Naming rights and Reindeer Games

As I reported about a month ago, there were changes in the naming rights game. But I did leave out a few details, we will get to those in a moment . . .

I asked a city councilor last week when he thought the naming rights would be announced, and he suspected right before the ground breaking in August, I guess, to keep that element of intrigue and surprise with the public. Heck he doesn’t even know, but let’s just say him and the mayor are not real ‘close’.

I am just not sure how ‘surprised’ the public will be when they hear the ‘S’ word for the the 1,000th time. Christ, what some people will do to buy their way into heaven or at least into the pocket books of the sick and dying.

Now, back to the naming rights.

As I reported on June 16, there was a little switcheroo on the naming rights contract. The city decided to terminate their contract with Superlative and hire Legends to help with the naming rights. Which seems odd since the company(s) that want to put their name(s) on the building may have already been chosen.

What I did not tell you is on June 15 I had a very ‘colorful’ talk with Myles Gallagher, owner of Superlative. We had an intriguing 45 minute phone conversation about Sioux Falls, the Events Center, and his ‘disagreements’ with Darrin Smith and Mike Huether. While I would love to share most of the conversation with my South DaCola readers, I cannot.

I can say this, it seems two companies are possibly vying for a naming rights deal in a quasi-partnership.

But does the city have other competitors? Even if they were still going to go with the ‘S’ word in partnership with the ‘F’ word. Wouldn’t it help to drive up the bid?

Is this why Superlative was dropped over Legends? Did Superlative give advice that would be beneficial to the taxpayers? I guess we will have to see if ‘S’ & ‘F’ come in first place and if their offer is golden, that will be tell tale heart.

I’m pretty sure this will not come up at the groundbreaking ceremony, but I’m sure there will be several punch bowls of kool-aid being served.


#1 Justin on 07.16.12 at 1:16 am

I don’t buy into any conspiracy theories here.

Why are you such a big fan of Superlative? $500 million in total naming rights raised is 1 or 2 NFL stadiums. They finished last.

Of course the guy who didn’t win the business is bitter. But it’s awfully bold to take our $65k and publicly diss the City.

If you are trying to run an auction process, it has to hurt the competitive process if everybody thinks Denny will match any offer and has the inside angle.

Sanford lost their big sign on the Target Center showing into the Twins’ stadium, we just need a fraction of that money.

I think fighting about which agent is hired is a little contrived.

#2 Justin on 07.16.12 at 1:23 am

Also your linkage of 49ers PSLs and this other firm in your prior article seemed far fetched to me. Are you seriously trying to imply that hiring this agent will lead to PSLs?

That seems like a heroic stretch.

#3 l3wis on 07.16.12 at 1:24 am

When did he publicly diss the city? In a private phone conversation he told me he was not happy with certain people who work for the city, but he never dissed our city.

“If you are trying to run an auction process, it has to hurt the competitive process if everybody thinks Denny will match any offer and has the inside angle.”

Who said Denny was making that offer? Seriously? We are only speculating, and maybe other businesses are to.

“I think fighting about which agent is hired is a little contrived.”

I would agree, why hire either one of them if we are just going to go with the same old hat anyway. Seems like a waste of my money to me.

#4 l3wis on 07.16.12 at 1:26 am


The ticket price increase is real.

#5 Justin on 07.16.12 at 1:48 am

The price of 49ers tickets has zero to do with the EC naming rights deal.

The more money we get theoretically the lower the prices but not really. Ticket prices for events are correlated to a particular act’s price tag.

If you are trying to imply that this agent leads to higher ticket prices, you are mistaken. I know enough about it to assure you of that.

#6 l3wis on 07.16.12 at 1:57 am

As for ticket prices, I would love to hear your explanation of what ticket prices are based on. Additional fees are always tacked onto to ticket prices (parking, handling, etc.). But please, fill us in. Your expertise intrigues me.

#7 Justin on 07.16.12 at 1:58 am

rather than giving you an education, let’s flip it:

you explain to me how hiring of an agent that isn’t the one you talked on the phone is going to lead to higher ticket prices at Sioux Falls events.

That is the wild claim we are discussing.

#8 Justin on 07.16.12 at 2:02 am

Here is a link discussing pricing:

I for one hope that the EC sets ticket prices at whatever level maximizes profits. Since it is owned by the city, I would think all of us that reside here have the same goal.

#9 l3wis on 07.16.12 at 2:06 am

Thanks for the blog link . . .

