EVALUATING FINANCING STRATEGIES FOR AMERICAN STADIA
THE CASE OF MISSION VALLEY STADIUM, SAN DIEGO, CALIFORNIA
Ayush Kumar // Manas Pratim Kalita // Mohita Dasgupta // Ronit Kumar Purohit // Ranu // Vivek Kumar // Harsh Gupta
Proposal
Sources of Funds
Area Statement
Preliminary Costs
Revenue and Income
Taxes
Operational Expenditure
Cash Flow
Feasibility
Conclusion
2022 Bread and Circuses 2
THE PROPOSAL
THE PROPOSAL
• The Qualcomm stadium site is comprised of three parcels owned by the City of San Diego & Water Department which encompasses +/- 167 acres with a significant portion of the site impacted by flood zones and environmental issues.
• The site is zoned under the Mission Valley Planned District (MVPD) as CV (Commercial Visitor). The Qualcomm Stadium structure and surrounding plaza occupy 22 acres in the centre of the site surrounded by 135 acres of paved parking lots and roads which encompasses a majority of the site.
4
2022 Bread and Circuses
5
2022 Bread and Circuses
EXISTING SITE OVERVIEW
6
2022 Bread and Circuses
DEVELOPABLE AREAS
PHASE -III
OFFICE // HOTEL
9
2022 Bread and Circuses
10
USE VILLAGE 2022 Bread and Circuses KEY STAKEHOLDERS Chargers/NFL Partners Local Govt. Joint Power Authority Master Developer
PHASE -IV MIXED
AREA STATEMENT
STADIUM AREA Stadium Bowl 12 Acres 48,000 Seats 4 Levels Club Tower 8 Acres 17,000 seats 10 Levels Stadium Park 3 Acres 500 Spaces Stadium Support 2 Acres 2 Levels 25 Acres 15 % of site MIXED USE DEVELOPMENT AREA Residential 45 Acres 3,000 units 3.1 Million SF Office 12 Acres 40- 50 floors 750,000-900,000 SF Retail 3 Acres 20- 30 Spaces 200,000-250,000 SF Hotel 6 Acres 250- 300 Rooms 250,000-300,000 SF 66 Acres 40 % of Site
AREA STATEMENT
INFRASTRUCTURE Parking Garage 3 Acres 3,500 Spaces 1.2 Million SF Transit Garage 6 Acres 1,500 Spaces 500,000 SF Parking Deck 33 Acres 8,500 Spaces 1.8 Million SF Tailgate Park 13 Acres 1,500 Spaces Roadways 15 Acres Walkways 5 Acres 75 Acres 45% of Site
AREA STATEMENT
SPACE LEVELS AREA DESCRIPTION STADUIM Stadium Bowl 48,000 Seats ,4 Levels (Field, Plaza, Loge View) Public park Support Areas Club tower 17,000 Seats ,10 levels (Retail, Floor, filed, Plaza , Lodge, Suites) Ground Floor restaurants, Hall of fame & Team Store PARKING Central Garage 7 Levels 3,500 Spaces 1.2 Millions SF Retail & Office Parking East Deck 2 Levels 9,000 Spaces 1.5 Million SF Event parking South Garage 3 Levels 1,000 Spaces 500,000 SF Retail & office parking MULTI- FAMILY Apartments Class A 4-5 Story on Grade 55-72 Units per acre Free- Standing parking Structures Apartments Class B (Affordable) 4-5 Story on Grade 55-72 units per acre Free- Standing parking Structures
DEVELOPMENT
OFFICE
High-Rise office Class A 300,000-400,000 SF 15-20 Floors Floorplates:20,00025,000 SF Retail,Roof Deck Mid-Rise office Class A 200,000-250,000 SF 6-10 Floors Floorplates:20,00025,000 SF Retail Mid-Rise medical Office Class A 200,000-250,000 SF 6-10 Floors Floorplates:20,00025,000 SF Drug Store-Pharmacy Surgery Low-Rise Courtyard Office Class B 80,000-100,000 SF 3 Floors & Retail Floorplates:20,00025,000 SF Retail Executive Suites Low –Rise Courtyard Office Class B & “Creative” 80,000SF-100,000SF 3 Floors & Retail Floorplates:20,00025,000 SF Retail “ Creative Offices” PARKS River park Tailgate & Picnic AreaParking 13 Acres 1500 Spaces Stadium Park Lawn& Playground 3 Acres - Grass
