A couple of days ago I praised AEG president Tim Leiweke's balls (I feel dirty).
Leiweke, as nicely as possible, had told David Cordish of the influential Power & Light District to mind his damn business. Leiweke's comments were in response to Cordish's criticism of the arena for not landing an NBA or NHL team. I've criticized Leiweke for promising a team and not delivering ... but not for the success of the arena itself (check the Best Of Kansas City 2008).
I also mentioned a blog post by Field of Schemes author Neil deMause, who tracks public money being spent for professional sports franchises. In clarifying the $1.8 million in profits that AEG was kicking back to the city, deMause wrote that the money was "operational profit -- in other
words, it doesn't count the cost of paying for the building it in the
Understanding the funding for the Sprint Center can be confusing.
For a refresher, I called Shani Tate, communications director for the Sprint Center. She walked me
through the basics: The building cost $276 million. AEG put up $54 million in
cash. The NABC put up $10 million. The
city is financing the rest through taxes on hotel rooms and rental
cars. And the city is taking is taking in more from the hotel/rental car tax than expected.
DeMause guessed the city was paying between $10-$15 million a year in arena bond
payments, adding "there's almost no way it [the city] will actually turn a profit
on building the Sprint Center."
His guess was close.
"We pay an annual debt service projected this year of about $13.8 million," said Troy Schulte, Kansas City's budget
Schulte says the hotel and car rental fees have "exceeded projections
over the last couple years every year." For example, last year the city
projected $8.9 million in arena fees. They actually received $9.3
As far as the $1.8 million operating profit, Schulte says that comes after AEG
takes its 16 percent cut and then the city and AEG split the money going forward.
"As long as that continues to generate activity like it has been, it'll be profitable for AEG to operate," Shculte says.
Schulte knows that it'll be tougher as the building loses its shine and
if the economy doesn't improve. And should AEG finally find an anchor
tenant, that sports franchise would take "a very sizable chunk of the
"Obviously an anchor tenant would have an effect as far as pulling down
the available revenues because a lot of those revenues would then go to
an anchor tenant," Schulte says.
Right now, it's more profitable for the Kansas City and AEG to book
concerts. But as the newness wears off, the stability of having 41
guaranteed dates a year will become more and more important.