Quote:
Originally Posted by J.OT13
Any funding from Government should come with first and foremost a guarantee that a major league team will be awarded (or moved) to the city, and that the team would stay for at least 20 years. It should also come with revenue splitting from concessions, parking and naming rights. If that can't be agreed upon, then taxpayer money invested should be in the form of a low interest loan, not a subsidy.
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A low interest loan is a subsidy. The assumption that there is profit to split is a perennial problem for stadiums. Certainly there should be binding terms on occupation.
What you can do is set up the agreement to capture 'excess profits', which protects the city from being hosed in negotiation on the subsidy amount, especially if naming rights are way more valuable than predicted. Basically, you keep the stadium, and associated revenue like (basic) concessions, parking and naming rights as part of a different corporation. Instead of a lease payment in the millions, you use a stadium fee on tickets (with a revenue guarantee from your chief tenant (excess losses protection)). You set the maximum margin on the profit for the stadium at lets say, 5 or 10%. This is used on modern private toll roads to avoid the Highway 407 problem.
Somewhat logical arrangements for the capital split would be to design and cost a bare bones stadium with the same capacity with no profit maximization considerations (boxes, clubs), and have the government contribute that much. Then the private operator pays for all the fancy features through the stadium fee. Operating costs, maintenance, and any capital upgrades need to be covered by the stadium fee, so it creates a tradeoff for the private operator to not request money losing upgrades during construction and the lease.