After 125 hours of lease negotiations in the last month, terms for a planned $250 million publicly funded arena in Memphis, Tenn., call for the NBA Grizzlies to keep all revenue for 25 years in exchange for the team's paying operating costs estimated at $3 million a year.
In addition, the Grizzlies will be locked into the Memphis market until 2014. Of the arena's $250 million cost, all but $20 million will be publicly funded. Memphis businesses will contribute $20 million and are also obligated to buy 5,000 tickets after the team's 10th season in Memphis as a guarantee to help drive attendance at the new arena, which officials hope to open within three years.
Until then, the Grizzlies will play in the Pyramid arena, which will undergo at least $1 million in renovations to meet NBA facility standards. The cost of the Pyramid's renovation will be part of the new arena's $250 million cost.
"Because of our unique corporate component, we have the best deal that any community has achieved in recent years," said Memphis Mayor Jim Rout in a letter outlining terms of the deal to Shelby County Commissioner James Ford. "We believe it is better even than what Indianapolis negotiated with the Pacers."
Other components of the deal would keep the Grizzlies tied to Memphis to 2014, with relocation a possibility from 2014 through 2029 under the following conditions: Average attendance must fall below 14,000 a game, and Grizzlies owner Michael Heisley must try to sell the team to local ownership, with minority ownership led by J.R. "Pitt" Hyde, founder of Memphis-based AutoZone Inc., having the right of first refusal. The Grizzlies would also have to pay $94 million to leave the Memphis market and Federal Express Corp., which has agreed to a $100 million naming-rights deal, would continue to pay between $2.5 million and $3.5 million to the city should the team relocate.
The deal must now be approved by the NBA.
