Metro government officials and a local investment group trying to buy the Nashville Predators disagree as to whether lease concessions the investors are seeking for the Sommet Center would cost taxpayers any additional money.
Metro’s annual cost of subsidizing professional hockey in Nashville could increase $5 million annually if the city approves a set of preliminary lease changes that Metro and the local investors seeking to purchase the team have discussed in recent weeks, according to Metro Finance Director David Manning.
However, the investment group, headed by David Freeman, disputes the $5 million amount.
James Weaver, attorney for the group, confirmed the discussions with Mayor Bill Purcell’s administration, but said the suggested lease changes, as analyzed by Manning, were only preliminary. Any formal lease concessions would be brought to Metro Council after the Sept. 11 run-off elections.
On Aug. 10, Weaver sent e-mails, obtained by The City Paper, to mayoral candidates Bob Clement and Karl Dean requesting meetings to discuss the suggested lease changes for the recently christened Sommet Center. Clement and Dean are in a runoff to become the city’s next mayor.
In the e-mails, Weaver says the group intended to keep most of the discussions private until after the election. He did say in an interview with The City Paper Thursday the point of keeping the discussions private until after the election was because a more formal proposal would not be ready until around mid-September, when it likely would be presented to the Metro Sports Authority and Metro Council, he said, at which point the changes would be opened for public discussion.
The e-mails, he said, were “to reassure the two campaigns that we don’t plan on making this an election issue — that the club is not going to force them to wear a Predators jersey to every campaign event between now and then. “
“We will have this discussion with whoever the new mayor is and the new Council — that’s what we plan to do,” Weaver said.
Weaver said the issues are “extremely complicated,” so waiting to start discussing them “for the first time on the 12th of September,” is not realistic.
In his e-mail to the campaigns, he did share a suggested statement to distribute to the media: “We are talking with the city and the mayoral campaigns about changes to the arena lease that will be mutually beneficial, to the city and the club,” Weaver wrote. “This is an ongoing discussion with the mayor and the administration that will likely extend to the Dean and Clement camps as the details become more certain. We’re on the same page with the mayor — the Predators are an important asset for Nashville and we need to keep the team where it belongs.”
But Manning said Thursday, succinctly, “This would increase the cost of hockey significantly for Nashville.” He added, though, the matter is largely out of Purcell’s hands.
“Obviously, an increase of $5 million is very significant for Metro, but our goal has been to work with them to understand their proposals and to be able to estimate what those costs are — it’s something that, really, the new mayor and the new Council have to consider,” Manning said.
“It’s too late for this administration to act on anything of this nature, and Mayor Purcell’s focus has been to try to help understand what they want but also just to keep selling tickets and keeping the team here.”
Under the changes, Metro — instead of compensating the arena management firm completely for whatever annual operating deficit it faces — would pay the manager a flat annual management fee, which the Finance Department estimates would be roughly $2.4 million.
Weaver says this would benefit Metro, given its past annual operating subsidy to Powers Management has averaged about $5 million.
Metro would also have to compensate the team for any shortfall in ticket sales below 14,000, which Metro estimates could cost an additional $937,000 annually.
The Metro analysis also says the arena management firm, under the proposed changes, would receive all ticket surcharge and sales tax revenue generated in the arena above fiscal year 2006 proceeds. That extra amount would have totaled to about $1 million this past fiscal year.
But Weaver said the investment group has recently suggested sharing these additional proceeds with Metro. “That just shows that Mr. Manning is apparently a little bit behind in the discussions,” Weaver said. “None of the proposals are final or otherwise considered to be.”
Weaver said the investment group hopes to boost the number of non-hockey events at the arena by 30-45 events annually and said sharing the revenue derived from the new events would be to Metro’s advantage.
Manning said the investment group also has proposed that the arena management firm begin receiving all other revenue generated by the arena — such as concession sales — which would cut Metro revenues.
Weaver, however, said this relates to the flat management fee concept.