve fund to the Sharks Foundation ⋅ $500,000 yearly into  $750,000 into reserve / yr enhancement fund  $500,000 into enhancement fund/yr  $250,000 into capital reserve/yr.  $100,000/yr for community events Tampa Bay Times $1.3 million for capital (yearly) $1.23 million for capital (yearly) Forum

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REQUIRED NUMBER OF FINANCIAL ACCOUNTS

Arena Arena Operator BB&T Center, Sunrise 6 Honda Center, Anaheim 4 Jobing.com Arena 3 First Niagara Center, Buffalo Unknown PNC Center, Raleigh N/A Nationwide Arena, Columbus N/A Xcel Energy Center, St. Paul 2 Bridgestone Arena, Nashville 3 Consol Energy Center, PBurgh 0 SAP Center, San Jose 3 Tampa Bay Times Forum 0

REPORTING REQUIREMENTS

Arena Monthly Quarterly Interim Annual BB&T Center, Sunrise    Honda Center, Anaheim   Jobing.com Arena    First Niagara Center, Buffalo Unable to Obtain Information PNC Center, Raleigh Nationwide Arena, Columbus Xcel Energy Center, St. Paul  Bridgestone Arena, Nashville   Consol Energy Center, PBurgh  SAP Center, San Jose   Tampa Bay Times Forum  

103 The Broward County Civic Arena: History, Facts and Opportunities

ANNUAL OPERATOR RENT PAYMENTS TO ARENA OWNER

Arena BB&T Center, Sunrise Approximately $4.6 million Honda Center, Anaheim Bond payments paid from gross revenues Jobing.com Arena $500,000 First Niagara Center, Buffalo 0 PNC Center, Raleigh $ 3 million (plus percentage of gross revenues) Nationwide Arena, Columbus 0 Xcel Energy Center, St. Paul $7.7 million Bridgestone Arena, Nashville $750,000 Consol Energy Center, PBurgh $6.1 million SAP Center, San Jose $3.8 million Tampa Bay Times Forum 0

TOTAL TEAM/ARENA OPERATOR OBLIGATIONS SUMMARY

Location Rent Capital Operating Insurance Other Florida      Anaheim    Arizona      Buffalo   Carolina   Columbus St. Paul     Nashville  Pittsburgh    San Jose    Tampa Bay   

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Part Appendix E NHL Team and Arena Profiles

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Florida Panthers

I. Franchise Information Metropolitan Area Population 5,564,635 / #8 Year Established 1993 Owner Sunrise Sports & Entertainment (SSE) # of Owners Since Inception 5 Most Recent Sale & Sales Price 2013 ($240 million) 2012 Forbes Franchise Value $240 million (#23 of 30) 2013-2014 Average Attendance 14,658 / #26 of 30 II. Venue Information Home Arena BB&T Center, Sunrise, Florida (suburban location) Arena Owner Broward County Arena Operator Arena Operating Company (AOC), a subsidiary of SSE Year Opened 1998 Construction Cost & Funding $212 million Public funds: $184 million (87%) Private funds: $28 million (13%) Arena Size 872,000 sq. ft. Arena Seating Capacity Hockey: 19,250 Concerts: 22,457 2012 Pollstar Ranking (US) #18 for non-sporting events tickets sold III. Key Agreement Provisions Term 30 Years (1998-2028) Extension Terms AOC option only for two, 5-year terms Non-default Early Termination None Relocation Terms None Arena Owner’s Suite None # of Public Use Dates Up to 15 dates annually Penalties for Games Not Played None Public Funding Contributions Annual arena bond payments ≈ $10 million Team/Operator Payments ⋅ Highway Ramps (FDOT) ≈$800,000 ⋅ Arena bond payments ≈ $4.6 million ⋅ Tourism promotion payment = $500,000/yr. ⋅ 2012 County Loan Payments ≈ $2 million ⋅ 2010 County Loan Payments ≈ $2.5 million ⋅ 1,500 tickets to Convention & Visitors Bureau Surcharges Seat Use Charge of $1.50 for hockey events and $3.75 for non-hockey events Management Fee to Operator $367,709 Team/Operator Rent Team pays AOC $307,500 in rent plus expenses to hold games at the Arena. This amount decreases in later years Exclusive Public Revenues ⋅ 20% of net operating revenues above $12 million ⋅ Difference between annual debt service and $10 million (County Preferred Revenue Allocation) ⋅ $500,000 tourism promotion payment ⋅ 2012 County Loan Payments

