COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING BEFORE THE COMMITTEE OF THE WHOLE - - - Room 400, City Hall Philadelphia, Pennsylvania Friday, December 1, 2000 9:50 a.m. - - - BILL NOS. - 721, 722, 723, 724, 725, 729, 730, 731, 732, 733, 705, and 706 - - - PRESENT: COUNCILWOMAN ANNA C. VERNA, Chair COUNCILWOMAN JANNIE L. BLACKWELL Vice-Chair COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JAMES F. KENNEY COUNCILMAN ANGEL L. ORTIZ COUNCILMAN FRANK RIZZO COUNCILMAN FRANK DiCICCO COUNCILMAN DAVID COHEN COUNCILMAN MICHAEL A. NUTTER COUNCILMAN DARRELL L. CLARKE COUNCILWOMAN JOAN L. KRAJEWSKI COUNCILMAN RICHARD T. MARIANO COUNCILWOMAN DONNA REED MILLER COUNCILWOMAN MARIAN B. TASCO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center Plaza, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 I N D E X BILLS , 722, 723, 724, 725, 729, 730, 731, 732, 733, 705, and 706 Derrick Hansell, Managing Director, Commerce Capital Markets----------------------------- 3 Sam Katz, CEO, Greater Philadelphia First------- 13 Joseph Banner, COO, Philadelphia Eagles--------- 76 Dennis Biggs, Representative, Kojima------------ 100 David P. Montgomery, CEO, Philadelphia Phillies------------------------------------ 104 William P. Hankowsky, President, PIDC----------- 191 Charles Pizzi, Chamber of Commerce-------------- 214 Joseph Vignola, PICA---------------------------- 311 - - - 3 STADIUM HEARINGS
Good morning, everyone. This is the continued Public Hearing of the Committee of the Whole regarding Bill Nos. 721, 722, 723, 724, 725, 729, 730, 731, 732, 733, 705, and 706. Mr. McPherson, who is our first witness? MR. McPHERSON: Representatives from Commerce Capital.
Kindly identify yourself for the record and proceed with your testimony.
My name is Derrick Hansell. I am the Managing Director with Commerce Capital Markets here in Philadelphia. Commerce Capital Markets has been retained by City Council --
Excuse me. Do all Council Members have a copy of the report? This is what it looks like. 4 STADIUM HEARINGS I'm sorry, please proceed.
Thanks. Commerce Capital Markets has been retained by City Council to assist in the review of the financial projections developed by the Administration and Arthur Anderson with respect to the stadium economics and the impact on the city's General Fund. In addition, we have performed some sensitivity analysis to test the impact of changes in certain key assumptions upon the city's General Fund over time. And, finally, we have attempted to highlight areas of potential up side or down side in the economic projections from the assumptions that the Administration has made. The Administration has performed and we have reviewed an analysis which has compared the revenues directly generated by the stadium agreements to the city's projected debt service and operations and maintenance obligations both at Veteran's Stadium and at the new facilities for the next 33 years. This analysis is considered only in-stadium revenues, with the exception of parking 5 STADIUM HEARINGS taxes generated during game days and the new vehicle rental tax. It does not include, as Mr. Hankowsky identified yesterday, any ancillary out-of-stadium economic activity and the benefits therefrom which might happen. Again, it does give credit for the vehicle rental tax. It does not adjust for any revenue which may have been received during the remainder of the Veteran's Stadium leases, and it also does include projected construction-related tax revenue. On the next page I have attempted to identify the key areas which produce the city's income over the next 33 years indirectly related to these facilities. The city's profit at the Veteran's Stadium, taxes associated with the construction of the new facilities, the new vehicle rental tax, wage taxes on team payrolls both players and nonplayers, city amusement taxes, city parking taxes, city concession taxes, wage taxes on third parties employed at the new facilities, corporate taxes PAID by the teams, tax revenues associated with other 6 STADIUM HEARINGS events which may be held at the new Eagles stadium, and payments in lieu of taxes. We have compared that stream of revenues over the projection period to the city's expenses, which include debt service on approximately $312 million worth of bonds, $90 million of present value of the Eagles stadium operations and maintenance expenses, and foregone tax revenues from the properties that will be acquired to achieve the plan. Yesterday during PIDC's presentation, they showed you their complete analysis. We have prepared a complete analysis that kind of mirrors the way that they have done that and allows us to perform our sensitivity analysis. But I wanted to show you on a one-year basis how this all works, how we are comparing the cash inflows to the cash outflows, so that you could understand the analysis that we are doing. I'd like to highlight that we chose 2003 as an analytic year because it has the most stuff going on. It happens to be the one year in the 33 years that produces a negative net loss for 7 STADIUM HEARINGS the city, as opposed to a net benefit. But we chose it because there is the most stuff happening. All of their -- you still have the Veteran's Stadium facility in existence, you will have the new Eagles facility in operation in '03. So it allowed us to compare the most things. So what we have done on the city income side, we add up all of the items in the left-hand column, we compare that to the new debt service, and the foregone tax revenues. And again in 2003 there happened to be a negative net loss of approximately $3 million. 7 million of net benefit to the city. Again, that's the number that PIDC had prepared, and we have confirmed that number.
The results of our base-case analysis utilizing the key assumptions developed by the teams, Arthur Anderson, and the Administration, and which we have reviewed, and to the extent that we have been able to determine, appear to be reasonable as base-case assumptions, the revenues generated by 8 STADIUM HEARINGS virtue of the new stadium deals exceed the city's expenses and foregone tax revenue over the 33-year projection period. 7 million. There's several key assumptions implicit in the base case, changes to which may change the economics and which may make the city's economic performance under these deals better or worse. What is the actual tax revenue received from the new vehicle rental tax? What is the Phillies payroll and attendance over the next 33 years? What's the Eagles payroll and attendance over the period? What do wage tax rates do beyond the five-year plan horizon? What happens to concession sales? What happens to the parking charges at the facilities? What other events are utilizing the Eagles stadium over the period? Again, changes in these assumptions could change the impact of the stadium deals on the city's General Fund either to the up side or the down side. 9 STADIUM HEARINGS In order to assess the impact of changes in certain key assumptions, primarily those related to the teams, we have attempted to analyze the sensitivity of the city's economics to changes in three key areas. First, changes in the Phillies' pay roll and attendance; second changes, in the Eagles' payroll; and, third, changes in other events at the Eagles' stadium. The following page just highlights the three sensitivity cases, a couple of the keep assumptions we have looked at there, and what that's done under the city's economics under the cases we have run. In the Phillies' case, we said, what if they don't pay their players what they have assumed they will pay them, but what if we cut that by a full third? 5 million. Again, we are not saying that's a 10 STADIUM HEARINGS realistic assumption, but we are saying, what happens if. 5 million to the negative. With the Eagles, we have assumed that the base assumption in the base case is that the Eagles and every other NFL team pays at the salary cap level for the period. One of the key areas of revenue is wage tax revenues from the NFL teams, both the Eagles and the visiting teams. And, again, what happens if they don't pay quite at the cap? What happens if they pay something less than that? So they will pay at 95 percent of the cap. 8 million impact. With other events, frankly, we took a look at cutting a lot of the other events that are projected there. Not because we don't think they are going to happen, but there are a lot of uncertainties associated with them. And, again, we are testing what happens if. We completely eliminated MLS as a revenue generator. We reduced the number of 11 STADIUM HEARINGS concerts from the PIDC projections. We cut the Army/Navy game from every year, to two out of every three years. 7 million from the city's economics. 7 million to the city over the period, you would still have a net benefit to the city of $49 million. Not on a present-value basis but on a gross-dollars basis, over the 33 years, if all of these things happened. Our goal here hasn't been to identify doomsday scenarios, but to identify what happens if, so that you have more comfort that if bad things happen, your financial position, the city's financial position, is still sound. Again, there are significant possible up sides to the projections that we have not analyzed. 5 million stabilized, but it is 3 12 STADIUM HEARINGS million stabilized? The city gets significant additional economic benefit from that. So we think there are up sides. We have attempted to analyze some of the key down sides and take a look at that.
Our conclusions from our analysis, both base case and the sensitivity analysis, are the following: Under the base case, as developed by the Administration and confirmed by our analysis, the revenues generated by virtue of the stadiums exceed the city's financial obligations in foregone tax revenue; Second, the combined financial impact of the three sensitivity cases that we have analyzed would not be sufficient to change this conclusion. That is, the city's revenues would still exceed its expenses; Third, there are potential additional direct and indirect benefits to the city, depending upon the actual team payrolls, stadium attendance, and in- and out-of-stadium spending that could change these projections to the plus. Thank you.
Thank you. We 13 STADIUM HEARINGS don't have a monitor this morning. So if there are any Council Members that would like to ask questions, if you would give me some indication that you do, I would be more than happy to recognize you. Any members of City Council have questions of this witness? Thank you very much.
Good morning, Madam President. Thank you for the opportunity to testify this morning.
My name is Sam Katz. I am the CEO of Greater Philadelphia First. And I am here representing an organization of 31 CEOs of the region's major business employers. S. GPF has long supported the city's efforts to develop new stadiums for the Philadelphia Phillies and the Philadelphia Eagles. Our support is motivated by a firm belief that the loss to the city and to the region from the failure to develop these facilities will be far greater than simply the prospect of losing professional sportss. That is, if these teams, which are community assets, were allowed to flee Philadelphia, it would send an unintentional but powerful message to a much broader constituency and the region's employers that it is okay to go. If the South Philadelphia Sports Complex Development Plan is implemented, Philadelphia will have a sports complex with 37,000 seats in two indoor venues, and 115,000 seats in two outdoor venues, all in close proximity, and an array of sports facilities unrivaled in any American city. 15 STADIUM HEARINGS How to capitalize on these assets presents an extraordinary challenge and opportunity for Philadelphia. Over the past ten years, Major League Baseball and the National Football League have seen a tremendous growth in the development of new facilities. The vast majority of these facilities have been funded substantially with public funds. In evaluating the business deals that are before the Council today, it should be recognized that Philadelphia is building at the end of a development cycle of major stadiums. Our stadiums will enjoy the benefits of design and fan amenity learning curves from other new stadiums and also learn from their mistakes. At the same time, 12 years after Oriole Park at Camden Yards and Comiskey Park in Chicago put their shovels in the ground, the fact that building costs have risen is indisputable. The basic business terms of the Eagles' football project reflect a creative and innovative approach and one that in all likelihood will not be seen again. The NFL has approved the use of 16 STADIUM HEARINGS low-interest credit agreements secured by NFL broadcast revenues for teams developing new facilities. This enables the league to fund up to 50 percent of a team's share of the cost of construction. By swapping capital and operating expenses with the city, the Eagles will bring low-cost debt from the league credit and relieve the city of the ongoing interest burden that would have been imposed had the city had to borrow. In funding nearly 80 percent of the direct stadium construction and development expenses, the Eagles have created a new standard of private investment for these projects. The Phillies' deal must also be examined from a peer-group perspective. In baseball today, with the exception of PacBell Park in San Francisco, where four failed public referenda required private finance to make that ballpark happen, new parks have been largely publicly financed. In Baltimore, Chicago, Cleveland, Denver, Arlington, Atlanta, St. Petersburg, Phoenix, 17 STADIUM HEARINGS Seattle, Milwaukee, Detroit, and Cincinnati, public funding has dominated in the financial structuring of these facilities. The Phillies have found themselves in a position where they are increasingly competing with clubs that enjoy the benefits of new facilities, without significant diversions of facility cash flow to pay for these projects. In providing 172 million, which represents 50 percent of the prospective construction costs of a new baseball park, and not including land, the Phillies are investing at higher levels than most in their peer group in both absolute and relevant terms. GPF believes that the business arrangements that have been negotiated by the city and the teams represent a fair balance between the naturally competing interests of both public and private parties.
