Observations about games at the Al

[GGGG]

SLU opened Chaifetz in 2008.  Before that they were playing in the arena that the St. Louis Blues play in.

USC opened the Galen Center in 2006.  Prior to that they played in the LA Arena, which was the original home of the LA Lakers prior to the Forum and the home of the Clippers prior to Staples.

UNCC opened Halton Arena in the mid 1990s.  They played at the Charlotte Colisium prior to that.

Miami (FL) opened the Watsco Center in 2003.  They played in the Miami Arena prior to that.

Cincinnati opened the Fifth Third Arena in 1989.  Prior to that they played in the old Riverfront Coliseum. 

I'm sure there are others.

San Diego State built an on campus arena in 1997.  Prior to that they played in the San Diego Sports arena, where the Clippers played.

[Marcus92]

The recent MU survey already gave me an idea of the increase in ticket prices. I'm not crazy about the idea of paying more. I like keeping as much of my money as possible. But I'm not totally opposed, either, for a few reasons:

1) Marquette has done an incredible job holding the line on ticket prices in recent years. I honestly can't remember the last time I saw an increase. You'd expect them to go up somewhat based simply on the rate of inflation.

2) I wasn't a season ticket holder when the Bradley Center opened. But I'd wager that MU season ticket prices went up then, too. Why? A better fan experience. Larger arena, comfortable padded seats, wider concourses, better amenities (concessions, parking, luxury boxes, etc.), everything that comes with a state-of-the-art facility.

3) Market economics are balanced by supply and demand. If ticket prices to Bucks and MU games are simply outrageous, both organizations are going to lose fans and revenue. I'm a big fan and proud to be a long-time season ticket holder. But everybody's got their limits.

I'm not sure higher ticket prices alone are proof that the Bucks are holding MU hostage. Again, would welcome any other specifics about the lease negotiations that would indicate we're being taken advantage of.

[Litehouse]

I believe only three other programs play in NBA arenas. The aforementioned Villanova, us, Georgetown, and Memphis. We are unquestionably in the best situation of the three because of the proximity to campus and the loyalty of the fanbase.

St. Johns is in the same situation as Villanova, splitting games between the on-campus and the NBA arena.  Only us, Georgetown and Memphis play every game in an NBA arena.

[GOO]

Let's make up some conservative numbers:

Current rent 29K (I assume this is the BC and not the new arena).  We get no additional revenue from parking or concessions.  Bucks get that money.  They also, I presume, get the signage/advertising money.  Maybe MU get some from the scoreboard ads..  But cost to MU out of pocket 29K.  I assume MU does not contribute to utilities or employees day of the event or fund depreciation, so 29K is pretty cheap.

We miss out on parking money:  Let's say if MU had it's own, that would be 1,000 cars at $20 or 20K per game.  Again, being conservative.
Let's say the average person spends $15 on food/beer; 15 x 13,500 is about 200K per game with a cost of say 30% would be about 140K a game.  If MU priced things right, and sold beer, and people knew they were making a donation to MU, these numbers go up.

29K + 20K + 140K = 189K per game.  189K x 19 games is about 3.5 million year.  So, let's say the lost revenue, ignoring costs of ownership is 3.5M.  What does that fund, when including depreciation costs/ownership costs/utilities, employees, etc...  Maybe 2.5M/3M a year.  That would fund a nice new arena.  This leaves a lot of money on the table and doesn't include advertising income, other events, donations by donors who want MU to have their own arena and name on it, etc.

Bonus: The right to schedule home dates on the best dates/times available either.

But, it won't be as nice as the new Bucks arena either. 

Bottom line is that MU should have options if the Bucks make it financially very difficult to renew with the new arena. 

[Mr. Nielsen]

Don't say Villanova, they've had the Pavilion for years.

Villanova is getting re-done this year. Will re-open in 2018-19 with all the new bling.

[Marcus92]

One more thing I forgot to mention. I'm not sure losing Marquette as a tenant and finding alternative revenue is as easy as you think.

Haven't checked this in a while, but I don't believe the Bradley Center held anywhere close to 18 non-basketball events in the past year. If so, the new arena would have to basically double its bookings of non-Bucks games just to break even.

Plus, the arena doesn't bear any of the cost of promoting Marquette games. In fact, the arena currently gets to market upcoming concerts, monster truck pulls, ice shows, etc. to an average of more than 13,000 MU fans at every game.

I'd love to see the Bucks arena become more of a draw for downtown. But if they really don't value the relationship with Marquette, that strikes me as a foolish and short-sighted business decision.

[mu03eng]

Villanova is getting re-done this year. Will re-open in 2018-19 with all the new bling.

Redone and building fresh are two very different things

[mu03eng]

San Diego State built an on campus arena in 1997.  Prior to that they played in the San Diego Sports arena, where the Clippers played.

Got it, so no examples within the past decade and for cities less than a million people other than SLU

[Goose]

Marcus

Replacing MU at BC would have been difficult to do. First off, the committee that runs it is nowhere near as sharp at the Buck's ownership, and attracting top level to BC never really materialized to the level it should have, IMO. Replacing MU for first 3-5 years would be quite easy. The new joint will be a statewide tourist attraction for several years.