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Florida Panthers

⋅ 2010 County Loan Payments ⋅ Ticket revenues from County events Exclusive Team/Operator ⋅ 100% - net operating revenues up to $12m Revenues ⋅ 80% - net operating revenues exceeding $12m ⋅ Revenues from hockey related events, including advertising, broadcasting, naming rights Operating Expenses Arena Operating Company Capital Improvements Arena Operating Company. However, County has contributed toward capital improvements. Property Insurance Arena Operating Company Arena Maintenance Standard “Quality Arena Standard” comparable to arenas in Buffalo, Philadelphia, Tampa, Anaheim and Cleveland and within 100 miles of the BB& T Center. Required Financial Accounts 1. County Preferred Revenue Allocation Account 2. 2012 County Loan Reserve Account 3. Operating Fund 4. Operating Reserve Account 5. Renewal and Replacement Account 6. Capital Expenditure Reserve Account Fiscal Year October 1 Annual Budget Due by August 1 (for review only) Reporting Requirements ⋅ Monthly: by the 20th of the following month ⋅ Quarterly: within 45 days following end of each quarter ⋅ Annual: Within 150 days after the end of the fiscal year, consolidated balance sheet of AOC and Team Naming Rights ⋅ BB&T ⋅ 10 years, expiring in 2022 ⋅ $36,874,570 ⋅ $3,687,457/yr Linked Development or ⋅ SSE may develop 12 acres. Development Rights ⋅ No development has occurred. Remarks

109 The Broward County Civic Arena: History, Facts and Opportunities

Anaheim Ducks I. Franchise Information Metropolitan Area Population 12,828,837 / #2 Year Established 1993 Owner Anaheim Arena Management, LLC # of Owners Since Inception 2 Most Recent Sale & Sales Price 2005 ($70 million) 2012 Forbes Franchise Value $300 million (#21 of 30) 2013-2014 Average Attendance 15,859 (#22 of 30) II. Venue Information Home Arena Honda Center, Anaheim, California (downtown location) Arena Owner City of Anaheim Arena Operator Anaheim Arena Management, LLC (team affiliate) Year Opened 1993 Construction Cost & Funding $123 million – 100% public Arena Size 650,000 sq. ft. Arena Seating Capacity Hockey: 17,174 Concerts: 18,900 2012 Pollstar Ranking (US) #20 – non-sporting events tickets sold III. Key Agreement Provisions Term 30 years (2003-2033) Extension Terms Four 5-year options by Anaheim Arena Management, LLC with 12-month notice to City Non-default Early Termination None Relocation Terms None Arena Owner’s Suite Yes x 1 plus 25 parking spaces at no charge # of Public Use Days 5 Penalties for Games Not Played N/A Public Funding Contributions $12 million deposited in a reserve account for capital improvements Team/Operator Payments N/A Surcharges N/A Management Fee to Operator N/A Rent Payments from Team or N/A Operator Exclusive Public Revenues ⋅ Net revenues between $8 million and $12 million (deposited in a reserve account for capital improvements) ⋅ Other revenues/profit sharing is based on a detailed distribution formula Exclusive Team/Operator ⋅ First $8 million of net revenues Revenues ⋅ 25% of net revenues over $12 million Operating Expenses Anaheim Arena Management, LLC Capital Improvements Both parties share and contribute toward capital improvements. Property Insurance Anaheim Arena Management, LLC Arena Maintenance Standard Not specified Required Financial Accounts 1. Operating Account 2. Reserve Account 3. Insurance and Condemnation Account

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Anaheim Ducks 4. Third Party Funds Account Fiscal Year N/A Annual Budget Within 60 days prior to the start of the fiscal year, including a five-year capital improvement plan Reporting Requirements ⋅ Monthly within 30 days after the end of each calendar month ⋅ Annual financial statement within 90 days following the end of each operating year ⋅ Annual marketing plan Naming Rights ⋅ American Honda Motor Co. ⋅ $60.45 million ⋅ 15 years, expires in 2020 ⋅ ≈$4 million annually Linked Development or  Team entered into development agreement to Development Rights develop portions of adjacent properties  Area adjacent to the arena known as the “Platinum Triangle” is undergoing redevelopment to include high-density residential, office, and retail space  16 projects planned or under construction for a total of 18,363 residential units, 5.7 million square feet of commercial and 16.8 million square feet of office. Includes the City National Grove of Anaheim indoor music venue. Remarks Anaheim Arena Management makes debt service payments from arena gross revenues

111 The Broward County Civic Arena: History, Facts and Opportunities

Arizona Coyotes (formerly the Phoenix Coyotes)

