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A developer trying to resurrect a $60 million sports condo-hotel project near Virginia Tech wants to go public to raise the money to get it off the ground.
Developer and Virginia Tech graduate Mark Kinser announced in April 2007 that he was going to build The Colosseum, a project encompassing two six-story towers with 241 condos ranging in price from $180,000 to $600,000.
Kinser saw thousands of alumni traveling three to four hours for football games but unable to find lodging in a small city with only 650 hotel rooms, he said. Kinser says 2,500 people have shown interest in purchasing a unit by registering on The Colosseum’s Web site. No deposits have been taken.
Some dirt was turned on the site in downtown Blacksburg, a mile and a half from Lane Stadium, but there has been no construction. Kinser’s lender, Lunden Investments of Pasadena, Calif., filed for bankruptcy in October, forcing him to search for alternative financing.
Eight months later, Kinser said, he has identified a shell company that will allow his firm, Unlimited Construction, to complete a reverse merger and become a publicly held entity that can enter the stock market to generate funds to build The Colosseum.
“What’s happened with the credit crunch is that the requirement for the equity piece has gotten larger and larger by the lenders,” Kinser said.
“What was 90 percent financing has now become 60 percent, so that’s an additional 30 percent equity on a $60 million project,” he said. “You’re looking at $18-$20 million minimum for equity, so our public markets will be able to generate that equity through sales of stock.”
Source Capital of Westport, Conn., is the investment bank organizing the public venture, Kinser said.
Kinser is only one developer trying to make this kind of college-town project work, but similar developments went belly up in Knoxville, Tenn., Louisville, Ky., and College Station, Texas, or are changing in scope, as is the case in West Lafayette, Ind.
The deal in Blacksburg calls for 140 units to be sold as investment properties and used for year-round rentals. Salamander Hospitality, owned by Sheila Johnson, managing partner of the
WNBA’s Washington Mystics, signed with Kinser to manage The Colosseum.
Officials at Virginia Tech, which has no financial stake in the project, have seen alumni buy town homes elsewhere in town to use during football season, and they think The Colosseum can help fill the need. “It’s a small cottage industry,” said Lu Merritt, Tech’s director of development for intercollegiate athletics.
IN OR OUT? The game of musical chairs in arena concessions is heating up this offseason, and Levy Restaurants has increased its market dominance in the NBA by grabbing deals in Detroit, Indianapolis and Oklahoma City, according to industry sources.
At Ford Center, an arena undergoing a $100 million renovation to meet NBA standards, officials are working on a deal for Levy to take over premium food service, confirmed Gary Desjardins, SMG’s regional general manager in Oklahoma City.
Improvements to accommodate the Thunder include reducing the number of regular suites from 55 to 36 units, with 11 new bunker suites and 48 new loge boxes introduced to the market this fall.
SMG’s in-house Savor division has operated Ford Center’s general concessions and suite catering, and will continue to manage food and drink in public areas, Desjardins said. Levy’s presence in the redeveloped premium spaces was “something the team desired,” he said.
The arena generates $10 million annually in food revenue, Desjardins said.
In Detroit, Palace Sports and Entertainment is having discussions with Levy about replacing Centerplate in general concessions at the Palace of Auburn Hills, where the incumbent has been entrenched since the arena opened in 1988.
“It is too early to make an announcement,” Palace spokesman Jeff Corey said last Monday.
The contract includes the two area amphitheaters Palace Sports operates, DTE Energy Music Theatre in Clarkston and Meadow Brook Music Theatre on the Oakland University campus.
The Pacers were expected to announce last week that Levy would replace Aramark in general concessions at Conseco Fieldhouse. Levy already operates the arena’s premium dining.
ROOF WITH A VIEW: 360 Architecture’s ideas for how to develop a roof over the U.S. Tennis Association’s Arthur Ashe Stadium include opportunities for advertisers to flash their brands on top of a facility that sits beneath a LaGuardia Airport flight path.
The eight to 10 designs that the Kansas City firm submitted to win the job include several schemes with pivoting and tilting panels that would allow logos to be shown even when the roof is open, said Brad Schrock, 360’s principal-in-charge.
“The power of the site increases its visibility,” Schrock said.
Danny Zausner, the USTA’s managing director, said it makes sense to explore all revenue opportunities to offset a project estimated at $100 million.
Don Muret can be reached at email@example.com.
The recession has laid down a speed bump in Stillwater, Okla., where Oklahoma State University is completing the final phase of the $283 million makeover of Boone Pickens Stadium, college football’s most expensive renovation.
The $180 million west end zone expansion, the final piece of the multiyear project opening this fall, contains 36 suites. Eighteen have been sold, said Larry Reece, OSU’s senior executive director of major gifts.
“I was hoping to have about five to six more sold, but I feel pretty good about where we are,” Reece said. “It’s been slow out there.”
Four 24-person skyboxes sold for $1 million, to be paid over a 10-year period, Reece said. Four medium-size suites, accommodating 18 people, sold for $325,000 over five years. Ten of the smallest units, a new piece of suite inventory with 14 seats, sold for $235,000 with five-year terms.
An additional eight small suites remain to be sold, along with four mediums and six larges, Reece said.
“The west end zone was more about getting all the bells and whistles for the players, with one of the biggest locker rooms and weight rooms in the country and a 200-seat theater,” he said. “We feel that recruiting will get better and we will be more competitive, which will help us sell more suites.”
Project officials held off on developing a second level of 30 suites in the seven-story end zone building, one floor below the top level’s 36 units. It will remain empty for now but could be used for office space as a backup plan, Reece said. The decision saved OSU about $2 million for now.
With BP Capital, the private investment firm owned by OSU alum T. Boone Pickens, losing equity during the credit market crisis, the school pulled back on the second level, Reece said. Pickens has financed the bulk of the renovation through donations totaling $235 million.
“It was something we had to do,” Reece said. “The demand wasn’t there, and the cash was not in hand. If the economy hadn’t tanked, we would have finished it out.”
In another sign of the economy’s drag on corporate dollars, 13 of the 18 suites are shared among more than one party, and in some cases there have been three-way splits, he said. In that instance, for example, three groups split an 18-seat skybox equally, receiving six tickets a game, Reece said.
OSU principals remain confident they can sell the 18 remaining units after the 2009 season before turning their attention to the floor below, he said.
The undeveloped level was initially intended for club seats, but with the 51 existing suites along both sidelines sold out, officials decided to focus exclusively on building more suites when the west zone addition first took shape a few years ago.
“No more club seats were needed; suites were selling better than outdoor seating,” said Gary Sparks, the project architect and a principal with Tulsa-based Crafton Tull Sparks.
All told, Boone Pickens Stadium will have 87 suites when the end zone expansion opens Sept. 5, for Oklahoma State’s season opener against Georgia.
Should full build-out occur with the 30 additional units, the 117 suites inside the stadium would be the fifth-largest in the college ranks, behind Arkansas, Alabama, Tennessee and Texas, according to SportsBusiness Journal research.
Not included in that total are the 14 suites inside Gallagher-Iba Arena, beyond the east end zone but with views to the field, that are sold for football, basketball and wrestling. Those units are sold out with terms of $375,000 paid over five years, Reece said.
“When we sold the last of our original 65 suites [in 2007], I never thought we would sell that many in Stillwater,” he said.