These transactions also have what in GPF's view are basic prerequisites to protect the public tax-paying interest, including assuring the long-term tenancy of both teams. Shifting the risk of construction 18 STADIUM HEARINGS cost overruns to private parties, defining and limiting the public financial exposure in both operating and capital costs, protecting the Packer Park neighborhood from excessive stadium nuisance, committing to the creation and funding of a Special Services District for the impacted community, and developing a world-class sports complex that will strengthen the competitiveness of the Eagles and the Phillies and that could make Philadelphia competitive for many new sporting events. There can be no question that city General Fund tax revenues being committed to this enterprise represent a significant investment of municipal resources. This represents a very tough vote for you, the members of Council. But it is imperative to recognize that the Commonwealth's $170 million investment, granted through the expenditure of significant political capital by state lawmakers, Governor Ridge, and local officials, and also the auto rental tax that was made available exclusively for stadium development, would not be available if we did not pursue these projects. Each of these resources imposes 19 STADIUM HEARINGS little or no financial hardship on local residents and has no direct impact on city General Funds. The city's present value commitments require careful scrutiny by City Council. In GPF's view, the underlying premise for the use of these resources to support development and operations is a sound one. Without these stadiums, Philadelphia will lose these clubs and their current and future tax yield. Having worked with the City of Los Angeles on its NFL initiative, I know well that the Eagles would have been a significant target for that city. S. And for those who believe that Major League Baseball or the National Football League would never have allowed Philadelphia and its sizable media market to remain vacant property, one need only look to Los Angeles. What the experience there teaches us is that without facilities, the leagues are not motivated to locate expansion franchises or to allow 20 STADIUM HEARINGS relocations. Finally, GPF fully appreciates the potential impact that these investments could have on the city's financial position in the future. Even without the stadiums to consider, new contracts with city workers, the new schoolteacher's contract, blight removal, and PGW issues all impose pressure on an already financially stretched municipal budget. The unmet needs of the city's children are an additional ongoing concern, as is wisely recognized in this stadium proposal. The continued good health of the national economy may be very telling for the city's fiscal future. I want to make clear that GPF remains steadfast in its support for reducing wage and business taxes. We trust that this Council's vigilance over city spending and revenues will, despite these other pressures and commitments, enable such reductions to occur in the years ahead. In closing, GPF urges members of the City Council to approve the package of ordinances 21 STADIUM HEARINGS that are under consideration. We applaud your diligence in evaluating their fiscal impact and encourage your efforts to enhance and strengthen them in appropriate ways. Rather than retreating to a safe and risk-free position of inaction, GPF is convinced that approving new stadiums will send a message that Philadelphia has confidence in its future and is prepared to do the things that can make that future a better one for all residents. Thank you very much.
Thank you, Madam Chair. Thank you, Mr. Katz, for your testimony. The theme, I think, of yesterday's testimony and now today is the issue of risk. And it is, I guess, GPF's position that the risk, in their opinion, is being shared equally, or as equally as possible in this particular industry based on other scenarios from around the country. 22 STADIUM HEARINGS But it is an issue of risk. The money that the city puts up, the money that the teams put up to do these projects all entail a certain element of risk based on history, historical information of assumptions that are being made about revenues generated from the new facilities. Is that an accurate statement?
The city's potential up side in this deal, in this arrangement, is based primarily on attendance at the facilities? Is that a fair statement?
It is based primarily on attendance, sales within the facilities by those present, and pricing.
But the critical mass of people coming to the facilities creates the potential strong up side for the city?
Okay. And on the converse of the argument is, if it isn't what is projected or it is less than what is projected, that we will maybe not realize as much money as we would like or possibly, in the worst-case scenario, not 23 STADIUM HEARINGS gain a return on our risk investment?
No. I would say that the principal element of risk in a transaction like this is event risk. Event risk being all the things that go into producing the revenue on which the tax rates are applied. And that's the same risk, by the way, that the think the clubs have.
I don't think it is a solely shared risk by the city. I recognize from Mr. Hankowsky's testimony yesterday that the teams, the Eagles and the Phillies, are putting substantial sums of money up and also sharing in that risk. The question I have for you is, is attendance at these events, attendance at these facilities, driven by the facilities themselves or the success of the teams that are playing at the facilities?
First of all, let me make one point that I think is worth noting. That is, in most stadium financing, the public finance is not event-risk driven. For example in Baltimore, Chicago, in many of the cities I mentioned, those communities 24 STADIUM HEARINGS created new tax sources which were not building related. Whether they were a lottery, as was the case in Maryland, or a hotel tax in Chicago, or a sales tax in Denver, or a sin tax in Cuyahoga County. So this makes this project in many ways unique. Because, in fact, rather than going to find, other than the auto rental tax, a new source of income to support the stadium, the city and the teams have evolved a strategy in which they are reliant on building revenues and building performance. That imposes up-side benefits and down-side risks. To your question, there is now approximately a ten-year history of the attendance impact of new stadiums. There are some good stories and there are some bad stories. The Chicago story is not a particularly good one. The Baltimore story is a particularly good one.
What do you believe the bad Chicago story is related to? What are the elements that have created the bad Chicago 25 STADIUM HEARINGS scenario?
Well, a bad team, I think a bad location. And I hope I don't offend an architect who might be in the building who designed the building, but I think a bad design. I don't think that it is nearly as fan-friendly as, for example, Oriole Park or Coors Field. And I think they located the stadium in a place that wasn't advantageous. But at the end of the day, I think that the stadium did well for a few years, and the team stopped, and then, you know, stadium attendance went down. Oriole Park, on the other hand, which is extremely accessible to people, draws from a very large market when you consider Northern Virginia, and is a great experience -- I mean, anybody who has been there, it is a great place to watch a baseball game. And I think it has been extremely well marketed, even when the team hasn't been very good.
Just to give you an example of my own personal experience with Camden STADIUM HEARINGS Yards. And that is, when it first opened, I went there with my family every year for a couple of years, and then found myself going maybe every other year, and now I haven't been back for probably two or three. And in order for the projections that we expect to happen, the Phillies really need to do well, in addition to having a new facility that people are attracted to and want to come to. On the other hand -- and this is the thing that makes me feel a little better about the deal as far as the Eagles are concerned -- is that the Eagles have been in a pretty bad building for a while, have not always had great teams, have had some pretty poor teams, but still have had a very loyal attendance at those games, despite how bad the team may have been doing. So from an Eagles perspective, I have a little more confidence. On the Phillies' side, I have some concern. Because we had those spikes in attendance '93, you know, when the team came out of nowhere, in a bad building, and really, you know, rocketed attendance. 27 STADIUM HEARINGS So the reason I raise that, I just want to know what you believe drives. Is it the combination of building and success, or will success -- if the Phillies had been in the world championship over the last three consecutive years, would the Vet be filled every game?
The Phillies' stadium today has too many seats for baseball. And I think that's the reason why the last 10 or baseball 14 stadium buildings and designs have averaged about 15 40, 45 thousand seats. And that's probably from the standpoint of the sight lines and fan amenities the better sized building. Plus, you are talking about a building that, you know, was -- in its genre, you know, the Veteran's Stadium, riverfront, Three Rivers, Busch Stadium, all built in the mid '60s to late '60s, all look pretty much the same and maybe don't provide some of the opportunities that the newer parks do. I think, Councilman, it is important 28 STADIUM HEARINGS to recognize that one of the things that drives attendance initially is new buildings. I want to make this very clear. Every team argues and will that a new building will help drive them to better economics, which will enable them to afford a better team, which will make them more competitive on the playing field. At some point every team has a new stadium, somebody still is going to come in last place. The fact here is that for the next five to seven years, the Phillies and the Eagles will have a new stadium, and that a lot of people from York who now drive to Baltimore, or from Lancaster who used to be Phillies fans, where the Phillies could draw, who now go to Baltimore, will be finding this stadium to be the one that really hopefully grabs their attention. At some point when it transitions from being an new park to being a teenager, and eventually a middle ager, the performance of the club and the marketing of the club are going to drive attendance. So I think in the short run, the two 29 STADIUM HEARINGS and a half million attendance fir the Phillies is probably conservative. And in the long run, two and a half million on a consistent basis would be the product of both good perform and good marketing. And I agree with you that the Eagles' attendance does not represent a significant risk to either the city or the team.
You are not a stadium financing expert. I don't know what your expertise is in sports generally.
Has baseball's attendance nationally been problematic? Is the national pastime having a difficult time in general attracting fans, or is it a city-by-city issue?
Well, I think on a national basis, sports is having more challenges because of the choices that people have, both for participating and for watching. I mean, there are sports now that draw fans that nobody heard of five, ten years ago. I think there are some baseball markets which are doing superbly well. And there 30 STADIUM HEARINGS are other markets for which, a market like Philadelphia, although large, has lots of choices. And the Eagles and the Phillies and the Flyers and the Sixers have lots of competition. The fact is that I think that, you know, sports are challenged, and baseball particularly. Because when you and I were kids, when I was a kid, we played baseball. And kids play soccer and they do all other kinds of things today. And I think one of the things about this ballpark, which is absolutely true in Baltimore, is that hopefully the design and the way that it appeals to families will have a positive impact on resuscitating the enthusiasm that young kids have for baseball, and that will drive fans in the future.
Okay. Thank you for your insight. Thank you, Madam Chair.
Thank you, Madam Chair. 31 STADIUM HEARINGS I think the experience of the Eagles and the Phillies are different based on just the fact of the way the NFL is structured financially, in terms of how their income is shared by all of the teams in terms of their TV contracts and so on. So the financial risks for one team is less because of that structure that we have between the two institutions? Is that so?
I think it is fair to say that the National Football League has probably a much fairer revenue-sharing arrangement, that small-market teams participate equally with large-market teams in the distribution of broadcast and properties revenue; that the collective bargaining agreement is probably a little firmer from the standpoint of salary caps in the NFL; and that in baseball, small-market teams, for example, the Pittsburgh Pirates, Milwaukee Brewers, have suffered as a result of the absence of a revenue-sharing arrangement.
Right. And in essence, so that you have an economic viewpoint different in those two leagues. But it intrigues me the way the 32 STADIUM HEARINGS argument in terms of stadium has gone in the city. We have gone from the stadiums being a source of economic development and motive for economic development and the production and creation of new revenue; now we are in a situation in which we are building stadiums in a locale where the new revenue aspect of it is going to be very limited, according to testimony given here by Mr. Hankowsky and other representatives of the Administration. So, as Jimmy says, the city's contribution, which is up front, because we have to pay and give up money and pay for clearing the land, buying the land, and then pay that out through bonds through over a 30-year period, the city's contribution is at greater risk. Because you say attendance is the key issue. And attendance in the first few years -- like Jimmy I used to go to Baltimore, just like I go to the Vet and so on. I like stadiums. I like baseball. But attendance and the attraction of the ballpark falls off after a few years, especially in baseball. Football and the NFL don't worry me 33 STADIUM HEARINGS because of their economic structure. So the city's aspect, because no new revenue is going to be forthcoming, the stadiums are not engines of economic development. And we still have a $54 million hole in this whole deal that no one expects to give us an answer before we are supposed to approve this.
Well, the economic engine argument, I don't disagree that direct economics of a stadium have, I think, limited performance. But there is another economic issue here, and that's the one that I have tried to make reference to. And that is, you know, we have lost a lot of business, and we have lost particularly a lot of larger businesses, but also smaller ones. And I think there is a very significant psychological argument to be made that, you know, there are only 30-some major league teams, and averaging in both leagues, I think 32 football. But there are increasingly more cities that think of themselves as major-league cities, and population and demographics are enhancing that. When a city like Philadelphia loses a major-league asset, I think it has a very 34 STADIUM HEARINGS significant negative impact. How you calculate it, I don't know. But I can tell you that as somebody who has lived his whole life here, and gets in a lot of taxi cabs around the country as I travel, that hearing about, oh, you just lost your team, I think it has a negative impact on the image of the city, I think it has a negative impact on the psychology of people trying to locate or retain business here. So that is an argument that, you know, obviously, how much you spend for that, you can have a debate about. As far as the risks are concerned, I think the attendance risk in Philadelphia is a lot less than people are anticipating. Because I think the Phillies have played in a facility that increasingly is unappealing to baseball fans because they have seen or heard or even visited places where watching baseball is truly enjoyable. And I don't mean to criticize the Vet, because in its time it was a good facility. But this is a market in which competition is important. 35 STADIUM HEARINGS Many Philadelphians have seen Oriole Park, many Philadelphia baseball fans have been there. And given the choice between watching a ballgame there and watching here, they have chosen in many cases not to. And I think once the Phillies get into that building, even after it is seven, eight, nine years old, that it will be designed with a lot more intelligence than the Vet was as it relates to the fan. I think we will do well there.
I don't think the argument is about whether to build them or not. I think building them is part of what everybody accepts. And I agree with you in terms of Comiskey. Comiskey is an awful ballpark to go watch a ballgame. But what we're talking about is that, given the responsibilities that the city has, and just during the last few months this City Council has been asked to begin dealing -- and we are not through dealing with this problem as of yet -- the Gas Works, in which $45 million alone, that we don't ever expect to be repaid or whatever, plus the $18 36 STADIUM HEARINGS million that contribution we got from the gas company, that was also contributed back to the Gas Works; the school system; plus now new responsibilities in terms of the debt paying for new stadiums, given together and putting it all together into one situation -- and we're not arguing here whether the stadiums should be built or whether the city should contribute something to that -- what we're arguing is, what is the level of responsible, given all of the other situations that the city is confronting. We had hearings about libraries, in terms of whether we have the ability to be able to put $60 million in terms of capital into one of our greatest institutions, that we have to put it in. Because it is going to benefit in the future much greater than just going to see a ballgame. So it is taking into context. We are not looking at the baseball stadiums in an isolated situation. It is taking it into context, and whether what should be the city's contribution. Should it be at this level, or at this level.