PRELIMINARY COSTS
SITE SUMMARY
Land Use Acreage Building SF %of Site Stadium 25 Acres 1.5 Million SF 15% Commercial 15 Acres 2.0 Million SF 10% Residential 45 Acres 2.7 Million SF 30% Parking-Tailgate Lots 48 Acres 6000 SF 25% Parking Garages 9 Acres 5,000 SF 5% Park Space 5 Acres 3% Roads & Walkways 20 Acres 12% Projects Totals: 166 Acres 100% 17 2022
PRELIMIARY COSTS
RESIDENTIAL $/UNIT Apartments 1,500 Units $213,000 $319,000,000 Affordable 180 Units $80,000 $14,400,000 1680 Units $333,400,000 OFFICE $/SF High-Rise 275,000 SF $300 $82,500,000 Mid-Rise 105,000 SF $250 $26,250,000 Medical 85,000 SF $300 $25,500,000 Low-Rise 30,000 SF $150 $4,500,000 745,000 SF $138,750,000 18 2022
RETAIL $/SF Stadium Plaza 40,000 SF $400 $16,000,000 Hotel 30,000 SF $400 $12,000,000 High-Rise 20,000 SF $350 $7,000,000 Mid- Rise 20,000 SF $350 $7,000,000 Medical 30,000 SF $350 $10,500,000 Low- Rise 20,000 SF $350 $8,750,000 160,000 SF $61,250,000 HOTEL $/Room Full Service 200 Rooms $250,000 $50,000,000 LAND Lease for a year 167 acres $29,940/acre (avg.) $4,999,980 19 2022
PRELIMIARY COSTS
STADIUM $/SF Stadium Bowl 625,000 SF $375 $203,125,000 Club Tower 450,000 SF $575 $258,750,000 Floor Pavilion $75,000,000 1,075,000 SF $536,875,0000 PARKING $/SF Central Structure 1,000,000 SF $60 $60,000,000 South Garage 300,000 SF $60 $18,000,000 Parking Deck 1,000,000 SF $50 $50,000,000 Tailgate Park & lots 300,000 SF $10 $3,000,000 2,600,000 SF $131,000,000
20 2022
PRELIMIARY COSTS
PRELIMIARY COSTS
INFRASTRUCTURE Roadways, Freeways &bridge $40,000,000 Pedestrian Bridges/Walks/Trails $15,000,000 Trolley/Transit Improvement $5,000,000 Rapid Bus Transit $15,000,000 Environmental $ Habitat $10,000,000 Site improvement & Utilities $20,000,000 Private Infrastructure $30,000,000 $175,000,0000
21 2022
PRELIMIARY COSTS
COMPONENT COST Multi-Family $333,400,000 Retail $61,250,000 Office $138,750,000 Hotel $50,000,000 Land $5,000,000 Stadium $537,000,000 Parking $141,000,000 Infrastructure $175,000,0000 TOTAL $1,441,000,000
22 2022 23% 4% 10% 4%0% 37% 10% 12% INITIAL
Multi-Family Retail Office Hotel Land Stadium Parking Infrastructure TOTAL
COST
SOURCES OF FUNDS
FINANCING METHOD
Chargers, NFL & Partners privately fund stadium.
Fans buy seat licenses to fund part of stadium.
City ground leases stadium land to Master Developer.
Developers pay ground rent & private infrastructure costs.
City & County form Joint Powers Authority for tax Increment financing along with TransNet/SANDAG funds public transportation & transit infrastructure.
City & County share costs of event services & security.
24
2022 Bread and Circuses
THREE PRONG FINACING STRATEGY
STADIUM: Chargers/NFL & Partners Build New Stadium.
TRANSPORATION: Use Tax Increment Financing through Joint Powers Authority + TransNet Funds
DEVELOPMENT: City Leases
Land for Development; Developers fund infrastructure costs.
25
2022 Bread and Circuses
SEAT LICENSES
Charges would offer long time season ticket holders, fans and local businesses the opportunity to co-invest in the new stadium by purchasing seats licenses. Seat licenses selection priority based on season ticket seniority. fans pay upfront deposit & finances licenses over 4-5 years. Seat license pricing varies based upon seat location and section.