“I for one hope that the EC sets ticket prices at whatever level maximizes profits.”

Yeah, I would agree. While CIP programs are being CUT for all of the citizens paying into it because of the debt incurred by the EC, we can only hope to afford tickets to see an event at said EC. Because whether we are attending event or not, we are still paying for it.

#10 Detroit Lewis on 07.16.12 at 2:21 am

BTW, whether you believe me or Myles or our phone convo doesn’t really matter, what concerns me is your defense of city government and your criticism of me questioning it. I have ever right to question this process, just as you have every right to question me. Ultimately I am paying for this train wreck.

#11 Scott on 07.16.12 at 10:45 am

The EC doesn’t set ticket prices. That is a contractural point in the contract between the artist and the promoter. Generally speaking, ticket prices are the same for an entire tour. Springsteen in wrigley field is no different than the fargodome. That said, if the rent in the new building is too high, the act will skip the venue.

#12 Scott on 07.16.12 at 10:47 am

This is also why the pre-election complaining about the number of seats was ridiculous. Tickets are not cheaper in a 20,000 seat building than they are in a 12,000. Of course, the guarantee is hire because it is usually based on 85-90% capacity.

#13 Scott on 07.16.12 at 11:44 am

ugh, autocorrect changed higher to hire.

#14 Justin on 07.16.12 at 11:57 am

Well I went through all of this once already but you pulled down the story when I posted it.

1. Smart move dropping (some of) the crazy accusations.

2. where is the cost benefit analysis that says this is costing you dearly? If the center is utilized enough it will be a profit center if it doesn’t it won’t be.

3. Where did I say you can’t question the city government? Why would you be concerned if I am defending any person or institution from baseless accusations? You clearly have an agenda against the Mayor. That’s fine. If you ever come up with good arguments to support your contrived witch hunt I will probably agree with you. This article is the reason the word pablum is in the lexicon.

#15 Justin on 07.16.12 at 12:19 pm

I also love this: “while I would love to share most of the conversation with my south dacola readers I cannot”.

Why not? Heck you tried to include one sentence and apparently that didn’t fly. Using the Donald Trump birther strategy gives your words less weight, not more.

And let me get this straight: you are now trying to spin the non-hiring of one of the four competing bidders to be evidence of a conspiracy that the bidding process will now be fixed? That wasn’t part of the original claim, but now that your connection between 49ers ticket prices and a conspiracy against SF residents has been blown up I guess you need some sort of hook.

#16 l3wis on 07.16.12 at 1:06 pm

Scott – it is all the extras that will be tacked onto to a ticket that concern me.

Justin – ‘A profitable’ events center? Now that I have stopped laughing, I can respond. Yes, Myles did tell me he doesn’t play political games, but there are other reasons why I cannot discuss our convo besides that comment. You are smart kid, and I am sure you can figure it out.

#17 Justin on 07.16.12 at 1:10 pm

Please explain to us how it won’t be profitable. Reason trumps laughter. If it is utilized enough it will make money. If not, it won’t. That is how business works. Revenue minus expenses equals profit.

I hope your explanation makes more sense and shows more understanding of the issues than this article. I’d start with the budget and a criticism of the projections if you have some insight.

#18 Detroit Lewis on 07.16.12 at 1:18 pm

Let me make this easy on you. Are any of the current entertainment facilities owned by the city profitable? (some are) But if you subtract naming rights and entertainment tax subsidies and principle and interest payments I find it a little hard to believe the EC will be profitable. The city already has a bad track record on this, not to mention, the only promise the mayor has secured was passing the ballot issue. He has been wrong about the price, corporate sponsorship, subsidies, location, parking, etc, etc. Why would I trust him now when it comes to the profitability of the EC? And what kind of left-handed cigarette is the mayor rolling for you?

#19 Justin on 07.16.12 at 1:28 pm

“Let me make this easy on you. Are any of the current entertainment facilities owned by the city profitable? (some are) But if you subtract naming rights and entertainment tax subsidies and principle and interest payments I find it a little hard to believe the EC will be profitable.:”

You have zero credibility. Your argument begins by explaining that others facilities are profitable. Then you follow it up by suggesting if we subtract the revenue from naming rights and taxes it won’t be profitable. Yes, that’s right, SUBTRACTING REVENUE.

Take a business class and come back to me when you learn that naming rights are revenue.