And given the situation that the premise have been eliminated of the creation of new revenues, a creation of new jobs, the only thing that we are hoping to get out of this deal is that we make enough just to be able to pay the debt service.
Councilman, there is always a risk of taking an action. But I think you have to balance the risk of taking this action, and the uncertain future revenue stream that will come from taking this action, with the risk of taking no action, which I know was not your point. But which if you do not do this, or if you try to structure a deal which is going to make the economics for baseball or football in Philadelphia or these teams directly cause them to leave, then all of the revenue that we are using to invest in this facility will disappear.
But I think that assumption of restructuring a deal and them leaving -- I mean, LA you mentioned LA. The NFL is not in LA because the NFL has not wanted to go to LA. The NFL is not in LA 38 STADIUM HEARINGS because the city government of LA has said, this is the type of situation we are willing to negotiate. And instead of accepting that, they went to Houston, because Houston offered a better deal along that line. But in the last ten years, the job that -- maybe the psyche of LA is better and it is not hurt by not having an NFL team. But the situation I'm saying is, it is that they have viewed what the priorities are that they have, and they have allocated the same, in a way. I don't believe that the Phillies or the Eagles are in danger of just picking up and leaving. Maybe I am wrong. And, you know, they left Cleveland, and Cleveland has a team. And we are not Cleveland. And Jacobs Field, not giving everything, Cleveland is still Cleveland and Baltimore is still Baltimore. The two fields have not changed the characteristics or the economics of the city.
I hate to disagree with you, but I have to tell you that on the specific cases that you just made reference to, I think that 39 STADIUM HEARINGS there are some facts that you probably would want to know. First of all, Los Angeles committed a substantial amount of public capital to the reconstruction of the LA Colosseum. And I will tell you, the NFL people can give you their own reasons, but I will tell you that I believe the NFL chose not to come to LA because the vast majority of the ownership hated the Los Angeles Colosseum location. Not because we couldn't finance it, because we could. We had a financing that worked, that would produce a very exciting, historically significant building, the home of a former Olympics. And the NFL chose Houston because, I think, the Houston deal was a better deal, not because LA wasn't committed to a significant level of public resources. Secondly, the circumstances in Philadelphia, to the credit of the Phillies and the Eagles, are vastly different than Cleveland and a number of other cities where team owners threatened to leave. 40 STADIUM HEARINGS Dick Jacobs threatened to leave and move the Cleveland Indians to a building that was built in St. Petersburg on spec, and used the leverage that came from his chance to leave to negotiate a very good, but not, you know -- but a fair deal. Art Modell left. He took the Cleveland Browns to a building that was significantly publicly financed. In fact, I can tell you that the PSI Net Stadium, in which the Ravens play in Baltimore, has about 30 million or 40 million dollars of private money in a $240 million stadium.
And, thirdly, as a result of that, and in direct reaction to it, the City of Cleveland and Cuyahoga County then built an extraordinarily built, expensive, and publicly financed building in order to get the NFL to commit 41 STADIUM HEARINGS to relocate an expansion team. And I don't mean to debate this with you. But the fact is, and I think it is really important, that these two teams have not threatened to leave, and that changed the dynamics for them.
We are not discussing that there is not going to be some public financing of the stadium. It is taking into context the overall responsibilities that we have, and bringing that into a more responsible focus. So it isn't that we are saying, no public financing. And the cost of the current one, the cost of the current locale, that has gone up from, I remember discussions early last year about building in South Philadelphia were like $500 million less than it has become. Because we were not thinking at that point of having to buy a whole series of new properties. And so that what we're saying is that there has been a whole series of decisions, badly taken or badly assumed at times, and that has added to the cost that the citizen of Philadelphia is going to have to bear in terms of the overall 42 STADIUM HEARINGS subsidies that these stadiums get. So we are not talking about not building it, no public subsidy. What we are talking about is, what is the agreement and how is it that the city begins to get some sort of responsible feedback and return on what it gives. Because, remember, we are not risk-takers, supposedly, in terms of -- because we are spending, as Republican party likes to say, this is not our money we're spending, this is the people's money.
Well, I don't know what the Republican party is saying. But I can tell you that the one thing that I think is important, Councilman, is, these leases at the Vet expire 2011. These teams have not threatened to leave. But I think it is fair to say that, assuming that they stayed in the Vet until 2011, and assuming that Philadelphia did not in 2011 build much more expensive new stadiums, they would leave Philadelphia. Because if they didn't leave Philadelphia, they would both be absolutely assured 43 STADIUM HEARINGS of being in last place for a long time, because their payrolls would never be able to compete with the teams in the league. Now, that may not be the city's problem, and I should not argue that it should be a taxpayer's problem. But I think it is fair to say there is a risk. And I want to come back to your point. There is a risk that a restructured deal, one that we might feel, might be more comfortable with, or is defensible to the taxpayers, would not produce the result you are looking for. And that's the risk that you take in trying to change the deal.
I'm not sure this adds to what you just said. Let's assume that one of the teams decided to leave. Can you ever imagine our getting a new team and they would play in the Vet Stadium?
No. No. I think there's no lure. We might get a new team, but I think it would probably be a Double A team.
Thank you, Madam President. I am intrigued by your statement that the teams haven't threatened to leave. Because --
Councilman, could you pull the microphone closer to you, please, so we can hear you.
Because I think just about everybody else in Philadelphia believes that there have been threats about leaving. There have been threats about practicing outside the city, there have been threats about maybe the lease conditions, the current lease conditions haven't been met, maybe there are weaknesses in the lease, maybe the current leases could be broken. It seems to me it has been quite clear that the threats, often subtle, have been part of the game. And I am not objecting to them. I am only taking issue with the statement that the teams, to their credit, have not made any threats. 45 STADIUM HEARINGS I think there have been threats. I don't know who has made them, but it seems to me that that's clearly been part of it. But, look, what would you do as a businessman if you were asked to sign something giving some other body total authority, as the City Council is being asked to sign, to approve leases that have not yet been drawn up, where we are not sure of what the terms are, where the leases will never be reported back to City Council for approval, and where, for the term of the lease, during the 30 years, those leases may be changed without ever City Council having any part to play in it? How would you feel, if you had the responsibility and you were asked to agree to such a proposal? I'd like your view on that. Because that's what City Council is being asked to do. Let's assume the terms are fair, ultimately. But we don't know what those terms are. Should we as a legislative body abdicate our responsibilities of examining a lease carefully, where it involves not just the $394 million, which is plenty to be concerned about, but 46 STADIUM HEARINGS over the next 30 years a billion dollars in tax funds?
Yes, I would like you to answer the question. What would your advice be to a client who says, should we sign an agreement the other side to the proposal says, "Sign and trust me"?
To the best of my ability to understand this body's process, that there are going to be quite a number of ordinances which are not yet before you, which will require your approval, not the least of which are bonding ordinances, which, in my mind, the Eagles and the Phillies can't close on their financing until those documents are available; and if I was in your shoes would not authorize the issuance of and closing on your financing until those documents were reviewable. And if as a result of your review of those documents you found significant and material variations from the commitments which you are being asked to make, you have the ability to not vote for 47 STADIUM HEARINGS and not approve the ordinances authorizing the financing. Unfortunately, the timing of this is what it is. And the risks that you run of delay under the circumstances of the agreements that were made between the teams and the city, involving commitments to fund Veteran's Stadium and to fund the practice facility, would, if those commitments were fulfilled, I think, undermine the ability of the city to finance a new stadium. Because precious resources would be diverted to the Vet and the practice facility that are needed for the stadium. So my only advice to you is -- and I said, and GPF's position is, we know that it is vital that you exercise diligence in this matter, and we are encouraging you to do it. And we believe you have other points along the way, as I understand it -- and I might be wrong about that -- but I don't think you are being asked to vote on the finance ordinances today. And that's your final leverage. As, by the way, a lender to the Eagles is going to have to be satisfied. They have 48 STADIUM HEARINGS a provision in their term sheet that requires them to sign a nonrelocation covenant for the term of the financing. If the language of that nonrelocation covenant is not acceptable to a lender to the Eagles or the Phillies, they will not get closed. Because the lender is going to want to know that they are irrevocably and unalterably committed to that lease. And those are the kinds of things you are going to want to see, as well.
Well, I know of absolutely nothing that City Council will be able to do in the future, if we pass these ordinances. I might be able to be lulled a little bit into feeling a little more comfortable if what you have presented existed. We know of nothing. This is clearly designed to make the final decision by City Council on the question of stadium financing today's decision, meaning the period between now and December 14. And nothing that I know of is going to come before City Council once we approve these bills, if we do that, which will enable City Council to exercise any oversight judgment, other than to 49 STADIUM HEARINGS say, as one Councilman says now, we made a mistake last spring when we passed legislation putting up an $80 million penalty, as some people interpret it, with respect to repairs of Veteran's Stadium as the alternative option to building new stadiums. We know of nothing. And I would appreciate if you could give us, if not now, within the next few days, a more definitive piece of information on what rights we have. Because I know of none.
I know of none either in my role as a veteran legislator or as an attorney. I know of no rights we will have. And I have never known of any professional person who ever authorized anybody to sign something blind. And I think we are being asked to do that. And the terms we talk about are terms that we're told are being contemplated. And we don't have any assurance that those will be the final terms. We are also told that there will be a 50 STADIUM HEARINGS provision that's going to permit changes in the lease during its 30-year life. And, again, we are told that those changes will not come back to City Council for approval. I think with respect to the responsible way in which the Greater Philadelphia First dealt with the school situation, they studied it for years and made proposals with respect to control of the budgeting of the school district, and to the credit of that organization, I think they acted very responsibly. But I would like to feel that Greater Philadelphia First is acting in that same responsible fashion on the stadiums as they did when they made the studies of the school district's finances. And I don't see it here, and I'm very concerned about that aspect. Secondly, why are baseball stadiums being built in smaller size today?
Well, first of all, Councilman, I am looking back at the materials that I have. And I suspect you may be right. I 51 STADIUM HEARINGS spoke without really understanding or at least without thinking clearly about what the process that you are engaged in is and how the financing was being done. And since the financing is being done through PAID, and you are authorizing that today, my sense is, without studying it -- and I will and get back to you -- that Council well may not have another look at this. And I apologize for that. Stadiums are being built at smaller size because the nature of the fan experience in baseball is for a more intimate, closer, closer to the field, closer to the players, better sight lines. And if you think about the geometry of a stadium, in order to accommodate 60,000 or 70,000 people, the geometry is generally up or out. But, in any event, in the last 15 to 20 rows, further and further away from the field, if you have ever sat on the 800 level of Veteran's Stadium to watch a baseball game, you probably better bring a television set because it is very hard to see. Whereas, the upper-deck seating at 52 STADIUM HEARINGS Oriole park or Coors Field still gives that person a very close, reasonably close, view of the stadium. Plus, baseball can't produce 60,000 people 81 dates a year; whereas, football can produce 60,000 people for ten days a year.
What's been the role, do you think, of the vastly increased price charges?
Because I find in years, many, many years back, even when Baker Bowl existed in Philadelphia, the fact that you sat, as I did very often, in the 800 row, later on in Vet's Stadium, the enthusiasm of the young people for sports then did not go away because of some difficult, you know, spots from which to see.
It seems to me that's what's happening today and the real danger to baseball as the national pastime is the fact that it is just outpricing itself from consideration for ordinary working people. A husband, wife, two kids wanting to 53 STADIUM HEARINGS go to the ballgame, it is a very expensive proposition. And it seems to me that baseball ought to be moving in a direction to solve the question of the size of stadiums by making itself more available to working-class families.
Because don't the statistics show that of those people going to Veteran's Stadium, that of the audience, only about percent of them come from the main population 13 source, the City of Philadelphia? 83 percent of 14 them appear to be from out of the city? 15
To your question about the 16 affordability of sports and baseball to families, I 17 think the affordability issue is a major problem for Major League Baseball. It accounts for why the Trenton Thunder and the Reading Phillies and the Wilmington team are doing so well, because they provide affordable baseball for a family and affordable food for a family.