PROJECTED SEAT LICENSE PRICING: CLUB TOWER Field & Plaza: $12,000-$25,000 Loge(Exclusive): $15,000-$40,000 STADIUM BOWL Field Level $12,000-$15,000 Plaza Level $6000-$12,000 Log Level $4,000-$10,000 View Level $2,500-$8,000
26 2022
SOURCES OF FUNDS
PUBLIC SOURCES BREAKDOWN AMOUNT Federal Subsidies (tax free) $100 Million (Average tax free subsidy for stadiums) $200M Joint Power Authority (in form of bonds for 20 years) Roadways, freeways $75M+ Pedestrian bridges $ 15M+ Environmental & Habitat $10M (in form of bonds for 20 years) $100M TRANSNET/SANDAG (Tax free) Trolley/Transit Improvements = $20M Rapid Bus/ Transit Centre = $20M Environmental & Habitat = $10 M $50M TOTAL PUBLIC INVESTMENT $350M
PRIVATE SOURCES Mellos Roos CFDs, CAM(San Diego) Site Improvements/Infrastructure/Parks = $75 M Parking Garages & Lots = $175 M Total Investment = $ 250 M $250M Chargers Partners $275M $275M Seat Licenses Club Tower: 12,000 seats @ avg. $15,000/PSL= $180M Stadium Bowl: 40,000 seats @ avg. $6000/PSL= $240M $420M Naming Rights Stadium+ Facility(Gates, Club) $145M TOTAL PRIVATE INVESTMENT $1090M TOTAL INVESTMENT $1441M 27 2022
Sources of Funds
Private Sources Public Sources
28 2022
REVENUE
REVENUE FROM EVENTS
30 2022 TYPE OF EVENT NUMBER OF EVENTS AVERAGE ATTENDANCE TOTAL ATTENDANCE NFL-Pre-season 2 62,000 124,000 NFL Regular Season 8 65,000 520,000 College Football 3 60,000 180,000 Concerts 3 45,000 135,000 Motor Sports 3 25,000 75,000 Football Matches 7 50,000 350,000 Other Events 3 20,000 60,000 TOTAL 29 1,444,000 EVENT ATTENDANCE AVG. TICKET COST TICKET REVENUE NFL events 624,000 $80.32 $50,119,680 Motor Sports 75,000 $96.25 $7,218,750 Soccer and College Football 530,000 $90.25 $47,832,500 Concerts 135,000 $100.25 $13,533,750 TOTAL REVENUE= $118,704,680
REVENUE FROM MIXED USE COMPONENTS
31 2022 TYPE OF COMPONENT SF/UNITS RATE REVENUE TOTAL REVENUE Hotel RevPAR = $180 $200 X 90% occ. $180/room/day for 200 rooms $180 X 200 X 365 $13,140,000 Retail Sales 160,000 SF $700/SF $160,000 X 700 $112,000,000 Parking 2,600,000 SF $20/SF 2,600,000 X 20 $52,000,000 Office Sales 745,000 SF 324.5/SF 745,000 X 324.5 $241,752,000 TOTAL 29 $406,112,000
OTHER STADIA REVENUE
32 2022 Revenues NFL Ticket Surcharge $ 803,000 SBL Proceeds $27,214,000 Interest $794,000 Naming Rights $12,000,000 Sponsorship Revenue (STR) $1,000,000 Rent $25,910,000 Senior & Youth Program Fees $230,000 Non-NFL Event Ticket Surcharge $1,800,000 BAHC Reimbursement for CFP Expenses $1,400,000 Other Revenue $2,500,000 Total Other Revenue $73,641,000
TOTAL REVENUE
33 2022 TYPE OF REVENUE REVENUE in 1St year of operation Events (Stadium) $118,704,680 Mixed Use $406,112,000 Other $73,641,000 EBIT $598,457,608 Revenue Events Mixed Use Other
TAX RATES
34 2022 TAXES (EVENTS) Earnings: $118,704,680 RATE TAX Hotel Tax 14% $16,618,655 State Sales Tax 6.25% $7,419,042 City Sales Tax 0.75% $1,169,042 County Sales Tax 0.25% $296,761 MTA Sales Tax 1.5% $1,780,570 TOTAL 22.75% $27,284,070 OTHER TAXES Earnings: $406,112,000 Short Term Capital Gains (STCG) 25% $101,528,000 Alternative Minimum Tax (AMT) 6.65% $27,006,448 Corporate tax + Property Tax (5.5+1.15)% $27,006,448 TOTAL 37.85% $155,540,896 TOTAL TAX: $182,824,966
OPERATIONAL EXPENDITURE
OPERATING MODEL
36 2022
