Preds investors, Metro discuss lease concessions

Friday, August 17, 2007 at 2:33am

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.

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By: idgaf on 12/31/69 at 6:00

They are buying the team with the existing contract in place (which is a bad deal for us) . Live by it or don't buy the team.This is the same deal Lieopold wanted.Craig is makeing 85 million on the deal let him buy the tickets.

By: idgaf on 12/31/69 at 6:00

Hopefully the papers or someone at a debate will asked the candidates (both Mayor and At large) where they stand on giveing them another 5 mill. (or more depending on their attendence)Its unlikely but if they have 1000 at a game we could be picking up the tab for 13000.

By: frank brown on 12/31/69 at 6:00

It is now the deciding factor in the election run-off. I will base my vote on what the candidates for council and mayor say about this issue....Any attempt to dodge this issue will be a negative for me...We all know that after the euphoria of keeping the team that the city has to deal with the fact that the majority don't care about buying and attending ice hockey games. Then the taxpayers will be picking up 2,000 to 3,000 tickets per game.

By: gdiafante on 12/31/69 at 6:00

“It is now the deciding factor in the election run-off. I will base my vote on what the candidates for council and mayor say about this issue....” Not surprising considering your negative fanaticism towards this team. There are a lot more issues in this election that are more important than a PRELIMINARY discussion about a POSSIBLE lease change.Is this really a surprise? A new ownership group trying to renegotiate an existing lease to increase their benefit? Go figure.

By: gdiafante on 12/31/69 at 6:00

Id, if they have 1000 at a game the paid attendance will still be a larger number. There are little things known as season tickets, which historically have been around the 7-8000 mark. Really, get a clue chicken little.I can understand why they want this in the lease, but I don’t believe Metro should pay the difference.

By: frank brown on 12/31/69 at 6:00

gdiafante, we all have our bias,don't we!

By: Cowboy84 on 12/31/69 at 6:00

Frank has a point, whoever is elected mayor will have to deal with this, so why not base your vote on this issue. The next mayor will not be able avoid it and not get called on it by the media like Purcell has done. Of course if it involved building a new sidewalk or putting another piece of "art" in front of the Sommet Center, Purcell would be there talking to any camera he could find and pledging any amount of Metro money to make sure it got done.

By: gdiafante on 12/31/69 at 6:00

Isn’t it interesting that Metro has to basically ‘give the bank away’ to attract business, entertainment, etc to Nashville? What does that REALLY say about this city?

By: WickedTribe on 12/31/69 at 6:00

"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."Why does this add up to a $1.6 million savings (to the city) and not a $5 million loss?

By: theplantsman on 12/31/69 at 6:00

““Excuse me Mayor Wannabe’s but I need some land for my six proposed retail neighborhood Garden Centers/Farmers markets. Since I will be providing products and services that most residents actually want and need both you and the Metro Council wannabes should approve my business plan and grant my business the land, facilities and utilities, etc. More so, because you will want my employees to have quality healthcare (I would not send my dying Goldfish to Metro General) to ensure that the business can afford healthcare for myself and my employees the business will need to retain the sales taxes that it takes in for the next, say, forty to fifty years with the option to extend that provision as I see necessary.In addition, to help them not contribute to the city’s air pollution, you will need to subsidize their bus fares. Oh, yeah, I almost forgot. They will need matching uniforms, too. Okay, okay. OKAY! Of course, the city will not receive any tax revenues and it fact, the taxpayers will probably see their tax increase, but if you want to have “Professional” neighborhood retail Garden Centers/Farmers markets, then you must pay for it. Surely, you do not expect me, or my employees to pay.””Folks, if you would not provide ALL businesses, the same privileges that you do these bogus “Professional” sports franchises; why are you providing anything to any of us. Discrimination is not exclusive to race, ethnicity or sex?

By: ace6off on 12/31/69 at 6:00

It's amazing to me that a city that can't afford to open it's librarys on Fridays would even consider something like this.

By: svage_steve on 12/31/69 at 6:00

Folks, I think it's important to let this group negotiate with Metro with the caveat that all of this is 'fluid' right now and judge the final product when it is presented to the Metro council. It'll have to go through several permutations before they are ready to set this in stone. Unfortunately, someone decided to play politics in this situation with a run-off election coming up and present the underpinings of a negotiation in progress that may not even look like we are seeing right now as a finished product. This makes me mistrust the political process even more when they make complex issues like this into knee-jerk reactions to garner a vote they ordinarily wouldn't get. Reading the text of what they have leaked, it looks like they are trying to get the power to make better use of the arena and get more shows/performances in the building which fuels the tourism revenue and the downtown businesses with full restaurants on event nights. Not to mention a major tenant of an NHL team that projects the image of Nashville to an international crowd following players on the team that are their breatheren and flourishing in Music City. Those are just a few examples of so many complex things that a pro sports team like this does for the city makes it a unique asset that is worth additional investment.