I. Franchise Information Metropolitan Area Population 4,192,887 / #13 Year Established 1996 Owner IceArizona Acquisition Co., LLC # of Owners Since Inception 6 Most Recent Sale & Sales Price 2013 ($170 million) 2012 Forbes Franchise Value $200 million (#25 of 30) 2013-2014 Average Attendance 13,025 (#30 of 30) II. Venue Information Home Arena Jobing.com Arena, Glendale, Arizona (suburban location) Arena Owner City of Glendale Arena Operator IceArizona Acquisition Co and IceArizona Hockey Co Year Opened 2003 Construction Cost & Funding $220 million -82% publicly funded Arena Size 600,000 sq. ft. Arena Seating Capacity Hockey: 18,300 Concerts: 19,000 (unconfirmed) 2012 Pollstar Ranking (US) #90 III. Key Agreement Provisions Term 15 Years ( 2013-2028) Extension Terms 5 years with mutual consent Non-default Early Termination Team may terminate at the end of year 5 if the team has incurred cumulative operating losses of $50 million or more Relocation Terms N/A Arena Owner’s Suite Yes x 1 # of Public Use Dates 10 Penalties for Games Not Played Yes - $60,000 for each regular season hockey game not played Public Funding Contributions  City makes yearly debt payments of approximately $12.6 million.  City makes annual capital improvement contributions of $500,000 thru 2019 and $1 million from 2020 thru 2029. Team/Operator Payments N/A Surcharges ⋅ Hockey events: $3/ticket (increases based on attendance) ⋅ Non-hockey events: $5/ticket ⋅ Supplemental surcharge of $1.50/ticket for all events Management Fee to Operator $15 million annually ($225 million total) Rent Payment from Team or $500,000 annually Operator Exclusive Public Revenues ⋅ Ticket surcharges ≈ $3.2 million ⋅ Parking ≈ $2.2 million ⋅ Parking profits in excess of $20,000 (hockey) ⋅ 75% of parking profits from pre-season, playoffs, All-Star and non-hockey events ⋅ 100% of parking profits from City events The Broward County Civic Arena: 112 History, Facts and Opportunities

Arizona Coyotes (formerly the Phoenix Coyotes)

⋅ 20% of arena naming rights ≈$670,000 ⋅ 100% of theater naming rights ≈ $150,000 ⋅ Base rent of $500,000 from team (escalates in later years to $800,000 ⋅ Net revenues from County events ⋅ Total ≈$6.7 million Exclusive Team/Operator ⋅ $15 million annual management fee Revenues ⋅ Hockey ticket receipts (less surcharges), Team retail store sales, sponsorship revenues, concessions (except for City and community events, advertising, broadcast, ⋅ 80% of arena naming rights ⋅ Non-hockey ticket receipts (less surcharges) Operating Expenses Arena operator Capital Improvements Responsibility of arena operator but subject to the availability of funds in the Renewal and Replacement account Property Insurance Arena operator Arena Maintenance Standard Meet or exceed the quality of the US Airways Arena in Phoenix, Nationwide Center, Xcel Energy Center Required Financial Accounts 1. Operating Account 2. Renewal and Replacement Account 3. City Surcharge Account Fiscal Year July 1 Annual Budget Due May 31 Reporting Requirements ⋅ Monthly ⋅ Quarterly (within 60 days following the end of each quarter) ⋅ Annual (within 90 days after the end of the fiscal year) ⋅ Litigation Reports Naming Rights ⋅ 10 Years (thru 2016 ⋅ $30 million ⋅ $3 million annually Linked Development or ⋅ Initially granted development rights to Development Rights WestGate City Center :  6.5 million sq. ft.  225 acres  Entertainment, office, residential, hotel  Phase 1 completed: 450,000 sq. ft., 20- screen cinema, 350-room Marriott hotel  Zanjero  Adjacent to WestGate  160 acres  Mixed-use development  Cabela’s - 165,000 sq. ft. Remarks  Team relocated from Winnipeg, previously the Winnipeg Jets (1979-1996);  NHL assumed team ownership in 2009 after the 113 The Broward County Civic Arena: History, Facts and Opportunities

Arizona Coyotes (formerly the Phoenix Coyotes)

team filed bankruptcy;  City of Glendale covered team losses for the 2010-2011 and 2011-2012 hockey seasons, 2011-2012 losses of $25 million;  NHL considered moving the team if the team’s lease was not restructured and new ownership obtained;  NHL averaged annual losses of $28 million for the four seasons it owned the team;  Previously played home games at the US Airways Center in Phoenix.

