New Downtown Arena

[Jersey Boss]

I'm guessing they have a verbal understanding of general parameters.

Is the Thunder the controlling Tenant? If so, will they---

Get $ from every event?

Get $ from every ticket?

Get $ from every F&B sale?

Get $ from all parking?

Get $ from every retail sale inside the facility?

Will the Thunder own and control all signage? And will the Thunder get $ from signage at every event?

Those are they type items that help decide if the city is getting a "good" or "bad" deal, IMO.

So does the current lease gift the Thunder with these revenues?

[chssooner]

So does the current lease gift the Thunder with these revenues?

I am sure it does for Thunder games. Why should the city make anything beyond sales tax on Thunder goods (t-shirts, hats, jerseys, etc.)?

Now, I am not 100% sure on stuff like parking or food and beverages (I just don't know). I would think for non-Thunder events, they get ugatz, and a split on Thunder games (not for parking).

[BDP]

According to Marquette School of Law's lease summary here is the Thunder's rights to revenue under the current lease (non-Thunder events revenue in bold):

Revenue Sources
Tickets
Thunder receive game day revenues attributable to home games of net revenues from ticket
sales. – Sect. 1(a), pg. 2
Concessions
For Team Events the Thunder receive: 40% of sales of the first $2.5 million; 42.5% of sales
between $2.5 million to $5 million; and 45% of sales exceeding $5 million in any Operating
Year. – Sect. 1(c)(i), pg. 2
For Clubs and Restaurants, including Courtside Seating for Team Events only, the Thunder
receive 10% of sales and 15% of sales from bars. – Sect. 1(c)(iii), pg. 2
Advertising
Thunder receive game day revenues attributable to home games of net revenues from
advertising. – Sect. 8.1, pg. 40
Naming Rights
Thunder will have the exclusive right to sell naming rights and permanent advertising for the
Arena less annual payments to the City that replace existing revenues the City receives from
Arena naming Rights. The Thunder will also have the exclusive right to sell naming rights and
advertising for the Practice Facility. – Sect. 8.3, pg. 41
Luxury/Premium Seating
For All Events the Thunder receive: 25% of sales for the first $1.25 million; 27.5% of sales
between $1.25 million to $1.75 million; and 30% of sales exceeding $1.75 million in any
Operating Year. – Sect. 1(c)(ii), pg. 2
Novelty and Merchandising Items
Thunder receive game day revenues attributable to home games of net revenues from
merchandising and sponsorships.

So, most of the revenue they received related to facility is tied to game days. Their use of the arena is limited to game day activities and use of Thunder specific facilities. If they want to use it beyond that, they need to give notice to the operator of the arena.

Essentially, if these terms are accurate and in fact would reman the same, they are very different than with many of the arenas that have been used for comparison here.

https://law.marquette.edu/assets/spo...ty-thunder.pdf

[BoulderSooner]

According to Marquette School of Law's lease summary here is the Thunder's rights to revenue under the current lease (non-Thunder events revenue in bold):



So, most of their revenue they received related to facility is tied to game days. Their use of the arena is limited to game day activities and use of Thunder specific facilities. If they want to use it beyond that, they need to give notice to the operator of the arena.

Essentially, if these terms are accurate and in fact would reman the same, they are very different than with many of the arenas that have been used for comparison here.

and the thunder pay rent and use fees for every game

[prickle]

[aDark]

This is going above my head. What are you saying here?

[Teo9969]

According to Marquette School of Law's lease summary here is the Thunder's rights to revenue under the current lease (non-Thunder events revenue in bold):



So, most of the revenue they received related to facility is tied to game days. Their use of the arena is limited to game day activities and use of Thunder specific facilities. If they want to use it beyond that, they need to give notice to the operator of the arena.

Essentially, if these terms are accurate and in fact would reman the same, they are very different than with many of the arenas that have been used for comparison here.

https://law.marquette.edu/assets/spo...ty-thunder.pdf

These are also zero risk to the Thunder. Getting % of sale is 100% profit with no exposure to cost and exposes the city to operational loss (which apparently we are incurring per Pete's research) especially given that those numbers were determined long before inflation became more than a rounding error in costs.

Hopefully theresholds go up substantially or the Thunder's percentage of sales goes down some.

[BDP]

These are also zero risk to the Thunder. Getting % of sale is 100% profit with no exposure to cost and exposes the city to operational loss (which apparently we are incurring per Pete's research)

Just trying to provide some information and context.

And sure, any entity operating a facility is exposed to potential operational losses.

What was the city's net operating profit from the arena before it had a tenant?

[BoulderSooner]

Getting % of sale is 100% profit

this is not accurate .. the reason the thunder get a % of the premium seating all year round is that they sell those tickets

[Teo9969]

this is not accurate .. the reason the thunder get a % of the premium seating all year round is that they sell those tickets

They bear zero cost of operation

[chssooner]

These are also zero risk to the Thunder. Getting % of sale is 100% profit with no exposure to cost and exposes the city to operational loss (which apparently we are incurring per Pete's research) especially given that those numbers were determined long before inflation became more than a rounding error in costs.

Hopefully theresholds go up substantially or the Thunder's percentage of sales goes down some.

They only get % of sales on premium/luxury seating. Not whole event, I believe.

[Teo9969]

They only get % of sales on premium/luxury seating. Not whole event, I believe.