OPERATING EXPENSES
37 2022 Operating Expenses (Stadium) COST SBL Sales and Service $ 2,500,000 Senior & Youth Program Fees (paid to City) $230,000 Non-NFL Event Expense $30,500,000 Ground Rent (paid to City) $750,000 Performance Rent (paid to City) $2,500,000 Discretionary Fund Expense $1,900,000 Utilities $1,500,000 Tenant Improvements $250,000 Stadium Authority General & Administrative $1,750,000 CFP Expenses $1400000 Naming Rights Commission $100,000 Legal Contingency $100,000 Other Expenses $105,000 Transfers Out $35,000,000 Operating Expenses (Management Staff) COST Stadium Operations $ 3,750,000 Engineering $1,850,000 Guest Services $800,000 Groundskeeping $150,000 Security $1,500,000 Insurance $3,000,000 Stadium Management Fee $300,000 TOTAL OPERATION COST(STADIUM) $89,935,000
OPERATING EXPENSES
38 2022 Operating Expenses (Mixed Use) Total value Maintenance Rate COST Residential $333,400,000 2.5% $8,335,000 Retail $61,250,000 10.5% $6,431,250 Parking $131,000,000 0.5% $655,000 Office $138,750,000 12% $16,650,000 Hotel $50,000,000 8% $4,000,000 TOTAL $36,071,250 TOTAL OPERATING EXPENSE • OPERATING EXPENSE (STADIUM AND MGMT.)= $89,935,000 • OPERATING EXPENSE (MIXED USE)= $36,071,250 • TOTAL EXPENDITURE= $126,006,250
EARNINGS AFTER TAXES AND OPERATING EXPENSES TOTAL EARNINGS= EARNINGS-(TAXES + OPERATING EXPENSE) =$598,457,608- ($182,824,966+$126,006,250) = $289,626,392
TOTAL
CASH FLOW
CASH FLOW
1. Construction cost till 4th year
2. Revenue in year 6 from lease and rent from Mixed use facilities (no sales revenue) and stadium.
3. The breakeven point is in 12th year.
4. CONSTRUCTION PERIOD-4 yrs.
5. OPERATION PERIOD
th year onwards
40 2022 CONSTRUCTION YEAR 1 YEAR 2 YEAR 3 YEAR 4 CONSTRUCTION COST 36,02,50,000 36,02,50,000 36,02,50,000 36,02,50,000 REVENUE 0 0 0 0 TAXES 0 0 0 0 OPERATIONAL COST 0 0 0 0 P/L 0 0 0 0 NET DEBT -36,02,50,000 -72,05,00,000 -1,08,07,50,000 -1,44,10,00,000
YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 CONSTRUCTION COST 0 0 0 0 0 REVENUE 59,84,57,608 32,48,89,600 32,48,89,600 32,48,89,600 32,48,89,600 32,48,89,600 TAXES 18,28,24,966 2,72,84,070 2,72,84,070 2,72,84,070 2,72,84,070 2,72,84,070 OPERATIONAL COST 12,60,06,250 12,60,06,250 12,60,06,250 12,60,06,250 12,60,06,250 12,60,06,250 P/L 28,96,26,392 17,15,99,280 17,15,99,280 17,15,99,280 17,15,99,280 17,15,99,280 NET DEBT -1,15,13,73,608 -97,97,74,328 -80,81,75,048 -63,65,75,768 -46,49,76,488 -29,33,77,208
OPERATION
5
CASH FLOW
CASH FLOW
41 2022 OPERATION YEAR 11 YEAR 12 YEAR 13 YEAR 14 YEAR 15 CONSTRUCTION COST 0 0 0 0 0 REVENUE 32,48,89,600 32,48,89,600 32,48,89,600 32,48,89,600 32,48,89,600 TAXES 2,72,84,070 2,72,84,070 2,72,84,070 2,72,84,070 2,72,84,070 OPERATIONAL COST 12,60,06,250 12,60,06,250 12,60,06,250 12,60,06,250 12,60,06,250 P/L 17,15,99,280 17,15,99,280 17,15,99,280 17,15,99,280 17,15,99,280 NET DEBT -12,17,77,928 4,98,21,352 22,14,20,632 39,30,19,912 56,46,19,192 -2,00,00,00,000 -1,50,00,00,000 -1,00,00,00,000 -50,00,00,000 0 50,00,00,000 1,00,00,00,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
FEASIBILITY
NPV AND IRR
Here,
CF0=$1,44,10,00,000
N= 25 years
Taking into consideration the cash flows calculated previously,
The IRR and NPV was calculated from an online financial calculator.