And ad hominem involving drugs and the Mayor you are obsessed with bashing, classy.

#20 l3wis on 07.16.12 at 1:37 pm

So a handout from a naming rights deal and a handout from the entertainment tax are considered ‘profits’?

Profits; pecuniary gain resulting from the employment of capital in any transaction. (in other words the EC being self-sufficient)

Revenue; the income of a government from taxation, excise duties, customs, or other sources, appropriated to the payment of the public expenses. (in other words the EC being held up by taxpayer subsidies).

Maybe you should take a business class.

And BTW, if you are so damn classy, how did you know what a left-handed cigarette was? Or did you have to google it? Your’e so cute.

#21 Justin on 07.16.12 at 1:47 pm

I challenge anybody with a business degree to agree with you here so I can actually debate them. I’m not about to continue a discussion of profitability with somebody that doesn’t understand the difference between revenue and expense.

Should be a dandy if we can find one that agrees that the two primary sources of revenue for the EC are either a) a handout or b) an expense, or even c) not a revenue. Maybe we’ll find somebody who will explain to me that the NFL wouldn’t be profitable without ticket sales or media revenue.

As for the ad hominem, you can play “I know you are but what am I” with somebody more on your level.

#22 Craig on 07.16.12 at 2:44 pm

Naming rights are part of the equation – so yes they add to the overall profitability of the facility just as rents do (because in essence they are simply renting space on the side of the building to one or more companies willing to pay for the privilege).

That said, I still don’t see any possible way the Events Center will be profitable – at least not in the first 15-20 years. The amount of days it would need to be utilized would need to far exceed the current Arena which means there is a huge assumption on attracting conventions and events to town that currently overlook Sioux Falls.

That might happen with a handful, but it isn’t going to turn on like a hydrant… it will be more of a trickle over time. Considering we have difficulty generating consistent revenue streams from the current Arena and the Washington Pavilion, I don’t think it is naive to assume the EC will require a subsidy from the taxpayer for the foreseeable future.

#23 Scott on 07.16.12 at 3:47 pm

There’s no way it will be profitable unless “S” and “F” way way overpay for the naming rights.

#24 Pathloss on 07.16.12 at 3:47 pm

I’ve doubted whether Sanford will put his name on it. It’s the ultimate corruption and city bid rigging scandal that was doomed from the beginning. Sanford is associated with success. He’s sharp enough to steer clear of anything Huether unless the city buys his name for 10 million or more.

#25 Pathloss on 07.16.12 at 3:48 pm

Just put a giant swastika at the entrance and call it Huether.

#26 Pathloss on 07.16.12 at 3:59 pm

It will attract all sorts of Nazi events. It’s big enough for cage fighting, monster trucks, WWF, and Mormon ceremonies. Heck, Romney will come here if there’s a tabernacle. It will not attract name concerts or large conventions. I’ll never go there because I know. if it’s built for 110 million, materials and construction will be inferior. The only way you can afford tickets will be if you’re republican.

#27 Alice15 on 07.16.12 at 4:08 pm

There is always some jackhole that brings politics into these conversations. If you really want to go there, let’s remember it is a Democrat who sold these pie-in-the-sky numbers in an industrial park. By the way, how is all that “new” development going with the wonder and anticipation of the new EC? That’s what I thought – nothing.

#28 Justin on 07.16.12 at 4:14 pm

Thank you, Craig, for injecting a modicum of reality into the rhetoric here.

First off, for Pathloss, Denny Sanford is so afraid of Huether that he hired Mike to be in charge of the marketing for the First Premier credit cards. The rest of what you said stands on it’s own.

Scott, I would actually say the “profitability” will be viewed by most as the annual financial cost/benefit analysis. The naming rights are typically renewable, but are usually set for a long period of time like 10 or 20 years. As such they have typically been paid upfront and discussed as more of a financing mechanism as far as the political negotiations are concerned. So they are a little more complicated to think about. There will definitely be an annual amortization of that revenue from an accounting perspective, although it will be non-cash. So there is a another measure of profitability, which is annual cash flow that would actually exclude the naming right revenue on an annual basis.

Now, Craig, I don’t think it is necessarily correct to either a) assume that the utilization rate will be the same as any other place in town as a reference (whether high or low) or b) assume that the breakeven point is the same utilization rate for any two of those facilities. Use it 10 times a year and get $500 gross per ticket or 365 times a year with $2 a ticket, big difference. To use your words but add one I heartily agree with you. I don’t think it’s naive to assume the EC MAY

#29 Justin on 07.16.12 at 4:16 pm

sorry posted accidentally while swatting a fly.