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Buffalo Sabres (Note: Unable to verify this information with legal documents or other sources) I. Franchise Information Metropolitan Area Population 1,135,509 / #49 Year Established 1970 Owner Hockey Western New York Holdings (Terry Pegula) # of Owners Since Inception 6 Most Recent Sale & Sales Price 2011 ($189 million) 2012 Forbes Franchise Value $250 million (#22 of 30) 2013-2014 Average Attendance 18,448 (#10 of 30) II. Venue Information Home Arena First Niagara Center, Buffalo, New York (downtown location) Arena Owner Erie County, New York Arena Operator Hockey Western New York, LLC Year Opened 1996 Construction Cost & Funding $123 Million Public funds: $54 million (44%) Arena Size 700,000 sq. ft. Arena Seating Capacity Hockey: 18,595 Concerts: 18,500 2012 Pollstar Ranking (US) #94 III. Key Agreement Provisions Term 25 years (1997-2021) Extension Terms Non-default Early Termination Relocation Separate Non-Relocation Agreement Arena Owner’s Suite # of Public Use Dates Team/Operator Payments Penalties for Games Not Played Public Funding Contributions Team/Operator Payments Surcharges Management Fee to Operator Team/Operator Rent Exclusive Public Revenues None Exclusive Team/Operator 100% of all revenues Revenues Operating Expenses Arena Operator Capital Improvements Arena Operator Property Insurance Arena Maintenance Standard Required Financial Accounts Fiscal Year Annual Budget Reporting Requirements Naming Rights  Naming rights acquired by First Niagara Financial Group on August 25, 2011  Undisclosed amount

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 15 years Linked Development or  Team received development rights to land Development Rights across from arena.  HarborCenter is a hockey-themed mixed –use development financed by the Team’s owner directly across the First Niagara Center.  750-space parking garage  Two indoor ice rinks  205-room Marriott Hotel  Retail and restaurant space.  One of the most expensive privately funded building in the City’s history. Remarks

117 The Broward County Civic Arena: History, Facts and Opportunities

Carolina Hurricanes I. Team Information Metropolitan Area Population 1,130,490 / #47 Year Established 1997 Owner Hurricane Holdings, LLC # of Owners Since Inception 1 Most Recent Sale & Sales Price 1994 ($47.5 million) 2012 Forbes Franchise Value $187 million (#27 of 30) 2013-2014 Average Attendance 15,420 (#23 of 30) II. Venue Information Home Arena PNC Center, Raleigh, North Carolina (suburban location) Arena Owner Centennial Authority Arena Operator Gale Force Sports & Entertainment (related to Hurricane Holdings) Year Opened 1999 Construction Cost & Public $158 million – 75% publicly funded Funding Arena Size 700,000 sq. ft. Arena Seating Capacity Hockey: 19,772 Concerts: 19,500 2012 Pollstar Ranking (US) #105 III. Key Agreement Provisions Term 25 years (1999-2024) Extension Terms Arena operator for two five-year terms Non-default Early Termination Relocation Terms Separate Non-Relocation Agreement Arena Owner’s Suite # of Public Use Dates Penalties for Games Not Played Public Funding Contributions Team/Operator Payments Surcharges 3% State Seat Tax Management Fee to Operator Rent Payments from Team or  $2.5 million annually Operator  Additional rent of 3 of gross arena revenues in excess of $60 million plus Exclusive Public Revenues Exclusive Team / Operator  Naming rights revenue split based on a formula Revenues between the Team, State and capital expense fund  Reimbursement from NC State for its events of $8,750 / event Relocation Provisions Operating Expenses Arena Operator Capital Improvements Centennial Authority Property Insurance Operator with some subsidy for Arena Owner Arena Maintenance Standard Required Financial Accounts Fiscal Year July 1 Annual Budget Approved by Centennial Authority each June

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Carolina Hurricanes Reporting Requirements Naming Rights  $80 million ($4 million annually)  20 Years ending in 2022 Linked Development or None Development Rights Remarks  Previously the Hartford Whalers  Arena is also the home of the NC State men’s basketball team