Again, the new guys running the arena are savvy biz folks and not the group running the BC. They will find ways to get any genre of entertainment to please the masses. I predict they will have major events going on there at a record clip.

[GGGG]

Got it, so no examples within the past decade and for cities less than a million people other than SLU

Well if you keep shifting the goalposts, you're bound to eventually be correct.

[mu03eng]

Let me see if I understand the argument for an on-campus arena. We're going to make at least a $100 mil capex investment for an arena (4th in a city of 600,000) so that 7 years from now we can "force" the Bucks to give us a better deal on the 6 games we play there. At this same time MU is trying to build the endowment AND build a new B school/student facilities. Meanwhile thr STH base will shrink because of ticket costs, which wont improve in a campus arena. And externally there will be some sort of bubble popping(probably) around the cost of higher education and or student debt?

If you have a time machine by all means go back 15 years and make this pitch but it makes no sense in the reality of 2018

[connie]

Let me see if I understand the argument for an on-campus arena. We're going to make at least a $100 mil capex investment for an arena (4th in a city of 600,000) so that 7 years from now we can "force" the Bucks to give us a better deal on the 6 games we play there. At this same time MU is trying to build the endowment AND build a new B school/student facilities. Meanwhile thr STH base will shrink because of ticket costs, which wont improve in a campus arena. And externally there will be some sort of bubble popping(probably) around the cost of higher education and or student debt?

Don't forget the 1000 car parking garage!   Seriously, this just makes no sense. 

[mu03eng]

Well if you keep shifting the goalposts, you're bound to eventually be correct.

Think of it less of a shift than a clarification based on MU's reality

[warriorchick]

29K + 20K + 140K = 189K per game.  189K x 19 games is about 3.5 million year.  So, let's say the lost revenue, ignoring costs of ownership is 3.5M.  What does that fund, when including depreciation costs/ownership costs/utilities, employees, etc...  Maybe 2.5M/3M a year.  That would fund a nice new arena.  This leaves a lot of money on the table and doesn't include advertising income, other events, donations by donors who want MU to have their own arena and name on it, etc.

Bonus: The right to schedule home dates on the best dates/times available either.

But, it won't be as nice as the new Bucks arena either. 

Bottom line is that MU should have options if the Bucks make it financially very difficult to renew with the new arena.

You honestly think you can build, maintain, and staff a 14K seat arena (and a parking facility) for $2.5 million per year?

The salaried staff alone is probably going to cost you at least $1 million.

[GGGG]

Let me see if I understand the argument for an on-campus arena. We're going to make at least a $100 mil capex investment for an arena (4th in a city of 600,000) so that 7 years from now we can "force" the Bucks to give us a better deal on the 6 games we play there. At this same time MU is trying to build the endowment AND build a new B school/student facilities. Meanwhile thr STH base will shrink because of ticket costs, which wont improve in a campus arena. And externally there will be some sort of bubble popping(probably) around the cost of higher education and or student debt?

If you have a time machine by all means go back 15 years and make this pitch but it makes no sense in the reality of 2018

I think ultimately your conclusion is a correct one.  Unless you have donors that underwrite a significant portion of this project, and who aren't interested in any other gifting to MU, then I do not think the numbers work. 

But I don't think its a bad idea to explore the possibility.

[Nukem2]

I think ultimately your conclusion is a correct one.  Unless you have donors that underwrite a significant portion of this project, and who aren't interested in any other gifting to MU, then I do not think the numbers work. 

But I don't think its a bad idea to explore the possibility.

Maybe Senator Kohl would be open to funding the Al McGuire Arena in honor of his great friend.   

[warriorchick]

Found a copy of the 2014 Bradley Center Financial statement, which is the most recent one I could quickly find.

http://bradleycenter.s3.amazonaws.com/doc/Bradley-Center-Sports-and-Entertainment-Corp-Financial-Statements-6-30-14.pdf


Total annual Expenses - $20 million - a lot of them fixed costs.

Even if you say Marquette is only going to have half of that - it's still a hell of a lot more than what we would ever pay in rent for the Chaluparena.

[Marcus92]

I agree that the Bucks are savvy business owners. But they've had plenty of help. The NBA basically blackmailed Milwaukee and the state of Wisconsin, threatening to move the franchise if we didn't approve and fund a new stadium. The team owners were simply the lucky beneficiaries.

They haven't shied away from hype, either. On the drawn-out naming rights negotiations, reportedly involving two unnamed finalists, the Bucks have said they seek $10 million a year. MillerCoors (a natural given the popularity of their product with an audience of sports fans) is out of the running. The same company that pays just $2 million a year for rights to Miller Park. Can the Bucks get $8 million more? Perhaps. Sounds more like a brash negotiating tactic or pipe dream to me.

Again, I would love for the new arena to help revitalize downtown. I've heard various big plans to accomplish that over the past 30 years: Grand Avenue Mall, convention center, baseball stadium, casino, House of Blues, streetcar, you name it. I'll believe it when I see it.