I don’t think it’s naive to assume the EC MAY require an annual subsidy, but I would sure be disappointed when the ballot said X million of positive cash flow per year.

It is a complex issue and it is certainly more complex than a swastika and the implication that the naming rights bidding is somehow tainted because some firm I’ve never heard of didn’t win.

#30 Justin on 07.16.12 at 4:19 pm

Alice, you aren’t really adding much either.

It is clear that the crowd that wanted the convention center downtown have their economic interests, too. Sorry, you lost, we have moved on. The infrastructure costs of doing that were outrageous and impractical no matter how much more it would have made your property worth.

#31 Justin on 07.16.12 at 4:22 pm

If people end up being priced out of events by ticket prices but they still sell out we should all be happy.

I don’t want to go to see Justin Bieber but if the people that do want to relieve my tax burden I’m all for it.

#32 Justin on 07.16.12 at 4:32 pm

I did, however, pay 230 bucks a ticket for concert tickets in St. Paul, Omaha and Chicago a couple of years ago for the same tour.

#33 Scott on 07.16.12 at 4:47 pm

Bieber at 2011 fame would still never come here. By the time it’s built he will be on the county fair circuit anyway.

#34 Justin on 07.16.12 at 4:56 pm

So, bad example.

But that’s what it comes down to in the events business, who will come here.

Before it was for sure a no (although Taylor Swift is pretty big and has played SD before).

I wouldn’t mind see The Wall live in Sioux Falls. That for sure would never even have been a possibility before.

If we build it and they don’t come it could be a mistake.

#35 Craig on 07.16.12 at 5:19 pm

I think it is important to remember that the final result to the city’s coffers is what is important here. There are going to be a lot of factors, but if we pretend that someone like Carrie Underwood comes to town we first need to determine if she would have came to town without it.

If she comes to town because of a new EC, then that is a positive, but if she would have scheduled a concert here regardless, the only gain would be the difference in revenue generated from the EC compared to the old Arena.

Then we need to determine what portion of ticket sales stays here. We know there are all sorts of fees, surcharges, and taxes – so what portion of that stays in the Sioux Falls area? The bulk of the ticket sales go to the performer or promoter, and in return we get the rental price for the facility.

We also get the benefit from concession sales, probably some sales tax revenue from merch sales. In theory we benefit from other tax revenue stemming from people who stick around to eat at a restaurant or stay in a hotel or maybe do some shopping… but those are unknowns and are heavily dependent upon future development which may have a better chance at capturing those dollars.

I don’t have the numbers in front of me, but I recall seeing some economic development numbers and what the estimates were (over the course of the financing period) ended up being less than the cost to build the thing. I could be wrong, but I don’t even think it paid for the cost of the money (bond interest etc) never mind the maintenance and upkeep etc.

Now I can’t help but think any number provided by the city will be as optimistic as the high school quarterback as he takes the “easy girl” to prom, so I tend to look at these things with skepticism, and that makes reality look that much worse.

I’ll freely admit I could be wrong – and to some degree I honestly hope I am, but I don’t see the EC making money for at least 15 – 20 years. I envision a perpetual subsidy from the city and as speech from city leaders on an annual basis reminding us that it shouldn’t be called a subsidy but rather an “investment” in our city’s future all the while our other facilities usage rates decline as a result of the new kid on the block.

Robbing Peter to pay Paul isn’t a new concept of course, but the problem is Peter is broke and needs new shoes.

#36 Justin on 07.16.12 at 5:25 pm

I guess I wait until that happens before I declare it a failure.

I would also love to see the projections you speak of that show a loss vs the language on the ballot.

#37 anominous on 07.16.12 at 7:01 pm

Wudn’t Carrie Underwood in Souix Falls last year?

#38 anominous on 07.16.12 at 7:07 pm

I think she was cuz I SE

#39 anominous on 07.16.12 at 7:08 pm

sorry posted accidentally while chasing a mouse.

I think she was cuz I seen a lot of ads up at the Arena one winter not too long ago.

#40 l3wis on 07.16.12 at 7:31 pm

You also have to take into account that they will be proposing a parking ramp next to the EC in a couple of years. Been plenty of talk about it already. I’m pretty sure we will have to bond for that to, and last I checked, there isn’t a contractor in town that will build them for free.