On the other hand, the 54 STADIUM HEARINGS more -- and this is the quandary that public sector partners are in -- the more that you ask the private side to finance, the more pressure on the private side for pricing, the more -- one of the reasons why Oriole Park, in my opinion, is successful is because it is more affordable than a lot of parks as a result of the extent to which it was publicly financed. The team -- they have been aggressive in the last couple of years raising prices in Baltimore. But when Edward Bennett Williams and later Eli Jacobs owned the team, the early pricing of Camden Yards was very, very competitive. And that was because they didn't divert much of their cash flow to pay for a mortgage; they had that mortgage essentially assumed by the state. But baseball as an industry has a challenge to make itself more attractive to families at a price they can afford to pay. And that is a big problem.
Why doesn't the usual rule of business and capitalism apply to 55 STADIUM HEARINGS sports teams? Why is it that those -- with respect to profit making, it does. And the profit making, where it exists -- and sometimes it is very substantial -- is justified on the basis that we take the risk, therefore we are entitled to the profits. And that may be a very sound theory. But it doesn't seem to apply here, where the risk taking -- I won't say the teams take no risks, but their risk taking is very heavily reduced by the fact that the city is making contribution of tax funds, largely paid by people who cannot afford to go to see the teams play. And that seems to me to be a kind of contradiction that's very difficult to justify.
Well, taking that question outside of Philadelphia, and just looking at the industry of professional sports, by keeping the number of franchises under some control, professional sports leagues, knowing the demand for franchises, have been able to capitalize on that demand as an industry by negotiating deals with their host municipalities that have been very favorable to the industry. 56 STADIUM HEARINGS And on industrywide basis, I think you can look across football and baseball particularly, but hockey and basketball as well, and understand that what professional sports is, is something that a lot of cities want and not all cities can get. And, as a result, some will work very hard and finance very aggressively to get them. And that's the economic factor. As opposed to looking at it on a microeconomic level, which we do in Philadelphia, if on a macro level there is a limited supply and a growing demand, and that makes this a seller's market.
Well, tell me, is the ability of the teams to pay no longer a factor in determining the extent to which they are assisted by public funding and public subsidies?
I think it differs from market to market. The ability of teams to pay I think is a factor here in Philadelphia. And I think that certainly in the case of the Eagles, the Eagles have a deal on the table which involves considerable funding and considerable risk by the team and the 57 STADIUM HEARINGS league.
Well, the National Football League gets how many billions of dollars from their TV contracts? Over a six-year period, don't they get an average of $3 billion a year, perhaps even more?
I don't have those numbers in front of me. I don't remember. They have a very, very sellable product, which they have created, which has driven advertisers to their product, which they are generating and distributing to their members.
Well, doesn't it come in terms of dollars to something like $75 million a year to the Eagles?
Has anybody, has your organization, been able to study the finances of the teams to determine whether or not there is a need? For example, does your organization, before it came here today, did it ask to see the 58 STADIUM HEARINGS books of the Eagles and the Phillies to determine whether or not there is this kind of a need?
Well, my organization did not ask to see the books of the Phillies or the Eagles, nor would we have expected to get to see the books of the Phillies or the Eagles. But I can tell you, away from my organization, and based on my own professional experience, having done this for years, that it 11 is not just the books of the Phillies and the Eagles 12 that matter; it is also the books of all the other 13 teams which the Phillies and the Eagles compete with 14 that matter. 15 Because, at the end of the day, we 16 could cut a very good deal for the citizens of 17 Philadelphia. We could have 100 percent privately financed baseball stadium, like they do in San Francisco, and the Giants may well find themselves five or six years from now unable to field the team and unable to pay the mortgage costs of their building because they took too big of a burden onto themselves and they can't compete with the Phillies or any other team.
Well, how would 59 STADIUM HEARINGS your organization evaluate the financial credibility of an organization that seeks to change terms of agreements just at the point when the contract requires them to begin making payments to the city on a promise they made years ago that there would 7 be income at that time it was said to be 6 million 8 over the years, it was brought to 4 million, for the 9 superboxes? 10 You know, payments are scheduled in 11 Philadelphia beginning February 2001. 12
Well, I think that's an 13 issue to be taken into consideration as you make 14 your decision about voting on this matter. 15 My organization, Greater Philadelphia 16 First, supports these ordinances, supports the 17 construction of these stadiums, believes that the 18 results of the negotiations produced a fair and 19 defensible deal. 20 Could it be better? Could it be worse? We could sit here and speculate. But that, in the long run, this will be good for Philadelphia and good for the teams and good for the fans and good for the city and good for its image. 60 STADIUM HEARINGS And we think that the risks, which we recognize exist, are worth taking.
But is it any surprise that an organization composed of the major business organizations would be supportive of a proposal that turns over large sums of tax money to two business organizations? That's no surprise, is it?
Councilman, worded that way, that would not be a surprise. However, that's not the way we look at it. We are not trying to give large sums of money to two major business organizations. We are trying to assure that the people of Philadelphia and of this region, who through their contributions and through the State of Pennsylvania are making a contribution to this, continue to enjoy both the assets of the Eagles and the Phillies and the experience of being pro baseball and pro football fans for a long time to come. I can assure you that as a policy matter, Greater Philadelphia First is not concerned about the financial or capital gains or position of 61 STADIUM HEARINGS the ownerships of either the Eagles or the Phillies, per se. And that's not what motivates us.
We will have to let the people of Philadelphia judge. Thank you, Mr. Katz. And thank you, Madam President.
Thank you very much. The Chair recognizes Councilman Rizzo.
Thank you, Madam Chair. Mr. Katz, or Sam, you may have answered this question, but I want to ask it again. I know you would have enjoyed the opportunity to negotiate this deal with the Phillies and the Eagles. I really know you would have personally liked to, enjoyed that opportunity. But if you had that opportunity to negotiate the deal between the Phillies and the Eagles, and you were coming to City Council to present the deal, would you personally have been pleased with the deal that you would have 62 STADIUM HEARINGS presented? If this were the deal that you had negotiated with the Phillies and Eagles, you personally, would you have been pleased that this was the best you could do?
Councilman, first of all, let me say, I am the CEO of Greater Philadelphia First, that's the capacity I am here in. And I appreciate the question. And I really haven't thought about it in the way you are asking me. I think that the city has been very well represented. I thought that the committee that the Mayor put together, led by Bill Rouse, was a very good and very broad and very bright group of people. I know a lot of the principals who actually negotiated -- I assume that when you say would I have looked to negotiate it, you mean as the financial adviser for the city?
No. If you were the Mayor; that's what I was getting at.
I don't think about that too much. So I would say that the answer to 63 STADIUM HEARINGS your question is, I have been on both sides, the public side and the private side, of stadiums and 4 11 arenas in the last 17 years. 5 I haven't seen very many deals like 6 this that put this much private capital into a 7 building, or into the buildings. The costs, I haven't seen billion-dollars stadium projects, either, I must say. But that's the nature of where we are in the inflation curve. And I am here comfortably as GPF's representative on both the professional and personal level, as a citizen of this city, supporting this project.
I thank you and appreciate your answer. Thank you, Madam Chair.
Thank you. Are there any other questions? The Chair recognizes Councilman Clarke. 64 STADIUM HEARINGS
Thank you, Madam Chair. How are you, Mr. Katz? Mr. Katz, one quick question. In yesterday's testimony, there were references to two particular stadiums, the FedEx Stadium and the Patriots Stadium, both in terms of location and in terms of the financing structure. Can you give me a comparison between those two, if you are familiar with the deals on those two at all?
I am not really familiar with them. And the ones that I am familiar with are the ones that I actually was involved with and worked on. One of the things that you have to recognize about the Patriots, without commenting about the structure, is that the Patriots made a deal to leave New England and cut a deal with the State of Connecticut and moved. After they could not get the Massachusetts legislature to act on the first pass-through of the proposal that they had, they couldn't get the support of the state. So the extent to which there are 65 STADIUM HEARINGS private funds in that project to the same degree that they exist in PacBell Park in San Francisco is a product of a lot of failure in both Massachusetts and Connecticut. FedEx Stadium, I really don't have any information about.
There was also this question about the cost of doing business as it relates to building stadiums in municipalities, particularly large municipalities, verses suburban sites. Do you have a sense of that? Is it that much cost in terms of the end operation of those stadiums?
Well, I think it is not really all that different from the cost of building anything in a green field or an open space, versus a more constrained space, as compared to the 12th and Vine site, where there were going to be extraordinary pressures on the contractors to get equipment in to move materials around because they had to be concerned with the businesses that operated in the area that would be adjacent to the site. 66 STADIUM HEARINGS Although, you know, the South Philadelphia site is not entirely a green field. Once the warehouses are cleared, it will be a relatively suburban-like site. And there is a difference. But given the numbers we are talking about, it is not $100 million of difference. It is going to be --
Not minimal, but not material over a 30-year amortization period.
Do you recall in the stadium bills that you worked on in urban versus suburban, where there are certain ancillary types of obligations from the social standpoint on various teams, in terms of participation, in terms of such as we have here today, a children's fund and things of that nature, did you find that it was --
I think that not nearly as explicitly as you have here with the children's fund. There have been conditions imposed on tenants, for example, to provide affordable tickets or to provide free tickets to groups; to make the field available; to do things that might be of a 67 STADIUM HEARINGS community-spirit nature, not as explicit as a million dollars a year per building to a children's fund. More recently I think that those kinds of considerations are being put into transactions. But most of the transactions that I worked on did not have those kinds of features. Nor do many transactions have a feature involving participation by the host municipality and the capital gain from the sale of the franchise. Which we did in Denver, but I haven't seen very many of those. And I think that's a positive thing here, at least for the five years or so that that applies.
That makes it really impossible to just flip the asset to a new owner. Because you have got the new stadium, which the city will have created the value in by investing in the stadium. I think that's a very positive feature.
Thank you. 68 STADIUM HEARINGS The Chair recognizes Councilman Goode.
Thank you, Madam President. Mr. Katz in your experience with the public financing of other stadium deals and major economic development projects, could you speak a little to participation goals for disadvantaged persons and businesses? And the goals for this deal have been set now at 49 percent for disadvantaged businesses in design and construction, and 50 percent in terms of work force hours. How does that stack up against other deals?
To the extent that these facilities have been developed in communities which had existing disadvantaged business programs and initiatives, which obviously many of them did, those programs were highly critical to the success and to the implementation of the construction and to the operations and the concessions. The numbers that you just described represent a significant increase over what I have 69 STADIUM HEARINGS normally seen or have heard about. But I think that that's to the benefit of Philadelphia, that those kinds of objectives and those kinds of goals be established. And I think GPF is very supportive of that. And I think that will make this facility one that people have not just the sense of ownership because they like the teams, but a sense of ownership because they actually have an interest in the economic up side of the construction and operations.
As a short followup, could you envision any other type of means of infusing that type of investment in minority- and women-owned businesses?
If we were not doing stadiums. Would there be any other vehicle right now to make that level of investment in minority- and women-owned businesses in Philadelphia?
Well, not under the current conditions of the capital redevelopment assistance funds that the state has provided or the 70 STADIUM HEARINGS auto rental tax or the fact that you are using tax revenues from an existing business to reinvest in the facilities to retain that business. I mean, the funding of this facility, not to mention the private financing, is creating probably something on the order of 750 or 700 million dollars, $750 million of construction. And I would be guessing, but to 50 10 million -- well, probably 50 to 75 million dollars a 11 year of annual business operations and sales and 12 operating expenses, that would be hard to generate 13 quickly, given the absence of resources. 14
So, in essence, 15 while people question whether this is an economic 16 engine or not for the city in general, it is 17 definitely an economic engine for disadvantaged 18 businesses and persons? 19
Certainly to the extent 20 that disadvantaged businesses are engaged in 21 providing services, that's the case. 22 The reason I took the position I did, 23 Councilman, was that this is disposable income 24 that's being spent. People go to ballparks to be 25 entertained. 71 STADIUM HEARINGS The absence of a ballpark doesn't necessarily mean that they won't be entertained somewhere else. They will find a way to spend their money doing something. But this is a place where concentration for participation of minority- and female-owned, women-owned businesses, disadvantaged businesses, would exist in ways that I don't think would necessarily avail themselves otherwise.
Thank you. The Chair recognizes Councilman DiCicco. COUNCILMAN DiCICCO: Thank you, Madam President. Good morning, Mr. Katz.