119 The Broward County Civic Arena: History, Facts and Opportunities

Columbus Blue Jackets I. Team Information Metropolitan Area Population 1,901,974 / #32 Year Established 2000 Owner John P. McConnell # of Owners Since Inception 1 Most Recent Sale & Sales Price N/A 2012 Forbes Franchise Value $175 million (30 of 30) 2013-2014 Average Attendance 13,608 (#28 of 30) II. Venue Information Home Arena Nationwide Arena, Columbus, Ohio (downtown location) Arena Owner Franklin County Convention Facilities Authority Arena Operator Columbus Arena Management (not affiliated with team) Year Opened 2000 Construction Cost & Public Funds $150 million / $0 Arena originally built by Nationwide Insurance at a cost of $175 million and sold to Franklin County for $43.3 million in 2012 financed by the City and County’s casino tax revenue. Arena Size 700,000 sq. ft. Arena Seating Capacity Hockey: 18,144 Concerts: 21,000 2012 Pollstar Ranking (US) #82 III. Key Agreement Provisions Term 39 years (2000-2039) Extension Provisions N/A Non-default Early Termination Yes. Team must remain until 2039 or pay $36 million in damages Relocation Terms Liquidated damages if team relocates based on a sliding scale Arena Owner’s Suite Yes x1 # of Public Use Days N/A Penalties for Games Not Played N/A Public Funding Contributions N/A Team/Operator Payments N/A Surcharges $1.00 per ticket Management Fee to Operator N/A Annual Rent Payments from None Team or Operator Public Revenues  Ticket surcharge  Non-hockey events  Shared signing bonus, if any  Parking revenue Team/Operator Revenues ⋅ Hockey event revenue ⋅ Naming rights ⋅ Portion of signing bonus, if any ⋅ Advertising revenue ⋅ Broadcast revenue Operating Expenses Franklin County Convention Facilities Authority

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Columbus Blue Jackets Capital Improvements Franklin County Convention Facilities Authority Property Insurance Franklin County Convention Facilities Authority Arena Maintenance Standard  NHL standards  Separate section addressing quality standard Required Financial Accounts N/A Fiscal Year N/A Annual Budget N/A Reporting Requirements N/A Naming Rights  Team receives 100% of naming rights revenue  2011-2021  $28.5 million ($2.8 million yearly) Linked Development or  Arena District includes shops, restaurants and Development Rights hotels,  Redevelopment of former Ohio Penitentiary  As of 2008, over $1 billion in private investment Remarks  Prior to arena lease restructuring, team lost $80 million in a six-year period, $25 million in 201 due to rising player salaries, declining attendance, reduction in revenue sharing, and lease issues.  Team identified “unfavorable lease terms” as the cause of $12 million in annual operating losses

121 The Broward County Civic Arena: History, Facts and Opportunities

Minnesota Wild

I. Team Information Metropolitan Area Population 3,348,859 / #16 Year Established 1997 Owner Minnesota Sports & Entertainment # of Owners Since Inception 2 Most Recent Sale & Sales Price 2008 ($225 million) 2012 Forbes Franchise Value $330 million (#19 of 30) 2013-2014 Average Attendance 18,225 (#12 of 30) II. Venue Information Home Arena Xcel Energy Center, downtown St. Paul, Minnesota Arena Owner City of St. Paul Arena Operator Saint Paul Arena Company (affiliate of Team) Year Opened 2000 Construction Cost & Public Funds $170 million – 79% publicly funded Team contributed $35 million Arena Size 650,000 sq. ft. Arena Seating Capacity Hockey: 19,854 Concerts: 20,554 2012 Pollstar Ranking (US) #45 III. Key Agreement Provisions Term 25 years (2000-2025) Extension Provisions Arena operator has the sole right to extend for two five-year terms Non-default Early Termination Termination fee, liquidated damages equal to the amount of outstanding bonds, reduction in value of the Arena arising from the absence of the team. Early termination can be exercised after the 10th year. Relocation Terms Not addressed Arena Owner’s Suite Not addressed # of Public Use Days 5 days annually Penalties for Games Not Played Not addressed Public Funding Contributions None Team/Operator Payments  Annual contributions of at least $500,000 to the Repair & Replacement Reserve Fund. The amount is indexed to CPI.  Annual contributions (undefined) to promote youth hockey programs. Surcharges None Management Fee to Operator None Rent Payments from Team / $3.5 million annually plus annual Payment in lieu of Operator Taxes which varies annually. In arena year 13 - $4,191,405. During the full term, Minnesota Hockey Ventures Group will have paid $87.5 million in rent and $105.8 million in PILOT for a total of $193,389,933. Public Revenues Net parking revenues from non-hockey events Team/Operator Revenues Saint Paul Arena Company (affiliate of Team) keeps all arena revenues including naming rights, advertising, and net parking revenues.