#41 l3wis on 07.16.12 at 7:40 pm

Justin – while you seem like a nice college educated kid who has probably helped with the Huether campaign, I have to disagree with you on several points about the EC, especially that it will be profitable. One thing I have learned about covering city politics for 10 years is that the city is very predictable. Going on this assumption alone, I will tell you that the place will have to be heavily subsidized by taxpayers.

I know I don’t have any scientific data to blow up your ass, but I haven’t missed a council meeting in over 8 years, and this knowledge has thought me that no administration, including Huether’s, has found away for an entertainment facility to be profitable. I am open to ideas, but when Mike ditched the EC being paid for by 25% corporate sponsorship, he pretty much sent that ship sailing.

#42 Justin on 07.16.12 at 7:57 pm

I thought you said some of the others were already profitable?

No I didn’t help in the Huether campaign. I met him in a professional capacity 5 years ago and haven’t spoken to him since I moved to Sioux Falls.

You will have to forgive me if I don’t buy your analysis, perhaps only because you don’t know the difference between revenue and expense. They didn’t teach that one in the Ivy League or on Wall Street.

#43 Scott on 07.16.12 at 7:58 pm

Yeah, that Underwood chick was just here and it apparently didn’t sell out (although a couple of people tried to claim otherwise).

#44 Detroit Lewis on 07.16.12 at 8:01 pm

Yup, the public golf courses, but I even question that since the SF Parks and Rec help maintain the courses, and I wonder if that is factored into their profits.

Justin, you can believe whatever you want, but if you look at history, and not financials, you can’t help to see the EC will not make money, at least for a very long time.

#45 Justin on 07.16.12 at 8:22 pm

also a parking ramp is a profitable venture that no idiot could screw up when next to an event facility.

Part of the economic sacrifice (boo hoo, right?) Zygi Wilf made in building where he was told to rather than in Arden Hills was that he would have owned that parking revenue for the games that is now owned by every adjacent real estate owner in downtown Minneapolis.

(Cue to my prior point about downtown political issues)

In fact, that was such a strong economic force that I believe firmly that’s why the Vikings stadium is where it is. It is such a strong economic force that the people that own property here where there IS NO MARGINAL PARKING will claim that the EC will lose money since they didn’t spend what it would take to connect downtown Sioux Falls to the rest of the world.

I’m sorry, downtown Sioux Falls is a bad place to start a retail business. What can I do to change reality for y’all?

#46 l3wis on 07.16.12 at 8:31 pm

“also a parking ramp is a profitable venture that no idiot could screw up when next to an event facility.”

You are correct, if there is events going on in said facility.

“I’m sorry, downtown Sioux Falls is a bad place to start a retail business.”

Really? I know of several businesses DT that have been successful for years, and I know of several that have gone by the wayside out by the Arena. Let’s compare apples to apples, buckeroo.

#47 Justin on 07.16.12 at 8:43 pm

In reality, I am in the market for retail real estate. There is loads of it in downtown Sioux Falls and I’m not interested. There is even more in the event center area and I’m not interested.

a City owned parking ramp would yield the best result for me, a disinterested Sioux Falls resident. I don’t see any reason to subsidize people for choosing a bad location for a retail business, but a public owned parking ramp next to a public owned events center is a gold mine for residents.

#48 l3wis on 07.16.12 at 8:48 pm

Like I said, if the ramp is used . . .

#49 Justin on 07.16.12 at 8:56 pm

well it won’t be built if it isn’t going to be used.

I hope you rest softly tonight as such.

#50 Detroit Lewis on 07.16.12 at 9:02 pm

Sweet dreams sugar.

#51 Alice15 on 07.17.12 at 10:00 am

I see Rapid City is including their parking ramps in their initial plan and figure. So glad that was also one more “shove under the bed until a later date” cost this administration chose to lie about. The difference with the RC parking facilities – they will get used during the week and be profitable as they are near an economically viable area. Not ours. One bad decision/lie after another.

#52 rufusx on 07.17.12 at 11:03 am

Having attended quite a few events in RC – it is great to be able to just cross the creek and be downtown shopping, art, history, food, entertainment, lodging. Just a short walk during or before or after.

Meanwhile @ SF Arena – get in the car and go home. Whether a parking ramp is there or not??? Who cares.