Good morning, Councilman. COUNCILMAN DiCICCO: I think it is safe to say that, based on some of the conversations I have had and a lot of the discussion that has occurred over the last the couple of days, that the majority of the folks in City Council would agree that we do need two new facilities. 72 STADIUM HEARINGS The question is as to what level of the public contribution should be made to accomplish that. I am going to create a scenario for you, and maybe you could give me an analysis of it. Assume for a moment that the support is not in City Council to fund the two stadiums. We're left with the Vet. The teams stay in place; they don't leave, they don't threaten to leave. Everything is basically status quo. The city will make an $80 million or so contribution to maintain the Vet over the next 10 to 11 years. Assuming any unforeseen problems with the stadium at that time, during that ten-year period, 80 is our cap, and that's where we are. As an elected official, we have to make responsible decisions today that will affect future generations. So I am going to fast-forward a bit. The stadiums are in place, the Vet is in place, the teams stay here. Ten years out. We have a facility that's ten years older. And although we have made 73 STADIUM HEARINGS $80-million-plus investment to maintain it, I think everyone would agree that, from a practical standpoint, that the integrity of the building then will be much worse than it is today. And, in fact, the City Council ten years from now -- and I think probably David Cohen may be the only one left -- but the rest of us, whether we are here on not, have to make decisions today on what that investment ten years out may have to be. I would assume -- and if you can elaborate, if you can, and give me an analysis -- wouldn't it be in the best interest of the city today to do that, based on what we think the anticipation of costs would be ten years out? Costs of development will be higher, materials are higher. So we as elected officials, I think, have a responsibility to pave the way so that the taxpayers of the future may not have to be responsible for even a greater tax burden, or greater contribution.
Well, I think it is very hard to make projections about what the status of 74 STADIUM HEARINGS the sports are going to be ten years from now, what the nature of the facility technology is going to be ten years from now. There are things that are going on in buildings now that were unforeseen and unforeseeable ten years ago. I would suspect that on the assumption that you were going to develop two new buildings, separately for the Eagles and the Phillies, that the costs would be dramatically higher; that the land costs would be dramatically higher; that on any calculation that you might make the political costs would likely be higher because you would be dealing, I think, in a much different environment, assuming you could keep the teams here for those ten years. And then there are all the uncertainties that, you know, you can't even forecast. But I think that's part of the reason why we believe at GPF that -- this is a 30-year-old building now. The assumption that you made that we would only have to put 80 million bucks into the building to keep it workable I think is probably not 75 STADIUM HEARINGS a very reasonable one. Because the rate at which it is depreciating now is faster than the rate at which it depreciated over the last ten years because of its age. Things are going to start going wrong at a faster clip now and at a more expensive replacement cost than now. So I think that if you do that analysis, although I have not done it, GPF has not done it, you will reach the conclusion that this is the better time and at a cheaper present and future value cost to invest now. COUNCILMAN DiCICCO: I guess that's the answer I was looking for. If we have to bite the bullet, you do it now, you get it done a lot less expensive than we would have to in ten years.
Thank you. Are there any other questions from members of the committee? Seeing none, I thank you, Mr. Katz. 76 STADIUM HEARINGS
Okay. Our next witnesses are? MR. McPHERSON: Will representatives of the Philadelphia Eagles and Philadelphia Phillies please come to the table.
Good morning. Mr. Banner, are you going to testify first?
We are doing it in alphabetical order, Madam President. I am Joseph Banner, Chief Operating Office for the Philadelphia Eagles. On behalf of the Philadelphia Eagles, I would like to thank you for this opportunity to testify. We sincerely appreciate the efforts of the Mayor, City Council, PIDC, and all others affiliated with the city in joining us in our mission to create world-class, state-of-the-art football stadium. We feel the proposal before you today is unique in many ways, unprecedented in the world of sports. The agreement between the city and 77 STADIUM HEARINGS the Eagles represents the most public-friendly deal of its type in the history of our league. It also features the largest private contribution towards a stadium --
Anybody having conversations, again, I am going to request that you do so in the corridor. And perhaps we can close these doors. Thank you. I'm sorry.
This deal also features the largest private contribution towards stadium construction in the history of professional sports in the United States. And as Bill Hankowsky of PIDC has referenced previously, it represents a revenue-positive deal to the General Fund, which is certainly not the case for the vast majority of cities doing stadium deals. While the economics of the deals are positive, from a public standpoint we feel we ultimately -- what is ultimately as compelling, and not moreso, is the end product of the proceedings. As we have referenced previously, we are among the last teams in the NFL to have a 78 STADIUM HEARINGS stadium situation resolved. A major advantage of this time line has been the opportunity to review and learn from developments and innovations in new NFL stadiums, as well as ballparks and arenas around the country. While the Eagles' ten home games a year are all major events in their own right, the new stadium represents so much more for this community. It enables us to be in a position to retain the Army/Navy game, help Temple retain its Big East status, and potentially attract a new franchise to the market with major league soccer. In addition to concerts and other special events, it provides us a facility capable of attracting national and international events; such as, the NCAA Lacrosse Championships and World Cup Soccer. Finally, our project will help create a sports complex that is truly one of a kind for major league franchises in state-of-the-art buildings that will attract millions of fans into our city each year. As I think we have shown with the 79 STADIUM HEARINGS completion of our NovaCare complex facility, we are committed to making the complex work better not only for our fans, but for the community. We also are committed to making sure that workers in business from all backgrounds in the city have an opportunity to participate in this project. At this point I would like to briefly walk you through a Power Point presentation regarding what we believe is a historic opportunity. I think everybody is aware it is a $395 million construction project. $85 million of that will come from the state, the remainder coming from the team. The city will contribute the site acquisition and preparation costs. In the deal there are a series of other commitments that the team has made. And I would like to walk you through those, because they go well beyond the 310 million we have offered to put up. As everybody knows, there is a children's fund. We have build the NovaCare complex. We have capitalized interest costs, pilot 80 STADIUM HEARINGS payments, and Special Service District payments. The first, third, and fourth items on that list are all up-front contributions, totaling just short of $350 million. In addition, the city is making contribution operation and maintenance expenses, but it still will leave the team with about percent 9 of those costs of operating and maintenance for the 10 first 25 years and also, as Bill Hankowsky testified 11 yesterday, the last five years of the deal the team 12 will have 100 percent of that obligation. 13 We will also pay what will amount to 14 be about 90 percent of the capital repair obligation 15 over the course of the lease. 16 This is a little bit hard to read, 17 but the left column here are all the teams in our 18 league that are in new stadiums. 19 The second column is a series of 20 teams of which we count ourselves as one that are in 21 the planning stage of a new stadium. 22 The third column are teams that have 23 accepted renovations and new leases. 24 So you will see that if we are able 25 to succeed here, the Minnesota Vikings will be the 81 STADIUM HEARINGS only and the last team in the NFL to satisfy its stadium needs. Again, this is difficult to read. And the next section will both promote this deal, but also start to speak a little bit to some of the things that you heard yesterday I want to speak to more specifically.
You will see on the right end of this deal is the Eagles. And across there you will see that there are a significant number of deals there with 250, 300 million dollar public contributions towards construction. If you look at the bottom of that, you will also see that, in addition to that, many of these deals also include operating and maintenance payments and capital repair payments from the public sector. So we are comparing apples to apples in the public money invested in the construction of our project. And, more importantly, the amount that leaves us contributing, the $310 million, as you see, most of the teams' contributions are a very small percentage of that amount. 82 STADIUM HEARINGS Yesterday you heard testimony with regard to what kind of deals or what location deals you should be comparing to this deal. Somehow in that testimony it was acceptable to decide that the two markets we should be compared to are Boston and Washington. I want to remind everybody here that neither Boston nor Washington have NFL football teams. On the other hand, in the top five markets in the United States in this time frame, three of those five cities are in the process of doing stadium deals. I will go back to the Washington and New England examples in a moment. But Chicago, which is the third-largest market in the United States, in fact yesterday their legislators approved the deal that you see on the screen right there. There is $390 million in public money. Although it comes through the Illinois Sports Facility Authority, the city's portion of the state hotel tax is pledged against it. So the city of Chicago took hotel tax 83 STADIUM HEARINGS revenues that it could have spent in a variety of ways and chose to invest 390 million of it towards the construction of the project. Remember, the Eagles' number versus Chicago there is zero. In addition to that, the city will be paying the operating and maintenance expenses, of which this city is paying about 75 percent. And the city will be paying the capital repairs, of which this city is paying about 10 percent. So even on a present-value basis, the deal the Eagles are receiving is about $600 million worse than the deal the City of Chicago, in the third-largest market, just gave its team. And that is a stadium in a city. And it makes a very big difference, as you will see in a moment, when you are building your stadium in a city versus outside of the city. The second city in the top five markets -- and by the way we are the fourth market -- the other team in the fifth market is Houston. The deal that Houston just completed that's under construction has $374 million of public 84 STADIUM HEARINGS money up front. The team contributed 50. It was allowed to sell PSLs. It sold $80 million worth of PSLs. So it ended up with a totally free stadium and $30 million left over. In addition, the City of Houston is paying operating and maintenance expenses and capital repairs. So, in fact, the real reference point here is three of the five largest markets in the United States have recently or are completing stadium deals. And those deals, compared to our deals, as you can see, are not even close. Here is a quick chart relative to our league. You have heard us say many teams that we are making the largest contribution of any team in the United States. You will see even the Washington deal, which was referenced yesterday, the contribution to the construction of the stadium by the team is half what we are offering to put up. You will also see, relative to a number of other deals out there, one-tenth the contribution we are offering to make is what those 85 STADIUM HEARINGS teams made. So even in the instance of a Washington, that was referenced yesterday -- by the way, the team is in Maryland, in spite of being called the Washington Redskins -- the contribution is less than half what the Philadelphia Eagles are offering to contribute to build a stadium here in the City of Philadelphia.
And as some people have posed the question to us, you are getting money towards operating and maintenance expenses, so it is misleading to just use the amount of money that goes into the construction project. So to be responsive to that criticism, we produced a second chart that's the combination of team debt service plus the team's contribution to operating and maintenance expenses. So you could see that even after the inclusion of the city's contribution to maintenance and operating expenses, the gap between our deal and Washington narrows slightly. But when combining those two factors, we are still offering the city the best deal by a huge margin of any team in the NFL. 86 STADIUM HEARINGS You will see there are a number of teams down there where there is no yellow line, there is no contribution, debt service, operating and maintenance, and capital repairs from a number of the teams in our league. I hope you are able to read this chart, because it is not actually in your book. We generated it just last night, after hearing yesterday's testimony. But we are building a stadium in the city. The construction taxes alone -- for example, the second column there is the Washington Redskins' Stadium, which you heard referenced yesterday. The next column is our stadium. 5 million -- by the way, we are not complaining about this. We have agreed to a deal. We are comfortable with it. We want to proceed. We are just trying to point out the respective differences to the deals that were being compared to yesterday. 5 million in construction taxes that don't exist in the Washington project, and a 10 percent difference by virtue of building that stadium 40 minutes from the closest city, not 87 STADIUM HEARINGS even in the same state that the team is named after. 5 million. In addition to that, you see that the building of a training facility, you have construction taxes, as well. And because of the limited availability of sites in the city, we chose a site that had a huge site cost. Before we even got to build the building, which would probably cost similar in Washington. But the work involved in that particular site, in order to keep that building in the city, increased the cost of that project by $10 million. I won't go through every line item. One of the other ones, though, that is very significant, you see the cost of debt on stadium construction. Our number there, again, is almost twice what it was in Washington. If you focus on the bottom line, when the two teams start to generate revenues over the course of the deal, the Redskins will have $326 million in obligations in these categories, and the 88 STADIUM HEARINGS Eagles will have $1,151,000,000. This is before we get to any of the other issues that have been addressed in questioning here that the city is concerned with and that we similarly care about, like MBE programs, like the utilization of union labor in building the project. So before we even get to some of the intangible benefits that we all share goals in achieving, just on the pure economics, this is the kind of difference that exists between the Redskins and our stadium. We contributed the largest private contribution for that stadium. Now, we can sit here for the next two weeks and debate that, but it is just an absolute fact. In addition to that, there are two out of the six categories where we have given up and taken less than 100 percent of the revenues. At Redskins park, if the Redskins park evolves into the number of events they plan on having, they will have almost $10 million in parking revenues, more than the entire O & M contribution we are asking the city for. The Eagles in this deal will have minimal parking revenues. 89 STADIUM HEARINGS So in that one category alone, the Redskins are getting more than we are asking the entire city for between what we are asking for in our deal.