43 2022
So,
RISKS IDENTIFIED
RISK MATRIX
RISK DESCRIPTION
PROJECT DEVELOPMENT PHASE
Delay in land acquisition
Over runs:
1. Cost
2. Time
Delays in project development
RISK MITIGATION
The land parcels identified for commercial development in Sand Diego stadium to be provided by authority to the concessionaire as per agreed timelines.
1. Fixed cost contract with contractor with adequate predefined penalties.
2. Fixed time contract with adequate pre-defined penalties. The risk lies with the Concessionaire
• The Project contracts should provide for significant penalties for such delay
• The local govt. may assist the developer in obtaining necessary consents and clearances from governmental agencies.
45 2022
RISK MATRIX
RISK DESCRIPTION
PROJECT CONSTRUCTION PHASE
Funding risk
RISK MITIGATION
Project completion risk
Depending on the project development option, funding risk has to be borne by the private developer. With SI providing some form of support, this risk is mitigated to a very large extent.
Concession Agreement should address the issues related to Concessionaire’s default in this case.
• Strict project monitoring by the Authority/Independent Consultant is required.
• Contracts for mandatory works may be structured as a fixed-price and fixed-schedule contract, with stiff liquidated damages for noncompliance. Performance guarantees may also be stipulated.
46 2022
RISK MATRIX
RISK DESCRIPTION
PROJECT CONSTRUCTION PHASE
Design Risk
Market, demand or volume risk
RISK MITIGATION
The possibility that the Concessionaire’s designs may not achieve the required output specifications.
• Output specifications to be detailed out in Concession Agreement.
• Design warranty.
• Patent and latent defect liability.
• Consultation with and review by Authority.
The possibility that the demand for commercial services generated by the Project may be less than projected. Concessionaire needs to do his own due diligence for the same and the risk will be borne by itself.
47 2022
RISK MATRIX
RISK DESCRIPTION
PROJECT OPERATION PHASE
Interest rate risk
Inflation risk
Residual value risk
RISK MITIGATION
These are factors affecting the availability and cost of funds. To mitigate this risk, hedging instruments or fixed rate loans to be used.
The possibility that the actual inflation rate will exceed the projected inflation rate. Risk to be borne by the developer.
• The risk that the Project Assets at termination or expiry of the Agreement will not be in the prescribed condition for hand back to the Authority.
• Obligation on developer to maintain and repair/upgrade the stadium and such transfer parameters to be specified in the Concession Agreement.
• Audit towards the end of Project Term.
48 2022
RESPONSIBILITY MATRIX
1 Provide land ownership details and land free of all encumbrances.
2 Definition of the bidding procedure and bidding criteria.
3 Approve the overall design of the facility.
4 Monitor and reporting mechanism for evaluating performance of concessionaire.
5 Collection of revenues.
6 Bearing the construction and equipment cost.
7 Operation and maintenance of the entire facility.
8 Payment of Annual Revenue Share to Chargers/ NFL partners
49 2022
S.No
Local Govt. Chargers/Partners and JPA Master Developer
CONCLUSION
CONCLUSION
Mixed-use developments next to stadiums and arenas continue to evolve beyond just restaurants, bars and shops. In the push to become economic engines outside of game days, the projects need to incorporate hotels, offices, apartments, event spaces and medical centers.
51 2022
THANK YOU
2022 52