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Minnesota Wild Operating Expenses Saint Paul Arena Company (affiliate of Team) Capital Improvements Saint Paul Arena Company (affiliate of Team) Property Insurance Saint Paul Arena Company (affiliate of Team) Arena Maintenance Standard “Consistent with industry standards” Required Financial Accounts  Capital Improvements Reserve Fund  Repair & Replacement Reserve Fund Fiscal Year “Arena Year” = September 1 Annual Budget By July 1st, 5-year capital improvement plan, 5-year repairs and maintenance cost projection, list of itemized repairs and maintenance costs and capital improvements completed during the preceding year, team equipment list, arena equipment replaced during the preceding year, amounts and recipients of charitable contributions made by the arena operator. Reporting Requirements  Quarterly Events Report - Events - Total attendance - # of tickets sold - Amount of sales taxes and ticket surcharges collected - Repair and replacement reserve fund balance

Naming Rights Xcel Energy is paying $75 million over 20 years thru 2024 ($3 million annually) Linked Development or None Development Rights Remarks

123 The Broward County Civic Arena: History, Facts and Opportunities

Nashville Predators I. Team Information Metropolitan Area Population 1,670,890 / #36 Year Established 1998 Owner Predator Holdings, LLC # of Owners Since Inception 3 Most Recent Sale & Sales Price 2007 ($172 million) 2012 Forbes Franchise Value $205 million (#24 of 30) 2013-2014 Average Attendance 16,524 (#20 of 30) II. Venue Information Home Arena Bridgestone Arena, downtown Nashville, Tennessee Arena Owner Sports Authority of Nashville and Davidson County Arena Operator Powers Management Company, a subsidiary of the Nashville Predators Year Opened 1996 Construction Cost & Public Funds $144 million – 100% publicly funded Arena Size 750,000 sq. ft. Arena Seating Capacity Hockey: 17,113 Concerts: 20,000 2012 Pollstar Ranking (US) #16 III. Key Agreement Provisions Term 30 Years (1998-2028) Extension Provisions None Non-default Early Termination  If attendance averages below 14,000 per game for two or more consecutive seasons.  Early termination fee applies ($10 million plus 50% of capital debt balance) Relocation Terms None Arena Owner’s Suite None # of Public Use Days Must make commercially reasonable efforts to make the arena available for community events Penalties for Games Not Played Yes, deduction based on a formula Public Funding Contributions N/A Team/Operator Payments N/A Surcharges  NHL Events (lesser of $1.75/seat of 5% of the ticket price) (used to pay debt service)  Non-hockey events (lesser of $2.00 or 5% of the ticket price) (used to pay debt service) Capital improvements fee (lesser of 5% of the ticket price or $2.00) Management Fee to Operator  $1 million annually (increases by lesser of CPI or 5%  Incentive fee not to exceed $2.7 million / year Annual Rent Payment from Team  $750,000 / year (license and use fee) subject to or Operator other terms  5% of ticket revenues less $750,000? Public Revenues  85% of food and beverage concessions  75% club seating and suite sales  50% merchandise  Surcharges Team/Operator Revenues  Parking revenues

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Nashville Predators  15% of food and beverage concessions  25% club seating and suite sales  100% concessions  50% merchandise  100% naming rights  100% advertising  Ticket revenues Operating Expenses Sports Authority of Nashville and Davidson County Capital Improvements Sports Authority of Nashville and Davidson County Property Insurance Sports Authority of Nashville and Davidson County Arena Maintenance Standard  Standard of care defined as comparable to Honda Center, United Center, Quicken Loans Arena, Scotttrade Center, and other arenas Required Financial Accounts  Operating Revenue Account  Working Capital Fund  Capital Improvement Fund Fiscal Year July 1 Annual Budget Due 12/1 Reporting Requirements  Annual financial statement by 12/1  Monthly – within 45 days of the end of each month

Naming Rights  2010-2019  Bridgestone Americas  Amount undisclosed Linked Development or None Development Rights Remarks  City paid $25.2 million of the $80 million NHL Franchise Fee when the franchise was awarded  Arena is located across the street from the Nashville Convention Center, Music City Center, other performance venues and several hotels  Prior to the 2007 sale, the team was widely rumored to be moving to either Hamilton, Ontario or Kansas City, Missouri due to declining attendance and mounting financial losses.  Sports Authority responsible for operating losses  Sports Authority responsible to contribute $750,000 into the working capital fund  Guaranty by team and local investors  Team allowed to play 2 home games per year at another venue