#53 Bond Perilous on 07.17.12 at 11:39 am

Sports arenas are not profitable Justin. Niether are convention centers, outside of Orlando and Vegas. One of the few civic institutions that is consistently profitable is the Lincoln Center in NYC, and they work their asses off to do so. It ain’t easy. Tell yourself what you want, but the Event Center will surely need to be subsidized. It’s going to be a boondoggle that will negatively impact quality of life in Sioux Falls due to the unnecessary tax burden on residents.

#54 l3wis on 07.17.12 at 11:40 am

Alice, I don’t think the city is lying about the parking ramp. I want to clarify that. They just didn’t tell us anything yet. Technically that isn’t lying, misleading, yes, but not lying.

#55 Alice15 on 07.17.12 at 2:11 pm

I am going to respectfully disagree. It is full knowledge that a parking ramp was/is going to be needed at the new EC. They willingly “left that out” of the current plan knowing full well it will have to be added and paid for about as soon as the doors open. That’s lying and misleading and this administration has become very good at it.

#56 Craig on 07.17.12 at 2:29 pm

I really don’t think a parking ramp will be needed. It would be less expensive to simply bulldoze the rest of McCart fields and relocate them elsewhere. They could also start buying up those homes to the West if it really came to it, because the cost per square foot of land would still be far cheaper than a ramp which would likely cost $20-25k per space and only be used a few times a month at best.

Besides – how many times a year will there be an event at the Events Center, one at the Arena, something in the Convention Center, and a baseball game to the point parking is a nightmare? Will that ever happen?

You only need parking if people show up. That is why I think it is an unknown and one they can’t really determine until a future date.

#57 Justin on 07.17.12 at 3:21 pm

Thanks for your authoritative statement with no references Bond. We can all accept that you know the truth even though you don’t bring a single example to support your point, the only example you have argues AGAINST your assertion. I’m guessing you weren’t on the debate team.

#58 l3wis on 07.17.12 at 3:26 pm

I thought Bond gave some pretty good examples.

#59 Justin on 07.17.12 at 3:36 pm

The Qwest center is Omaha has turned a profit every year and only gets allocated 30% of the parking revenue.

I suppose the xcel arena in st Paul is a big money loser, too?

#60 Bond Perilous on 07.17.12 at 3:54 pm

Alright. Fine.

“Niether civic nor cultural centers make any pretense of being self-financing.”

Pg 96. The American City: what works, what doesn’t. Gavin, A. 1996.

Garvin’s kinda smart too. He teaches urban planning at Yale. In the following paragraph, he explains how sports facilities and convention center typically fail miserably.

Now either go find some facts that support YOUR argument, or go back under the bridge from which you reside, you troll. Oh wait, there are NO facts that support your argument.

#61 Bond Perilous on 07.17.12 at 3:56 pm

“There you go again. Every time I hear you speak, I’m reminded of the ad, ‘Where’s the beef?'”

R. Reagan

#62 Justin on 07.17.12 at 4:20 pm

I found an example. Discuss.

You found somebody that repeated your line of nonsense and I have proven both of you wrong.

#63 Justin on 07.17.12 at 4:24 pm

You better call Omaha and tell them they are breaking your rules:

#64 Justin on 07.17.12 at 4:37 pm

Here’s another example of a profitable one, Dubuque Iowa. It is the second income statement I have looked for, and, shocker, the second profitable one:

Dubuque, Iowa
Grand Harbor Resort and Waterpark and Grand River Center
The Grand Harbor Resort and
Waterpark (“Resort”) and the
Grand River Center (“Center”)
opened in October 2003 with
the combined efforts of the
City of Dubuque and Platinum
Holdings, LLC (“Platinum”).
The Resort offers 193 rooms,
while the Center offers
approximately 54,000 square feet of total sellable space, with an estimated 30,000-sqaure
foot exhibit hall, 12,000 square feet of meeting room space (divisible into six separate
rooms) and 12,000 square feet of ballroom space (divisible into five separate rooms).
Feasibility Analysis of Proposed New Arena and Convention Center Development in Lincoln
Financial Operations Analysis
Page 83
Draft Copy
For Discussion Purposes
The entire project cost approximately
$51.3 million to develop and was a
part of the $188 million Grand River
Center and America’s River Project,
which included the addition of a
museum, a river walk and other
relevant infrastructure. Platinum
contributed $25 million to fund the
construction of the Resort, with the
City contributing the remaining
$26.3 million to fund the
construction of the Center. The
City’s portion of funding was
financed with a combination of state
grants, general obligation bonds,
sales tax dollars and other general
fund dollars.
The City owns the Center and the land upon which the Center and Resort sits. Platinum
holds a 50-year lease agreement with the City for the hotel’s land and operates the entire
facility. As compensation for operating the Center, the City agreed to pay Platinum
approximately $640,000 prior to the first year of operation and approximately $251,000
prior to the second year of operation. Further, the City agreed to allocate 50 percent of
the hotel/motel tax collections from the Resort to cover operation expenses at the Center
for each of the first ten years of operation. Platinum is responsible for any additional
expenses and retains all revenues associated with the operation of the Center and Resort.
If expenses are in excess of $1,000 for an individual repair or in excess of $15,000 in the
aggregate in a given fiscal year they are considered a capital repair, which is paid for by
the City. Any expenses less than $1,000 for an individual repair or less than $15,000 in
the aggregate in a given fiscal year are considered to be standard operating costs and are
the responsibility of Platinum.
During the first two years of the Center’s operations, the City is responsible for covering
any operational deficits at the Center. The overall contribution included approximately
$396,000 in start-up costs, $244,000 in operational deficits after the first year of
operations and $251,000 after the second year of operations. However, the City indicated
that there was no need to cover any deficit as the Center generated an operating profit in
each of its first two years of operation.

#65 Bond Perilous on 07.17.12 at 7:18 pm

Congratulations. You found a couple of needles it the haystack. The fact is, more often than not, stadiums and arenas lose money. Note that I didn’t say ALL. That still leaves the high probability for failure. Btw, it’s pretty easy to find new arenas that are profitable. This is due to two factors: debt structure and the substitution effect (read: The Economics and Politics of Sports Facilities). Debt structure goes without saying…just look at deal MMM struke. The substitution effect refers to people’s desire to check out the shiny new toy. After seven years or so, it loses it’s luster.

I find your dis of an industry expert to be high-larious btw. I was quoting the summary of a chapter in which Garvin cited many case studies. You didn’t bother to look it up though, did you?

And what’s with the massive cut and paste? It doesn’t make your point any more significant. I guess you’re not into the whole brevity thing…El Duderino. Nice use of the Googles though!

#66 Justin on 07.17.12 at 7:43 pm

That’s a great theory. Who cares why, the fact is they can be profitable and the only two income statements I’ve seen are profitable. You say Lincoln Center is profitable. So there are three and I have still yet to see the income statement of one that loses money.

And that doesn’t even count the incremental sales tax it will bring or the massive profits the hotels are going to make there during events.

Why the long quote? Because I didn’t think you would click through. Your posts need some googling because you have still haven’t provided any income statements showing losses.

#67 Bond Perilous on 07.17.12 at 8:03 pm

It ain’t hard to be profitable in the early years when the debt is backloaded. And let’s stay focused on the PUBLIC’s investment, not private industry. I
could careless if a hotel is profitable or not. It has little impact on taxpayers.

As for proof, would New York Times article suffice? Or do you need me to show you the evidence like I do with my dog when he shits in the house?

#68 Justin on 07.17.12 at 8:20 pm

Thanks, you finally found one. I think the Tyson Center is probably another one. Rio Rancho has a population of only 87k and definitely overbuilt.

Of course they can lose money, but they can also make money, a fact you completely dismissed. And I must have been right about you not clicking through because there are several more examples of successful centers in the presentation to the mayor of Lincoln, NE.

Nothing personal, I’m just sick of the absolutist rhetoric coming from people like Mary Kiffenmeyer in MN. It is a Koch Brothers and Tea Party rallying point, and like most of what they do it is backed by a lot of falsehoods and nonsense, along with “economists” who have never heard of a multivariable regression.

#69 cr on 07.17.12 at 9:24 pm

I think Justin needs to spend some time reviewing CSL’s report to the 2009 EC Task Force and also, AECOM’s report.

He will then have a clearer idea of the predictions regarding operating costs for the EC.

#70 l3wis on 07.17.12 at 9:28 pm

I think he needs to stop drinking so much coffee, that would probably change about 50% of his perspective.

#71 Justin on 07.17.12 at 10:03 pm

I don’t touch coffee. Do you have any zingers that don’t involve accusing somebody of drug abuse?

Yes cr, I have been looking for those docs, if you have a link I can’t locate them on the city website anymore. Also the current projections.