Sorry, I'm not responding with the best contextualization. I realize now that there was a boarder convo about what Thunder receive for nom-Thunder events.


My point is, whenever Thunder receive money from arena operations it's from gross sales, not from net margin.

So relatively speaking, on $1,000,000 of a revenue line item, the Thunder get the exact same amount every time, but the city could profit a lot, little, break even or lose a lot, little.

[BoulderSooner]

They bear zero cost of operation

they pay operating expenses every time the use the arena ..

[Teo9969]

they pay operating expenses every time the use the arena ..

I wouldn't call Thunder Employees operating expenses from an arena management perspective.

[Jersey Boss]

this is not accurate .. the reason the thunder get a % of the premium seating all year round is that they sell those tickets

The Thunder get the revenue from non Thunder events because the arena owners gave them this plum in the lease.

[Teo9969]

The Thunder get the revenue from non Thunder events because the arena owners gave them this plum in the lease.

I would assume this is in the lease because the Thunder are the chief recruiter for groups who lease the suites for the whole year. If ATT leases a suite, the idea would be that they otherwise wouldn't but for the Thunder, so ATTs occupation of the suite for a Carrie Underwood concert is partially owed to the Thunder.

[PhiAlpha]

The Thunder get the revenue from non Thunder events because the arena owners gave them this plum in the lease.

Would all of those suites be leased at the premiums that were paid if there was no Thunder?

[Jersey Boss]

...

[chssooner]

...

PhiAlpha is very, very much right, you know. Whether you want to believe him or not is on you, but it doesn't change that having an anchor tenant is why thr Paycom Center is able to sell those suites. And you need them for concerts and other events, as well (the suites, that is).

[Dob Hooligan]

Seems to me that many here are bothered that the Thunder might make good money. Got no idea how the system works in the league, but want to begrudge them for any success. You want to make sure we have the most financially strapped team in the NBA? Serve notice that Okies hate giving a nickel to the NBA? Let them know you miss dollar beer, tickets and regular fights at the Blazers hockey?

Tell me what you know about major sports in the US and how the Thunder fit in.

[April in the Plaza]

This is going above my head. What are you saying here?

I’ll try to unpack it. I know that memes have become, in many cases, indecipherable for the uninitiated.

a) The people who control capital assets in the city’s various districts are, for the most part, fairly wealthy individuals. They aren’t Dobson or Kaiser wealthy, of course, but they are wealthy nonetheless.

b) These people understand that a multi-billion dollar arena district is not necessarily accretive for their respective non-CBD districts. In fact, a new arena will almost certainly be bad for their interests.

“Any student of economics knows that households have budget constraints that are binding, which means that families have only so much money to spend, particularly on entertainment. If the family chooses to spend the money at the ballpark, for example, then those funds cannot be spent on other activities. Thus, no new revenues are actually being generated.”

Source: https://www.stlouisfed.org/publicati...rts-facilities

c) These people are actively protesting against the December 12 vote but cannot do so in their official capacities. That, too, would be bad for business. At the same time, they recognize that the “billionaires are bad!” argument tends to resonate with common people during a period of uncommonly high inflation.

I don’t necessarily subscribe to the meme, but I think this is a reasonable explanation of it.

[unfundedrick]

Show me a state, city or country that spent too much on education.

Mentioning education here is a bogus argument. Education can't be improved by any kind of temporary city tax. OKC had a previous Maps for Kids for infrastructure improvements for schools and that did a good job of doing what was intended. Complain about the state if you are concerned about spending on education.

[Rover]

I’ll try to unpack it. I know that memes have become, in many cases, indecipherable for the uninitiated.

a) The people who control capital assets in the city’s various districts are, for the most part, fairly wealthy individuals. They aren’t Dobson or Kaiser wealthy, of course, but they are wealthy nonetheless.

b) These people understand that a multi-billion dollar arena district is not necessarily accretive for their respective non-CBD districts. In fact, a new arena will almost certainly be bad for their interests.

“Any student of economics knows that households have budget constraints that are binding, which means that families have only so much money to spend, particularly on entertainment. If the family chooses to spend the money at the ballpark, for example, then those funds cannot be spent on other activities. Thus, no new revenues are actually being generated.”

Source: https://www.stlouisfed.org/publicati...rts-facilities

c) These people are actively protesting against the December 12 vote but cannot do so in their official capacities. That, too, would be bad for business. At the same time, they recognize that the “billionaires are bad!” argument tends to resonate with common people during a period of uncommonly high inflation.

I don’t necessarily subscribe to the meme, but I think this is a reasonable explanation of it.

Disposable income is an identifiable amount but people choose what to do with it. They can save or spend it. They can alter their behaviors. They may choose to spend it locally and not out of the area, for instance. So it can increase local spending without changing their total disposable amount. And, we can draw disposable income amounts from an expanded area. This isn’t necessarily taking a dollar from okc spending to give to Thunder. Things like tv money, out of town visitors, etc. We don’t live in a bubble and we try to bring in money from elsewhere all the time.

[Teo9969]

Mentioning education here is a bogus argument. Education can't be improved by any kind of temporary city tax. OKC had a previous Maps for Kids for infrastructure improvements for schools and that did a good job of doing what was intended. Complain about the state if you are concerned about spending on education.

It could be improved by a permanent one for sure. Letting the state dictate the quality of our schools is definitely a deciding factor in why our business community remains smaller than we need it to be.

[Richard at Remax]

Got this email yesterday