In addition to that, we have agreed to a pilot -- we are not aware of any other cities in the NFL that have pilots -- a Special Services District, a children's fund. And of course we have a preexisting amusement tax that exists in some other NFL cities, but also does not exist in many of the other cities, including some of the ones you saw up there, where towards the construction there were two and three hundred million dollar contributions. We have heard in the questioning the reference to what has been the totaling up of the city's payments on its debt service and O & M of being a number, I think, in the area of 900-plus million dollars. So we thought it would be worthwhile, and you will see in the Phillies presentation, as well, for you to get the comparable version of the Eagles' money. Of course this does not factor in the state money, as well. 90 STADIUM HEARINGS And you will see the city is getting a tremendous return on its contribution. 4 billion. The Phillies will show you shortly a similar number. 8 billion. And, again, in addition to that, you have a state contribution. You know, there has been a lot of reference about the risks of this deal. And I will tell you from the team's perspective, our view is that all the risks have been shifted to us almost literally. This is at the bottom there, you will see eight recently completed NFL stadium deals. If you look at the right column, you will see the negative impact on the General Fund to those cities each year on one stadium. So you are talking 18 to 20 million dollars per year in each one of those cities to build one stadium. 91 STADIUM HEARINGS In the very worst-case scenario, run by the city, run by Commerce, Capital Bank, with the worst-case scenario of assumptions over the 30 years of this deal, the city has a collective positive cash flow in the worst-case scenario. We actually believe the 159 million that's being referred to is a dramatic underestimation of what the outcome will actually be of these deals. You are competing with cities -- and, frankly, we are competing with cities, that are willing to take on an to million dollar per 14 year negative impact on their General Fund in order 15 to build these stadiums. 16 And I think most of you know that the 17 way those cities have dealt with that is, they have 18 increased taxes. Because they can't afford any more 19 than this city can to take that kind of money out of 20 other services. We are talking about a positive impact with no taxes directly to the citizens. And I agree with the categorization of a voluntary tax in the form of the car rental tax being the only thing involved in this entire deal. We think there are some compelling 92 STADIUM HEARINGS reasons to do this deal now. I will let you read those. I am just going to focus on the bottom one for one second, because I think it is a very compelling example of how significantly PIDC has been conservative in their numbers, which I think is perfectly appropriate. But I want to point it out to you. One of the things that's achieved in the deal is to keep the NovaCare complex in the city. 7 million. We think that's a conservative estimate of just the city wage tax revenues. But, in fact, I think everybody recognizes if that facility were to move, you would also lose our use and occupancy tax, our real estate, our business privilege tax, our gross receipts tax, our sales tax. And I won't keep going through the list, but all of the various taxes that we pay. We believe that number is over $4 93 STADIUM HEARINGS million per year. In fact, it is factually over $4 million a year. 3 million per year. And of course it is built all on things that escalate. So as you got five and ten years out, that number of over $4 million grows very dramatically. Here is what's meant to be a sampling.
Obviously one of the numbers you have that you have to develop a sense of confidence or comfort with whether this will really get developed, because there is a tax revenue number that's tied to it, is whether we will be able to generate in the building the kind of activity that's projected. This is not meant to be a precise list of what will happen. We fully recognize that some of the things on that list may happen and some may not. We think that there are other events that could replace some of those events that don't happen. But what I would like to focus your attention on, though, is that 25 of the 49 events 94 STADIUM HEARINGS there -- this question was asked yesterday -- actually already exist. And those are in the form of Eagles games, Temple football, Army/Navy, the concerts, and the Jehovah Witness use of the facility. So of 7 those 49 events already exist. 8 17 of the difference are MLS soccer. 9 We have -- and I will be happy to distribute 10 today -- a letter from the Commissioner of MLS 11 soccer indicating their enthusiasm about this 12 project going forward, their interest in this 13 market. 14 In the letter he identifies this as 15 the most desirable soccer market for them to expand 16 into, and their eagerness to sit down with us and 17 other people in the city that would like to utilize 18 this facility to bring the team here. 19 Obviously at this point they are not 20 prepared to make a final commitment. But the letter 21 gives a clear indication of the seriousness they 22 have about expanding, which was one of the questions 23 that brought up yesterday. 24 Yesterday it was said that Major 25 League Soccer isn't planning an expansion. And you 95 STADIUM HEARINGS will see in this letter that they are planning an expansion, and that they view Philadelphia as the most desirable city to look at for that expansion. Go ahead. I know, again, this chart is hard to read. But just moments ago in questioning, one member of Council said that there were going to be taxes here that were going to have to be paid by people who couldn't afford to come to our games. If you look at this chart, you will see that the increment that our stadium is going to create, which is the analysis that will be used to pay the O & M that we are asking for in the acquisition of the land that relates to our project, is in fact PAID only by people who either come to our games, play for our team, work for our organization. Nobody else will create that increment. And, in fact, even more significantly and beneficial to the City of Philadelphia is that 82 percent of those revenues are generated by people who do not live in the city. So if you have live in the City of Philadelphia and you can't afford to come to our 96 STADIUM HEARINGS game, maybe you don't even care that we exist, you will not contribute anything to this project. You will contribute absolutely nothing. Because the increment that we will be creating will be created by people who come to our games, or people who perform in our stadium, or people who play for the team, or people who work for our organization. You see the list on the left. There is the taxes, the categories of taxes, that are being used in the calculation to support the city's investment. There is nothing on that list that is paid for by anybody who doesn't attend an event or utilize the facility to play in. So the argument that this will be PAID for by people who can't afford it, or people who can't afford to come to the games, or people who don't even care about these sports teams is inaccurate in the instance of this portion of the revenues being generated from the Eagles' participation in the deal. I would like to spend a couple of minutes on what we believe is a very important 97 STADIUM HEARINGS subject.
Even though you do not have our final plans here -- they are in the process of being drafted, and we want to make sure everybody is comfortable with the language in them before we present them finally -- I do think you have been made aware of the fact that we have agreed to a plan that calls for 49 percent combined MBE/WBE participation. What I want to tell you about this is that the Philadelphia Eagles began over a year ago meeting with the people that were identified to us, primarily Jim Roundtree and Marla Hamilton, as the key people in the city, to start to educate ourselves as to what was going on in the city and what the city's expectations and needs would be. In that time frame, we have actually had some projects going on. We built a practice facility. There's no MBE plan with that practice facility. We were encouraged to make sure that we had a level of participation in the 20 to 24 percent range. 25 There was no monitoring of what we 98 STADIUM HEARINGS did in this area with our facility. At this point in the facility we are running a little bit over 34 percent. And we believe upon completion of this facility, we will be at 42 percent. That will be one of the best performances, some would even argue the best performance, of any project of this size in the City of Philadelphia. We didn't have an official plan. Nobody monitored us. We view this issue as very fundamentally important to the city, but it is also very fundamentally important to the philosophy of our organization. And, therefore, we went out and achieved those levels of participation without any concrete plan and without anybody monitoring what we were doing. In addition, as everybody knows, we have gone forward and had to develop the design for the stadium because of our timing needs. We were told that design teams in the city have generally been running in the 10 to 15 percent range for participation, it would be greatly appreciated if we could try to raise the bar and 99 STADIUM HEARINGS come into the to percent range. By the way, one of the other things we have been told is that the city doesn't like ranges because people generally tend to come in at the low end, if at all, in the range. Well, we agreed to try to raise the bar in this to percent range, and at the 9 moment are at approximately a 21 percent, with some 10 work remaining. And we think we will hold that 21 11 percent or even have a chance to slightly increase 12 it. 13 I would also like to just pause here 14 for one second. I have Dennis Biggs sitting next to 15 me. 16 The people managing our project is a 17 company called Kojima. And they will be the front 18 point people practicing the philosophy that we have 19 identified in our practices to this point. 20 And a significant reason that we hired them was, they are the people that led the project in the building of the San Francisco Giants Stadium. And we received word that that project was receiving tremendous praise for its 100 STADIUM HEARINGS success relative to the goals that were established in that community on its MBE plans. So I want to tell you that a factor in our hiring this firm was to make sure that we were backing up our commitment in terms of how important this was to us, and we were going to bring somebody in with a track record succeeding in this area. So I am going to give Dennis the mike here just briefly so he can tell you specifically what they were asked to do in San Francisco and what the succeeded in achieving.
As Joe mentioned, my name is Dennis Biggs. And I represent Kojima, who was the development manager in San Francisco on the Giants new Pacific Bell Park Project. We were asked in that community to also look at what could be done to raise the bar. In the community, to 30 percent 21 was the range that had been an acceptable level for 22 organizations in publicly financed projects. 23 Now, as has been mentioned, the 24 Giants project was virtually financed privately. 25 And because of that, it was very voluntary by the 101 STADIUM HEARINGS organization as to the level of commitment that they actually had to make legislatively. Instead of 30 percent being the number that we were able to achieve at the end of the day, we achieved a 43 percent participation. Most importantly was the impact we made on the community. By outreach programs and by innovative thinking in San Francisco, we were able to ensure that more of the entities within the city were able to participate in the project. We innovatively arranged for subcontracts to be sized so that we could get more participation by minority, women, or disadvantaged businesses. It is a success story that we are very proud of. We do the same thing on all of our projects. But San Francisco being a baseball park is very similar to the kinds of programs that we will be using here. We think that the work that has been done in the last year with Marla Hamilton and with Jim Roundtree are a good foundation for us to move forward. And we have been making contacts with 102 STADIUM HEARINGS the community to make sure that, as we move forward, we can set that goal higher for Philadelphia and achieve results that will be a leader in the industry and in this community.
And I think we have all said that we understand the need to not only commit to the numbers, but have to you the completed plan with all the different facets of it. And I think that will be forthcoming very soon. The next item that's been discussed, and we are working on and I think we are nearing completion on also, is a scheduling protocol that everybody is in agreement on. And we also expect to have that document in greater detail for you shortly. Now, we have tried to stay on the positive. We feel we have a good plan here. And we do feel it represents a very aggressive contribution from the private side. But obviously part of the analysis as reflected in the questioning is, what if we do things and what if we don't do this deal. So we do point out that there obviously is a buy-back of the NovaCare complex of 103 STADIUM HEARINGS $23 million if the deals don't go forward. We believe that over the source of the ten years, even 120 million is an extremely conservative estimate of the capital repairs that would have to be done collectively. And, as I reflected, if we were to relocate the NovaCare complex, we think the incremental tax revenue, in fact currently, is at a significantly higher level than is being reflected in the PIDC documents. I would just like to close with one comment that I think will come up in the questioning as we go forward. There's been questions about could the teams put in more money and could we restructure this deal so it was more friendly to the taxpayer. I think the fact that there is a gap kind of answers that question. The city has taken the position, obviously, that it is not putting anymore money in, and the teams have, as well. All three parties have said that if any one of the three is required to put in more money, we are all willing to say that we don't have 104 STADIUM HEARINGS a deal. So I think it is clear that the negotiating people representing the city have exhausted every possibility of getting any larger contribution from the teams, and has similarly drawn a line with respect to the city. So, in fact, we are at the point where we are making a choice, where we have maximized the contribution that the three parties can make of either doing deals or not doing deals. A choice that remains is not doing deals, but restructuring the deals. If that were the case, then we wouldn't have a gap; either the city or the teams would have put up the money and we wouldn't be sitting here with a gap. So that really completes our presentation. We look forward to the opportunity of answering all of your questions. And we very much appreciate your time in hearing our presentation.
Council President, members of Council, good morning. My name is David Montgomery, and I am President of the 105 STADIUM HEARINGS Phillies. I am clearly delighted to have the opportunity to testify today in support of the Mayor's proposal to create a new state-of-the-art baseball park and a new state-of-the-art football stadium in the Philadelphia Sports Complex. Obviously my remarks will center primarily on the baseball aspect of the proposal. We have provided written testimony, and attached to that a number of slides. I will take members of Council through a portion of that, and then I believe both clubs will be available to answer any questions. There's been a great deal of discussion in the last few days about our industry in toto and the Phillies' position in that industry. It has clearly been identified that a big issue concerning our franchise going forward is the attendance capability of that franchise; the additional revenue associated from that attendance, leading, we believe, to the additional payroll capacity of the club to create a more competitive club, to in turn ensure that that greater attendance 106 STADIUM HEARINGS will be something that will stay with us going forward. As was testified just earlier by others about, we are in a business where we must compare and compete with others. And one of the things that's happened on the subject of new facilities in Major League Baseball is that, since 1989, you see a list here of new ballparks that 10 have been developed since then. 11 Next April, Pittsburgh and Milwaukee 12 join that group. And by the Year 2003, Cincinnati 13 will also be included, with San Diego either in that year or following in 2004. What is significant as a result of these new ballpark creations is not only the attractiveness of the facility that has been discussed, but what it does to us from a revenue capacity and where it would place us in our ability to compete with those other 29 Major League Baseball franchises. This is one of the charts that's in the booklet provided to you. This is the one that shows the Phillies ranking in the category of net stadium revenues. 107 STADIUM HEARINGS They are all the revenues associated with attendance; the actual tickets, concessions, parking, et cetera, associated with the fan attending, less the stadium operations expense that the club bears. You can see that in 1999, our rank in that category was 24th of the 30 Major League franchises. Two of the franchises at that time that were to the right of us, that ranked lower, were the two that I mentioned that are going to go into new ballparks just next year in April, the Milwaukee and Pittsburgh franchises. So just by virtue of those new facilities, we will slip even further to the 26th ranking. We are excited about the opportunity to provide a new facility for our franchise, our fans, and for this city. It is interesting, there's been reference to Baker Bowl, Connie Mack Stadium, Shibe Park, et cetera. By the time that we complete what we hope will be our occupancy in Veteran's Stadium in 108 STADIUM HEARINGS the Year 2003, we will have been at Veteran's Stadium for 33 years. So happens that that's the exact same number of years that we spent in Connie Mack Stadium. Many people, it would seem like we were there forever. Our vision is the opportunity to move forward in a totally different environment. One of the questions that was asked of Sam Katz earlier was the size of the facility. Well, size really does work against us. We believe from a supply-and-demand standpoint, we want to go to a smaller facility to give our fans the opportunity to be right on top of the action. So it will be played on natural grass, grass-and-dirt field; it will have a capacity of no more than 45,000, as opposed to the 65,000 seat capacity today. We think that what that will enable us to do is to provide sight lines that are far different from the current situation.