By: gdiafante on 12/31/69 at 6:00

No matter how much anyone tries to market Nashville as an exciting, international destination, it is nothing more than a small town that has to “bribe” businesses to relocate here and a citizenry who cannot support even a small amusement park.As much as I love hockey, the Predators should move to a more deserving city. They could always use the arena to film a modern version of “Hee Haw”.

By: frank brown on 12/31/69 at 6:00

gdiafante, Now you are making more sense. I have much more respect for your comments as a result of your last post.

By: Nashville Voter on 12/31/69 at 6:00

svage_steve is Exactly right. Why did the City leak this information? Ask yourself that? Did Franklin leak info about Nissan talking to them about incentives early in the discussion process? ...NO...Did Franklin leak info about Mars Pet food headquarters coming to Cool Springs?....NO.... of course not. Why? becuae the early parts of these discussion are "fluid" and the parties don't have all the infromation and numbers and analysis done.......No wonder everything good is going to Franklin and Cool Springs. In the end e-mails and the letters that Metro leaked say that all this will go before the public, Sports Authority and the Council. All will have public meetings and take public input---as it should be. This is nothing more than someone inside metro with an agenda.

By: WSPanic on 12/31/69 at 6:00

As I read the story, the request is not $5 million, but rather a discussion about changes to the lease that would be substantially less. It's no secret the current mayor is hostile to pro sports and the facilities. The Predators generate millions for this city through sales taxes and the downtown economic activity. Companies like Nissan are attracted to Nashville because we have major pro sports. Losing this team would be a crime! Come on Mayor, step up.

By: idgaf on 12/31/69 at 6:00

I want all government officials to be hostile to giving our taxpayer money to millionairs.If its in the yellow pages we have no business paying for it.

By: BigPapa on 12/31/69 at 6:00

Because whenever someone else's tax money is being used to fund another person's entertainment, the people should know what's happening. $5M would go a long way in the police dept, fire dept, schools, etc.. The Preds do not generate money, sports teams just rearange the entertainment money people would spend in another way.

By: svage_steve on 12/31/69 at 6:00

$5M a year in the Metro coffers is chump change to them. They will cry poor when there is money to be taken and be generous when it is to their advantage to dole it out. As far as entertainment dollars goes, I really doubt that they would spend it on other entertainment to that level and take away a key point to attract young, well educated talent to the area in the long run to stay and build families over the next 20-30 years.

By: idgaf on 12/31/69 at 6:00

$5 million here (which is really $18 million) $22 million there (titians) ?millions to dell (warehouse jobs) and it adds up to real money.

By: theplantsman on 12/31/69 at 6:00

WSPanic “Companies like Nissan are attracted to Nashville because we have major pro sports.” I am laughing so hard that it is difficult to be serious. Nonetheless, if professional sporting teams were the draw, then Nissan would have NEVER left California for Tennessee but would have chosen New York instead. WSPanic, who do you think you are fooling?The PRIME reason any corporation relocates to the Southeast in general and Nashville, Tennessee in particular is due to the economic/tax incentives lavished upon them. More so, it sure as heck is not our ‘no-star’ (call me when we get a McCormick and Schmidt’s) dining and shopping. WSPanic BT, exactly where are those “millions” of dollars that you proclaim Nashville is wallowing in originating? Upon crunching estimated numbers and being generous at that, it appears to me, we are still at a deficit. More so, how do your numbers offset the financial shortfall in revenues that we property taxpayers are forced to subsidize? Perhaps, those that advocate such indulgence and the attendees should be willing to pay out-of-pocket for the true cost (tickets, maintenance, personnel and replacement cost of the Sommet Center) of attending these sporting events so the Davidson County property taxpayers do not. You would agree, wouldn’t you?

By: preddevil on 12/31/69 at 6:00

"The Preds do not generate money, sports teams just rearange the entertainment money people would spend in another way."BigPapa, You'll right. People would spend it in another way. Much of that money would be spent in places like Cool Springs, or Stones River Mall, or even the Outlet Mall in Lebanon. Too bad that none of that tax revenue would go into Metro's coffers.