SBD/August 29, 2012/Facilities

Comcast's Luukko Promises 25-Year Lease For Proposed Virginia Beach Arena

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The proposed arena could cost around $350M, but who will pay has not been discussed
Comcast-Spectacor President & COO Peter Luukko yesterday “promised the Virginia Beach City Council his group would lease a proposed 18,500-seat oceanfront arena for 25 years, but the question of who will pay the estimated $350 million tab remains unanswered,” according to Dave Johnson of the Hampton Roads DAILY PRESS. Luukko said the area is "one of the largest under-used markets in North America.” He promised to “pursue a professional sports team that would be the main tenant for the building.” But Luukko said, “We've had no discussions with any teams. Let me be very clear: This is preliminary. We're just getting started." Johnson notes Virginia Beach, with a population of approximately 435,000, would be "the smallest city to have an NBA franchise.” But in his presentation, city Economic Development Dir Warren Harris defined the market “as Southeastern Virginia, which extends from the oceanfront down Interstate 64 to Richmond.” He said that that area “consists of 3 million residents.” Harris added that the Southeastern Virginia model “was based on Oklahoma City, which included Tulsa in its proposal.” City Council member Bill DeSteph said, "We're looking at an estimated cost of $350 million dollars. My question was, who's going to pay for it. And the answer is, you don't know yet" (Hampton Roads DAILY PRESS, 8/29).

THE PLAYERS: In Norfolk, Aaron Applegate reports Virginia Beach released an economic impact study stating that an arena, starting in '15, would "host 200 events a year with 1.3 million attendees.” Harris said that one of the city’s goals is to "come up with a deal in which revenue generated by the arena would more than meet the city’s debt service obligations.” The Virginia Beach Development Authority “will help develop the term sheet for a possible deal, along with Mayor Will Sessoms and Vice Mayor Louis Jones.” Harris said that the term sheet “should be ready to bring to the City Council by late October or early November.” Meanwhile, NBA Senior VP/Marketing Communications Mike Bass said that the league “has not been contacted by the Kings about moving and that the franchise has not filed an application for relocation” (Norfolk VIRGINIAN-PILOT, 8/29).

THY KINGDOM COME? In Sacramento, Kelly Johnson noted the Kings “weren’t even mentioned” in the arena presentation yesterday (BIZJOURNALS.com, 8/28). In Virginia, David Teel notes Luukko “declined to offer details but refuted accounts of negotiations with the Kings.” When told that The Meridian Group, “a marketing and public relations firm retained by the city, had purchased the Internet domains ‘VBKings’ and ‘VirginiaBeachKings,’ Luukko smiled wryly.” He said, "PR people, they're always thinking. Sometimes they think too much." Meridian Group VP Terry Kelley said, "We're trying to get out ahead of this thing. We bought a whole bunch of URLs, like any other marketing company would do. … I think you have to look at specific franchises that might be on the move” (Hampton Roads DAILY PRESS, 8/29). In Sacramento, Ryan Lillis notes team sponsors “received emails from the Kings last week telling them not to believe the talk of the potential move to Virginia Beach.” The e-mail read in part, “Any information you have heard connecting the Maloofs, the Kings, and the city of Virginia Beach are false and have no validity” (SACRAMENTO BEE, 8/29).
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