The nature of Veteran's Stadium today is a compromise for two sports, such that it is 109 STADIUM HEARINGS created in a circle, in essence. And whether you are sitting at first or third base, in the lower, upper deck, and be back from the action as a result of the contour of the facility, or whether, frankly, you are at an Eagles game and sitting at the 50-yard line, you have a situation where you just are not on top of the action. Going forward, we will have an open ballpark, one that the previous slide indicated that you will be able to look in from the outfield side and, as this slide shows, one that you will be able to see through the facility. It will be created right at street level. If you were standing on Pattison Avenue looking north, you would look through the facility at this level. The field itself will be down, and you can see the see skyline in that openness in the outfield. The goal is that with enhanced sight lines and ticket pricing of all categories -- earlier Councilman Cohen, who has stepped out for a moment, was talking about the current pricing 110 STADIUM HEARINGS structure of our sport. I hope he is aware that today our general admission prices would allow that same family of four, four people, to come for $24. Right now the Phillies enjoy -- that's total, by the way. Right now the Phillies enjoy 70 percent of our fans coming with another family member. And one of the key concerns and goals of the organization is to be able to maintain that level of family support going forward. We think that by providing the sight lines that others have talked about that exist in some minor league ballparks and others, and the proximity to the action in general, the obvious advantages that have sprung up in other parks, there was much discussion of Oriole Park and Camden Yards earlier, that we will really significantly enhance our broad-based fan appeal. We have spent an awful lot of time talking about the siting of a ballpark in Philadelphia. Councilman Clarke. And there has been, during that period of time, in addition, a great deal of discussion of the appropriate siting 111 STADIUM HEARINGS in the sports complex. The proposed Jetro site plan we believe offers many advantages. But we would remind Council that in response to the request of the neighbors to have a very different experience going forward than they have today, we took the original location, which would be in the lower left-hand corner of this slide, Veteran's Stadium, originally moved it north, so that it would abut 10th Street and be primarily east of the homes that are commonly referred to as the Vet Stadium Neighbors' Association. Later we talked with the Administration about moving down to the corner of 10th and Pattison and still remaining on the North Lot. And ultimately, with the help of the Administration, our discussions led to the current siting, which has us on the Jetro location. We believe this is an enhanced location for the benefit not only of the neighbors, but also for the benefit, frankly, of our fans and the fans to those other excellent facilities either currently operating in the sports complex or the new 112 STADIUM HEARINGS football facility that Joe referenced. The reason for that is that this layout will show you that we now have distribution of parking, which will enable each of the facilities to have parking in close proximity with their own venue. In addition to that, we have more evenly distributed the parking to be somewhat similar on the north and south sides of Pattison Avenue. And what we think will be an enhanced element of this new layout is what we have referred to as four east-to-west highway, or road access points. Currently it is just Packer to the north and Pattison between the facilities. Our hope is to develop a similar opportunity through our facility on Hartranft Street, and then enhance the opportunity south of the complex on Terminal Avenue.
The other thing to note in looking at this site plan is that, although there is a great deal of parking, and that's been one of the key elements, to enhance the total amount of parking we are doing it in a way that we think are developing a 113 STADIUM HEARINGS lot of smaller lots. We believe that will create for our fans much greater ease of entry and exit and for the neighborhood itself much less traffic congestion in the area. This is a ballpark, not a stadium. What does that mean? Well, first of all, it means several things as far as the size of the facility is concerned. One of the questions that's been asked is, if we remain in the sports complex, what would be our distance from the existing neighborhoods that we just saw on the site plan? The top of this slide demonstrates in blue a home to the left and the distance to Veteran's Stadium, which is currently 310 feet. And it also gives you an idea of the size of the facility. We were moving in our proposal that we talked about a year ago to the 10th Street side of the lot, commonly referred to as the North Lot site, which would have increased our distance one and a half times. We would have gone from 310 feet 114 STADIUM HEARINGS to 490 feet. And the facility itself would have been roughly two-thirds the height of Veteran's Stadium today. You can see on the bottom of this slide what the Jetro site does to these dimensions. Veteran's Stadium in blue, obviously still 310 feet away. The new ballpark, 1250 feet away. The opportunity to build it in a way that it is at street level as you walk in, and actual field level would be feet below grade, 12 dramatically reduces the height of the facility. 13 So we are four times further away. 14 And, as the next slide shows, the actual height of 15 the facility above street has gone from 145, to 75 16 feet. 17 The distance from the neighbors we 18 just talked about, 310 to 1250 feet. 19 The acreage of the footprint, because 20 of no longer the need of the ramps -- I think 21 Councilman Kenney was talking about this in his 22 questioning yesterday -- the fact that the ramps are 23 not needed to have fans access the facility reduces 24 the acreage. 25 Obviously the other thing that 115 STADIUM HEARINGS reduces the acreage is the size of the facility going from 65,000 today to 45,000. And the good news is, parking for the complex has gone the other direction. We are seeing an increase in the number of parking spots from 15,000 to approximately 22,000 spots. Next we would like to quickly take you through a summary of the proposed arrangement with the Phillies. Sources of funds for the new ballpark have been discussed. We have the opportunity to take advantage of the money that we all went to talk to the state about now several years ago, and that is the state's participation of 85 million into the construction of the ballpark. The Administration has testified to their $89 million commitment. And the Phillies' commitment is the remainder, which is approximately half of the current cost of the project, $172 million. The reason I say, "the current cost of the project," is that if this grows, and instead of the total ballpark costs being 346 million, it would grow to, say, 366 million, that additional $20 116 STADIUM HEARINGS million comes one place, and that's the risk that our franchise is taking to take the cost overruns not only for the ballpark, but also we have been asked to take the cost overruns associated with all the site work associated with all the work done north of Pattison Avenue. An element of discussion, and it came up yesterday in the Professor Rosentraub's analysis, was the operation and maintenance associated with the facility. We have, unlike the current situation, 100 percent of the responsibility going forward falls to the Phillies. There is no 15 exposure, no cost to the city at all for operating maintenance of our facility.
Yesterday you heard a reference to the fact that -- and I don't know whether it was an estimate on the professor's part or what -- that he saw that value to be $89 million. Well, I beg to differ. Our expected expenditure in Year One is $13,870,000 for operating and maintenance. Present value of that, assuming 4 percent inflation and discounted back at 6 percent, produces this 117 STADIUM HEARINGS number of 243 million. And there have been some references today of what's that over 30 years. And I think that is 772 million. So I think that is substantially different from some of the information that you received yesterday. And, again, we do not receive any reimbursement. Here is the slide that talks about the total contribution. Joe just talked about a similar slide on behalf of the Eagles. And you will see, interestingly enough, the numbers, although they are constructed differently, come to a very similar amount, a total of $1,400,000,000, actually in excess of that, that the Phillies will be making in the way of contributions either in construction in the debt service associated with it, our various payments that we agreed to, an estimate of the capital repairs. Remember, right now City Council is asked on a year-by-year basis to consider the amount of dollars that would be necessary to repair capital repairs for Veteran's Stadium. 118 STADIUM HEARINGS Going forward, 100 percent of that responsibility has been passed to the ball club. And here is this number for operating and maintenance that I referenced just a little bit earlier. So on the whole issue that Council has concerned themselves with, and Councilman Ortiz has mentioned from time to time, which is the risk associated with it, let me show you a slide that summarizes what we believe is the risk associated today. And I apologize that our numbers are in red. Without the glare from the left here, excuse me, we would be able to see those better. But the costs of the ballpark when Veteran's Stadium was built, it was 100 percent city responsibility. Our new ballpark, 50 percent of it is the Phillies' responsibility. As far as cost overruns, going back, it was 100 percent city responsibility; going forward, 100 percent Phillies' responsibility. Cost overruns for site work, 100 percent city responsibility in the past; 100 percent Phillies' responsibility going forward. 119 STADIUM HEARINGS The facility operating and maintenance. Currently our ball club does pay the expense associated with a game-day staff. But as far as the full-time staff operating and maintaining Veteran's Stadium, that has been the city's responsibility. That will move to the team. All the capital improvements associated with the facility and the capital upkeep also shift from the city, to the team. So I think there has been a very significant shift. It was the goal of the Administration in their discussions with both the teams that the risk associated with running these facilities and, frankly, an expression that the city wanted to get out of the stadium business. And, therefore, it was imperative that we understand that a good bit of the risk was going to be shifted to us. I would like now to quickly take you through a comparison with other deals in Major League Baseball. This slide shows the amount of contribution into construction. You see the Phillies there in red, compared to the other numbers 120 STADIUM HEARINGS of stadiums that have at this point been completed. That number indicates the 172 million today that we have committed. It doesn't have any indication of what the exposure may be for cost overruns. But let us just add two things that are unique in the Philadelphia deal, which is the commitment that the teams have made to the children's fund and Special Services District. We add those two elements, and you will see that we will slide past the current situation, into the number two slot. And I agree entirely.
We heard yesterday testimony from the consultant that you brought in that says, there is a situation where the San Francisco Giants did put in more up-front dollars. That is correct. They are the one club to the left. However, for some reason the professor chose to ignore comparison with any of the other existing contributions made by the public sector or any of the ones proposed. So that there are 16 other situations where I think we compare favorably; in fact, exceed. 121 STADIUM HEARINGS The other thing -- I just want to pause for a moment here. Because a key element of the analysis that was done yesterday on behalf of Council centered on the expenses associated with our franchise. There was an estimate that was made that our nonplayer expenses were $32 million. I think on questioning the professor indicated he had no real knowledge of that, but he was taking it from third-party information, yet it was a key component in his computation of the return on investment concept that he was talking about. I would tell you that our actual nonplayer expenses are -- he only missed by a third. Our actual expenses are 48 million, versus 32 million. He did not include, although he testified, I was confused by this, but I think he testified to the contrary, he did not include the fact that those expenses are going to increase with our obligation to take all the capital -- I mean, all the maintenance responsibility of the facility going forward. Our current estimate of that is 122 STADIUM HEARINGS approximately an additional $12 million. And for somebody that was as knowledgeable as he was on sports, he did not at all talk about the revenue-sharing expense that our ball club will have in a new facility, as opposed to the situation that we have today, which would add another million. 9 So that if you would take that 10 expense number of 32 million that he indicated, and add approximately, say, 38 million of actual expenses that we're going to have, I think he would have come to a far different conclusion than the one that he presented yesterday. As far as the economic impact of the ballpark on the City of Philadelphia, there was a great deal of testimony by Bill Hankowsky on this subject, and the concept of the Arthur Anderson report, and the element of risk associated with attendance. We thought, as a result of that, everybody should know what our pro forma indicated on first year attendance. 3 million in attendance. 123 STADIUM HEARINGS We have been lucky, the Philadelphia Phillies have enjoyed great fan support from the fans of this area over a number of years. In fact, when our ballpark, Veteran's Stadium was new, through the late '70s and early '80s, we were, for a number of years, north of million in attendance. In 1993, clearly we were over million. We think that the experience identified in new ballparks justifies the number that we put in our pro forma. 9 million in attendance. million. million. 9, what would be the value just in three major categories? Again, it is Joe's point of how dollars are spent. These are tax dollars generated by those fans attending. The amusement tax additional dollars would be roughly $475,000, Council President. 475,000 a year. The taxes associated with concessions would be 125,000, approximately. And with parking, approximately 200,000 a year. So the opportunity in direct city revenue associated with 400,000 more in attendance would be another $800,000 on an annual basis. There are several slides at the end of our booklet talking about the sources of economic benefit. We have talked a great deal about tax revenue associated with ballpark operations. Clearly there are significant tax dollars associated with the construction of these new facilities. But we think at the same time there is a significant amount of out-of-park spending that is done in the City of Philadelphia.