125 The Broward County Civic Arena: History, Facts and Opportunities

Pittsburgh Penguins

I. Team Information Metropolitan Area Population 2,356,285 / #22 Year Established 1967 Owner Lemieux Group # of Owners Since Inception 10 Most Recent Sale & Sales Price 1999 ($107 million) 2012 Forbes Franchise Value $480 million (#8 of 30) 2013-2014 Average Attendance 18,592 (#8 of 30) II. Venue Information Home Arena Consol Energy Center Arena Owner Sports & Exhibition Authority of Pittsburgh and Allegheny County Arena Operator Pittsburgh Arena Operating, LP (affiliated with team) Year Opened 2010 Construction Cost & Public Funds $321 million – 0% public Arena Size 720,000 sq. ft. Arena Seating Capacity Hockey: 18,387 Concerts: 19,758 2012 Pollstar Ranking (US) #15 III. Key Agreement Provisions Term 30 years Extension Provisions N/A Non-default Early Termination N/A Relocation Terms Yes - Non-relocation covenant Arena Owner’s Suite Yes x1 # of Public Use Dates 6 Penalties for Games Not Played None Public Funding Contributions N/A Team/Operator Payments N/A Management Fee to Operator None Team/Operator Rent  $4.1 million  $200,000 parking, plus  “Supplemental rent of $1.8 million thru 2029 for arena and service yard. Surcharges  Non-NHL events – 5% of ticket price  Parking - $1 /vehicle  Leased parking - .50/vehicle  NHL events – 3% of ticket price Public Revenues  Parking: $400,000/max to be deposited into Capital Reserve Fund  Rent Team/Operator Revenues  Pittsburgh Arena Operating, LP. Retains 100 of net revenues from all events  Parking revenues Excess of $400,000 in parking surcharges to Pittsburgh Arena Operating, LP.  Gate receipts – 100%  Concessions – 100%  Non-NHL events – 100%  Suites and premium seating – 100%

The Broward County Civic Arena: 126 History, Facts and Opportunities

Pittsburgh Penguins

 Merchandise – 100%  Marquee advertising – 100%  Sponsorship and advertising – 100%  Naming rights – 100%  Retail – 100%  Surcharges Operating Expenses Pittsburgh Arena Operating, LP Capital Improvements  Pittsburgh Arena Operating, LP. Pays 40% of major repairs and replacement to maintain the foundation and structural integrity of an adjacent parking garage.  Authority pays out of the Capital Reserve Fund or other sources  Authority made initial contribution of $3 million and $400,000 annually Property Insurance Pittsburgh Arena Operating, LP Arena Maintenance Standard Consistent with comparable facilities Required Financial Accounts N/A Fiscal Year August 1 Annual Budget  Operating Due by July 31  5-Year Capital by June 15 Reporting Requirements  Annually (by 12/1) certified financial statement for arena operations  Annually (by 12/1) audited financial statement of Pittsburgh Arena Operating, LP  Annually (by 12/1) Annual Report Naming Rights  $84-105 million  21 years expiring 2031 Linked Development or  Team granted rights to develop the 28-acre Development Rights former Civic Arena site, now known as the “Lower Hill District”  Plans include 1,200 residential units, 600,000 sq. ft. of office development, and 250,000 sq. ft. of retail.  Team must develop at least 2 acres annually over 10 years starting in 2014 or possibly lose the development rights to the land.  142-room hotel opened across from the arena Remarks  Team required to provide 300 tickets per each game at “materially discounted rates”  Debt service on bonds is paid by casino operator