[connie]

Found a copy of the 2014 Bradley Center Financial statement, which is the most recent one I could quickly find.

http://bradleycenter.s3.amazonaws.com/doc/Bradley-Center-Sports-and-Entertainment-Corp-Financial-Statements-6-30-14.pdf


Total annual Expenses - $20 million - a lot of them fixed costs.

Even if you say Marquette is only going to have half of that - it's still a hell of a lot more than what we would ever pay in rent for the Chaluparena.

I assume none of that 20mil was debt service on the initial construction, so MU also needs a sugar daddy 4-5 times larger than the 25m Herb gave to the Kohl Center to even reach that point. 

[Benny B]

So now you want to build a 9 figure arena because a brand new state of the art arena that might be the best in the entire country doesn't contemplate 'special student seating' in its design?  C'mon brew. You're a smart guy.  Picture that written proposal bf the BOT.

Benny's already priced it out... not including the cost of the land, you can build a decent on-campus arena that seats around 9k-10k without any luxury boxes, meeting/conference spaces, ancillary amenities, etc. for under $60M; it's those last items where the cost gets to be in the 9-figures... MU doesn't need any of that, although if you could make it self-funding, different story.  Operating costs are hard to estimate, but in skimming through the BC's statement that Chick posted, only $5.5M of the BC's $20M is base building R&M, and you could probably chop off at least 20-30% based on more efficient technology alone, and then another 20-30% off of that based on the building's size (on-campus would not be the size of the BC), and then remove the property taxes... in all your base cost to keep the lights on and HVAC running is under $3.0M.  The other $14.5M... well, depreciation and interest isn't applicable and the HR and direct costs are tied to the number of events held... a miniscule part of the HR might overlap the AD, but those are mostly costs to staff the arena on gameday, and if those costs are currently covered under the $29k rent at the BC, I would bet the game-day costs are no more than half of the rent.

So very conservative guess: $3.0M to keep the building running, $15k/game to staff, and $500k for year-round personnel. At most, $3.8M/year.

On-campus doesn't make sense with the new arena opening up where rent is not going to be more than $1M/year, but as soon as the Bucks skip town whenever their lease runs out (and mark my words, they will), that's when we break ground on the Thunderdome.

[mu03eng]

Benny's already priced it out... not including the cost of the land, you can build a decent on-campus arena that seats around 9k-10k without any luxury boxes, meeting/conference spaces, ancillary amenities, etc. for under $60M; it's those last items where the cost gets to be in the 9-figures... MU doesn't need any of that, although if you could make it self-funding, different story.  Operating costs are hard to estimate, but in skimming through the BC's statement that Chick posted, only $5.5M of the BC's $20M is base building R&M, and you could probably chop off at least 20-30% based on more efficient technology alone, and then another 20-30% off of that based on the building's size (on-campus would not be the size of the BC), and then remove the property taxes... in all your base cost to keep the lights on and HVAC running is under $3.0M.  The other $14.5M... well, depreciation and interest isn't applicable and the HR and direct costs are tied to the number of events held... a miniscule part of the HR might overlap the AD, but those are mostly costs to staff the arena on gameday, and if those costs are currently covered under the $29k rent at the BC, I would bet the game-day costs are no more than half of the rent.

So very conservative guess: $3.0M to keep the building running, $15k/game to staff, and $500k for year-round personnel. At most, $3.8M/year.

On-campus doesn't make sense with the new arena opening up where rent is not going to be more than $1M/year, but as soon as the Bucks skip town whenever their lease runs out (and mark my words, they will), that's when we break ground on the Thunderdome.

This is wrong, simply because if the Bucks do leave town there will be ENORMOUS politican pressure to keep Marquette in that venue because otherwise it becomes a museum to the idiocy of tax payer funded sports arenas. No way the city/state let's the top 2 tenants flee that stadium.

And that's exactly when MU will have a ton of leverage to reduce the rent to retain them in that facility.

[Benny B]

This is wrong, simply because if the Bucks do leave town there will be ENORMOUS politican pressure to keep Marquette in that venue because otherwise it becomes a museum to the idiocy of tax payer funded sports arenas. No way the city/state let's the top 2 tenants flee that stadium.

And that's exactly when MU will have a ton of leverage to reduce the rent to retain them in that facility.

But by then, the FoxHole will be obsolete.  Where are the self-driving car drop-off areas?  Where are the jet-pack landing pads?  Where are the charging ports for your beacon that keeps the AI beer vendroids from killing you?

[mu03eng]

But by then, the FoxHole will be obsolete.  Where are the self-driving car drop-off areas?  Where are the jet-pack landing pads?  Where are the charging ports for your beacon that keeps the AI beer vendroids from killing you?

[Goose]

Marcus

I would never bet anything of importance based off of other people's failures. The city of MKE has done more to hurt themselves over the years, than to help themselves. That said, over the past 3-4 years I strongly believe that downtown is on an uptick and the new arena is the next big ingredient for "real" downtown success. Just my two cents.

[Benny B]

Sure... everyone wants to blame the engineers.  So let's do that.