125 STADIUM HEARINGS Anecdotally, we had a period of time there with, because of our labor issues in baseball, that we did not operate part of the summer of 1994. We had a number of restaurants in both South Philadelphia and Center City come to us and talk about the impact on their business. We think also in the area of new jobs, there are not only the construction jobs that we are looking forward to providing with our new facilities; we believe there is an expansion of the number of jobs in our ballpark operation. And, again, to the extent that there is out-of-park spending associated with the attendance of our games, we think that as well will generate additional jobs. And I would like to close as somebody that has also spent my entire life in this area and grown up in the city. Our franchise has been disappointed, A, in performance -- I think, Mr. Gillespie, I don't know where he is at the moment, referenced that earlier -- but we have also been disappointed in the way that the facility that our fans come to see us play is characterized both within the city and 126 STADIUM HEARINGS around the country. And so we are excited about, for our franchise's benefit, for our fans' benefit, for the city's benefit, to replace what is now a black eye on this city, a stadium that is certainly not state-of-the-art, with a brand-new football stadium that we think is going to be spectacular and with a state-of-the-art ballpark that we believe will be something that will make our fans in this city very proud of. So in closing, we think that what we are going to create is a Philadelphia Sports Complex that with four major sports teams, all playing within the City of Philadelphia, all playing within a quarter of a mile of each other, all playing in outstanding new state-of-the-art facilities, that that complex will become one of the premiere sports destinations in the entire country, if not the premiere. Thank very much for the opportunity to share our comments with you, Madam President.
Thank you. Mr. Banner, please explain what charter seats are, how much you will charge, and why 127 STADIUM HEARINGS are the proceeds from the sale going to PAID?
The charter seat is a similar arrangement with what is more publicly thought of as permanent seat licenses, or PSLs. It is a fee you pay, for which you get the asset of, in essence, you own the seat, or the right to purchase that seat. And it is something you literally own. You can buy it, you can sell, it it can become worth more, it can stabilize in value.
You would purchase the charter arrangement, or the seat license.
Well, we haven't priced them yet. What we have done so far is agree to minimize the quantity of seats, both as a request from the city and our own desire to make sure that people who have been long-term season-ticket holders of the Eagles will still be able to afford to come to our games. 128 STADIUM HEARINGS So we have agreed to a limit of 29,000 seats that could possibly be in the program, which is about 40 percent of capacity. Most of the stadiums being built have been in the 80 or 90 percent of the seats have been sold on these licenses. So if you are a season-ticket holder, and you want to continue to be a season-ticket holder, but you cannot afford a charter seat agreement, there will be about 40,000 seats in the stadium that will be available to you without having to purchase one. And, obviously, the seats we will be selling, the arrangement side, if we do it, will be the best seats. But the remainder of the seating capacity will be, in the new stadium, will be similar to the quality of the seats in the lower bowl that will have these arrangements because of the proximity to the field and the smallness of the stadium compared to Veteran's Stadium.
Well, it has ranged. 129 STADIUM HEARINGS Probably the most conservative program was actually run in Pittsburgh, where they sole them purely to their season-ticket holders through the mail. And I think they raised about $40 million in the 80 percent of the seats. The more extreme programs have been in places like Baltimore and St. Louis and Carolina, where they have raised anywhere from 80 to 150 million dollars, and sold them on almost the entire building. And, again, the seats, it is, in cities that have existing teams, have been primarily sold to existing season-ticket holders. The price ranges, by the way, in Pittsburgh I think the low price was like $600 and the high price was $2700. I think in Carolina the range was like from $1200.
That's for the 30 years of the lease. You pay that one time, then you pay the price of the ticket each year. But the license agreement you pay one time, and then you own it for the entire length of 130 STADIUM HEARINGS the stadium lease, so in this case for 30 years. And if ten years down the road you decide that you no longer want to own that license, you own the right to sell that license. And there are some instances where those licenses have appreciated and, in fact, people have sold them for more than they paid for them.
I guess my next question goes to both teams. What will your affordable seating policy be? And how many seats will fall within this category? And what will be their locations?
I am happy to go first, Council President. Unfortunately, we have had our ballpark moved so many times that we are not quite as far along in designing it as the Eagles are. And so I cannot answer that with specifics because we have not had the opportunity to lay out the facility. So my answer must be that we are committed, as we have said to you previously, to keeping our pricing in a way that our family audiences are still able to attend. 131 STADIUM HEARINGS You know, our pricing, because of the fact that we have 80 games and whatnot, is below that of the other three professional sports. And we believe that it is extremely important that we continue to remain significantly below them. And we really look at the opportunity to create a new facility like this as the opportunity to develop some additional upscale seating. Right now in Veteran's Stadium, we do have superboxes. They have been referenced before. Unfortunately, the best location for such superbox is past the bag at third, and runs all the way around the outfield to the right field corner. The other premium seating --
Mr. Montgomery, I am sorry. I think you deserve a little more respect, and so do we. Because we are having difficulty hearing you.
I am sorry. Gentleman, if you are having a conversation, please do so in the corridor. We are 132 STADIUM HEARINGS trying to conduct business. Thank you. Mr. Montgomery, proceed.
Thank you, Council President. The other premium seating in Veteran's Stadium are the sky boxes, which, as you know, are all the way at the top of the facility. And I think I demonstrated a little earlier just how high that is in Veteran's Stadium. So what we hope to be able to do is to have it approximately 5,000 premium seats that are well located. The pricing of that will be higher than our current pricing structure for sure. But what that will enable us to do is to continue to have what we believe are extremely affordable ticket prices, probably in a range, in our pro form as have been, south of $15 a ticket, somewhere between 10 and 15 dollars, probably in excess of 10 to 15 percent of the facility. As far as the location is concerned, again, they probably will not be the closest seats to the action, as they are today. Yet at the same time I will tell you 133 STADIUM HEARINGS they will probably be dramatically closer because of the size of the facility than the 600 and 700 level at Veteran's Stadium would be for those same fans.
Thank you. And, Mr. Banner, since you didn't have to change your plans and locations as much as the Phillies did, I am sure you can provide us with some information.
That was convenient. We really are further along in design, but we are not really to the point where we can give you a direct answer to that. I can tell you what we are doing, because of the point we are at. We are trying to accumulate. It is not an uncommon question for some of the new stadiums to have these plans as part of the deal. So we have been soliciting from other teams that have been required to do this what exactly they did to try to get a sense of what ideas are out there, as well as to add our own. Obviously there is a state requirement in this area, as well. So Pittsburgh is 134 STADIUM HEARINGS one of the places we reached out to find out exactly what they did. So as soon we kind of accumulate that information, I think we can be more specific.
Thank you. And this question goes to both teams. What types of other activities are you planning to have in your new stadiums and their frequency?
Well, Joe has shown a slide I think that specifically indicates the actual other activities. Our view is a little bit different, Council President. Our view is that this is going to be a baseball-based facility, so that we will be primarily playing baseball games. We clearly have made an obligation to both segments of the public sector to allow both the state and the city to have ten use days. And, frankly, I'm not sure what the restrictions are on the public sector's use of our facility. Beyond that, you know, we have talked about, from a scheduling standpoint, there may be 135 STADIUM HEARINGS events that currently utilize Veteran's Stadium that ideally would think about a football-based facility as their home; such as, the Jehovah's witnesses and the Promise Keepers. Yet if Joe is successful in the Major League Soccer, and they would be coming in on a weekend where he had home games, those people may be utilizing our facility. So for us, our goal is -- we are finally going to play on grass and dirt. Our goal is to have it be a pretty pristine environment, as far as our players are concerned. We do, however, anticipate, there are a lot of baseball games played today at Veteran's Stadium. And we hope to be able, primarily of amateur level, where we have been the host of the Carpenter Cup for the benefit of high school games, we have been the host of the Liberty Bell Classic for the benefit of the eight area college teams. We still expect to be able, on grass and dirt, to be able to invite amateur teams such as that to continue to play. And hope to be able to be a facility that the Department of Recreation can utilize, but 136 STADIUM HEARINGS perhaps not quite so frequently. Because the artificial surface allows you to do more of that than actual grass and dirt would.
I think, as the slide indicated -- and I know you asked this question yesterday, so I checked -- we are hoping to be in the area of 40 to 50 events a year. of those 11 already exist in the building. 12 So if you took the 25 that exist -- 13
25 events that exist in 15 Veteran's Stadium at this time. 16 We would be just moving over and 17 continuing to provide a facility that could house 18 those things, like the Army/Navy game, Temple 19 football, so on and so forth. 20 In addition to that, the major 21 addition, hopefully, would be a Major League Soccer 22 team, which is 17 additional events. 23 So just between existing activity and 24 Major League Soccer, we would be at 42 events. And 25 I think that we are maybe looking for some modest 137 STADIUM HEARINGS increase above that or some periodic championship-type events. But that's essentially what we would be looking to do.
Can you explain to me, because I have never heard of it, a Rib Fest. Where would that be located? Are you going to be having this outside of the stadium proper? Are you going to be having table and chairs out there? Are you going to be selling beer? Can you tell us what that is and how many people do you anticipate would be partaking of the Rib Fest?
Madam Chair, just so we get the full flavor of what that's all about, will there be chicken involved in that, as well?
I assumed that is directed to Mr. Banner. Because I am as interested as you are, Council President, in understanding what this Rib Fest is.
There have been a couple of -- one of my employees is in a lot of trouble for this, and he happens to be in the audience. There are a couple of areas. I think the first one was the indoor arena in Minnesota that created, literally, a Rib Fest. And it is a variety of people come in. It is almost kind of a competition. They can be done anywhere. They can be done within our building. In our instance we are creating kind of a plaza that surrounds our building. And I would think that would be the primary location, if we did this. As I said, that list is meant to be kind of a list of items from which some may happen and some may not. But that we would take advantage of the space within and immediately surrounding our building, if we were to do this. 139 STADIUM HEARINGS And it is kind of a weekend type of thing, and it is open to the public. And people come down and they --
So, in other words, if Councilman Nutter wants to come down there, he can take his own barbecue and set it up there? Or how does that work?
No. This is really people who are in the field of -- they either, I don't know, maybe Councilman Nutter does. People that compete as experts. Or there are businesses that are out there across the country that pride themselves in being great rib makers and barbecuers of ribs. And they create an event that's open to the public to come down. It would probably be a large version of -- Philadelphia has a number of kind of community almost local carnivals, where there is eating and maybe there is a little bit of music, and it is people just coming out on a sun afternoon, maybe with their families, and partaking in food in a celebration. It is a version of that around ribs.
Okay. I guess we will be invited to that one? 140 STADIUM HEARINGS
I read in one of the papers that the Eagles are supposed to have the biggest barbecue pit in the world. Where is that going to be, and what are you doing?
It is also in the baseball stadium. No. We thought -- and you can correct us -- there's been a strong desire to try to minimize tailgating in the area and to also try to minimize the consumption of substances that maybe once they get to our games and after our games is not healthy for us or the community. So we had an idea that in the plaza surrounding the stadium, again, similar to what we do in Veteran's Stadium on a very small scale, to try to create an event that would be kind of an outdoor barbecue pit, selling hot dogs and hamburgers.
Yes. I think on a bigger scale. But they do do this actually between 141 STADIUM HEARINGS the two stadiums in Baltimore, at least I know on a football day. But this would be a bigger-scaled version of that. We would literally attract people in, discourage them from participating in the manner they have been in the parking lots. Although we hope there is some level of that that would still be allowed. But hopefully we can kind of get it into a more controlled environment and in a manner that both for our games and the conditions people are in after the games will serve that goal then.
The question then becomes, what time would you have this operation start and what time would you have it end?
Well, I mean, I think the vision we have that there is a few hours before our game currently even that people tend to arrive and start to either barbecue for themselves or have beer or whatever it is that they are doing.
It is my understanding that some of the fans are out there at 8 o'clock in the morning.
I think that's true. 142 STADIUM HEARINGS I arrive relatively early. And I think it is a relatively small group. But there is no question that there are people beginning to arrive that early. So we are hopefully creating an environment in which we minimize that; it is more controlled; it is right by the stadium, which is now a much further distance from the communities even than we are now; and we have an ability to kind of control the crowd and the activities and the kinds of things that they are doing.