127 The Broward County Civic Arena: History, Facts and Opportunities

San Jose Sharks I. Team Information Metropolitan Area Population 1,836,911 / #34 Year Established 1991 Owner Sharks Sports and Entertainment # of Owners Since Inception 2 Most Recent Sale & Sales Price 2002 9$147 million 2012 Forbes Franchise Value $405 million (#13 of 30) 2013-2014 Average Attendance 17,562 (#17 of 30) II. Venue Information Home Arena SAP Center at San Jose Arena Owner City of San Jose Arena Operator Sharks Sports & Entertainment Year Opened 1993 Construction Cost & Public Funds $162.5 million – 82% publicly funded Arena Size 450,000 sq. ft. Arena Seating Capacity Hockey: 17,562 Concerts: 19,190 2012 Pollstar Ranking (US) #5 III. Key Agreement Provisions Term 27 years (1991-2018) Extension Provisions Operator has one 5-year option Non-default Early Termination N/A Relocation Terms Covenant not to relocate Arena Owner’s Suite Yes along with hockey tickets and parking # of Public Use Dates 10 Penalties for Games Not Played N/A Public Funding Contributions  City required to provide $750,000 annually into a reserve fund  City required to contribute $500,000 annually into an “enhancement fund” Team/Operator Payments  Team required to provide $750,000 annually into a reserve fund  Team required to contribute $500,000 annually into an enhancement fund  $250,000 capital reserve fund Surcharges N/A Management Fee to Operator N/A Rent Payments for Team or Hockey Rent ≈ $1,459,983 Operator Building Rent ≈$1,642,283 (2008) About $3.8 million Public Revenues Hockey Rent ≈ $1,459,983 Building Rent ≈$1,642,283 (2008) Parking ≈ $150,000 increased by 5% annum Building naming revenues? Team/Operator Revenues 50% building naming revenues Operating Expenses Sharks Sports & Entertainment Capital Improvements 50% City / 50% Sharks Sports & Entertainment if agreed City responsible for any capital enhancements resulting from building code changes

The Broward County Civic Arena: 128 History, Facts and Opportunities

Team all other Capital budget can’t exceed reserve fund balance City responsible for certain parking area capital repairs and enhancements Property Insurance City of San Jose Arena Maintenance Standard Comparable to major arenas in the U.S. at which NBA and/or NHL games are played Required Financial Accounts City related accounts Capital Reserve & Enhancement Fund City & Community Events Fund - $100,000 Fiscal Year August 1 Annual Budget Due March 1 Reporting Requirements  Monthly  Annual Financial Statements for the City related accounts within 90 days of the end of the fiscal year Naming Rights  SAP America, Inc. entered into a five-year agreement on July 9, 2013 for the naming rights, financial terms undisclosed. However, unconfirmed reports are that the rights sold for $3.35 million over five years ($670,000/year).  As part of the naming rights, $375,000 will be contributed to the Sharks Foundation for youth and family services. Linked Development or  City has adopted a master plan for the Diridon Development Rights Area  240-acre site includes arena  5 million sq. ft. of office  420,000 sq. ft. of retail  2,600 residential units  900 hotel rooms Remarks

129 The Broward County Civic Arena: History, Facts and Opportunities

Tampa Bay Lightning I. Team Information Metropolitan Area Population #18 – 2,783,243 Year Established 1991 Owner Jeffrey Vinik # of Owners Since Inception 5 Most Recent Sale & Sales Price 2010 ($110 million) 2012 Forbes Franchise Value $189 million (29 of 30) 2013-2014 Average Attendance 18,368 (#11 of 30) II. Venue Information Home Arena Tampa Bay Times Forum Arena Owner Hillsborough County Arena Operator Tampa Bay Arena LP Year Opened 1996 Construction Cost & Public Funds $139 million / $86 million (62%) Arena Size 670,000 sq. ft. Arena Seating Capacity Hockey: 19,204 Concerts: 21,500 2012 Pollstar Ranking (US) #22 III. Key Agreement Provisions Term 30 Years (1995-2025) Extension Provisions Operator has the option for two five-year periods Non-default Early Termination N/A Relocation Terms Non-relocation covenant Arena Owner’s Suite None # of Public Use Dates 6 Penalties for Games Not Played N/A Public Funding Contributions County is contributing $39 million for capital improvements over 30 years ($1.23 million yearly) Team/Operator Payments Team is contributing $40 million for capital improvements over 30 years ($1.3 million yearly) Surcharges 8% of ticket price up to $2.50 used for bond payments Management Fee to Operator N/A Rent Payments from Team or None - waived Operator Public Revenues Surcharges Team/Operator Revenues All Operating Expenses Arena operator Capital Improvements  County is contributing $39 million for capital improvements over 30 years ($1.23 million yearly)  Team is contributing $40 million for capital improvements over 30 years ($1.3 million yearly) Property Insurance Arena Operator Arena Maintenance Standard Average standard of quality of performance compared to Auburn Hills, Milwaukee, Phoenix, San Jose, Minneapolis, Orlando, Charlotte and Miami Required Financial Accounts N/A Fiscal Year October 1

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Tampa Bay Lightning Annual Budget N/A Reporting Requirements ⋅ By 12/31 summary annual financial statement ⋅ Within 90 days of the end of the second quarter of tenant’s fiscal year, interim financial statements Naming Rights $40 million over 12 years ($3.5 million annually) Linked Development or N/A Development Rights Remarks

131 The Broward County Civic Arena: History, Facts and Opportunities