#72 l3wis on 07.17.12 at 10:06 pm

So people who drink coffee are drug abusers. Interesting.

#73 Justin on 07.17.12 at 10:14 pm

So you are going straight ad hominem now? I don’t blame you I think its the only way you have scored any points here.

#74 Bond Perilous on 07.18.12 at 12:28 am

Justin, the article mentions ten examples. The books I cited analyze over 50. You don’t need a MULTIVARIATE regression to realize the score is 64 to 1. Actually, it’s more like 100 to 1.

I want to thank you for providing me with evidence to state my case. The funny thing is, YOU DO EVEN READ YOUR OWN RESOURCES!!! You’re a joke. What does page 78 of the Lincoln arena report say? I’ll tell you. IT PREDICTS AN OPERATING LOSS FOR THE ENTIRE LIFE OF THE ARENA!!! Bwahahaha! What does page 93 say? I’ll tell you. CONVENTION/CONFERENCE CENTERS TYPICALLY OPERATE AT A LOSS BETWEEN $250,000 & $1.3 MILLION!!! Bwahahahaha!

Ah, ah, HAH-CHOO!!! Sorry, I was typing while allergic to your BS. Now, QUIT CRAPPING IN THE HOUSE! BAD JUSTIN, BAD!

#75 Justin on 07.18.12 at 1:24 am

Yeah you really got me, I have read the report. That’s why I posted it.

Next you will tell me the state of Minnesota lost money on the Metrodome.

#76 Bond Perilous on 07.18.12 at 1:31 am


#77 Justin on 07.18.12 at 2:02 am

Anyway, back on Earth, I would seriously like the links to the outside reports and outside or inside projections. I will give the city an F in transparency if none of it is available today.

#78 The Guy From Guernsey on 07.18.12 at 8:12 am

well skippy, here’s your link to the AECOM report (The Guy From Guernsey settles into Uncle Justin’s lap for a reading of the fairy-tale about the boom in convention business which provides the financial underpinnings for the business pro-forma for this “Event Center” project):

The consultants agree with you about the lackluster potential for development near the present Arena.

BTW, welcome to Sioux Falls. I’m getting the sense that you may be a recent transplant & weren’t in the city at any point in last decade – a time during which there has been robust debate on this issue.

#79 The Guy From Guernsey on 07.18.12 at 8:27 am

Had to pull the scab off of this wound (from the AECOM report):

“Of Sioux Falls’ three professional sports teams, we assume that the Skyforce will continue to play in the Arena, and that the Stampede and Storm will play in the Events Center.”

Only days after the event center referendum, the Skyforce confirmed that the team, would in fact, be playing in the soon-to-be-completed Sanford Sports Complex (For reference: Event Center referendum = Nov. 8; Skyforce announcement = Nov. 30).

As a previous poster noted … not a lie; simply a blatant misrepresentation.

#80 The Guy From Guernsey on 07.18.12 at 9:11 am

A link to the Final Report of the 2009 Event Center Task Force:

… and a link to the 2009 CSL Summary:

#81 The Guy From Guernsey on 07.18.12 at 9:39 am


You are a busy, on-the-go kind of person. I want our time together today to yield the highest value for you.

Lewis has included a nice feature by which you can review all of the South Dacola postings which are categorized as those which concern the “Event Center”:

There have been oodles of links provided by posters to South Dacola over the years which speak to the financial performance of these type of municipal projects.

In order to be most efficient with your time, here is a link to one of the most recent postings:

#82 Bond Perilous on 07.18.12 at 10:23 am

Post #64 proves absolutely nothing. It only describes a public/private partnership. Justin, would you please provide a properly cited quote from the Lincoln report that supports your argument? Saying “I have read it,” is not a counter argument. And please explain the contradictions to your case on pages 78 & 93. And while you’re at it, explain why the authors of the books I listed are wrong.

One thing is certain…we could power the Event Center by harnessing the energy you expend blowing smoke up your own ass. That would surely help the bottom line!

#83 Justin on 07.18.12 at 11:48 am

Thank you kindly Dan. I thinks the task force summary says it best, that any in any given year there is a reasonable chance to break even and there is a possibility for moderate profits.

The goal of building an EC is both civic and cultural, but it need not be a financial disaster.

I am disappointed to not find the financial pro formas anywhere though. The Aecom report is ok.

Given what this thread began about I was interested to see no mentions of naming rights anywhere in the EIR numbers.