Thursday, June 02, 2011

sequere pecuniam

What to do with the (never again to be called Mellon) Civic Arena? A big question. Don't ask me, I've already thrown my 2 cents out there.  I'm  more interested in the money.

(an aside, but speaking of the Civic Arena, it is an anniversary of sorts of the greatest euphemism of all time and the start of what was described as the "face-lifting" of the Lower Hill District, 55 years ago this week. Doesn't the face need to still be there after a 'face-lift'? )
In this recent story, we note that the Penguins are paying 6 million/year in rent (offset in whole or at least part by the naming rights they retained) for their use of Consol Arena.   Yet, we also know they SEA receives $7.5 million a year from the casino to pay for the arena as part of it’s license agrement.   Then there is the state that is supposedly paying $7.5 million a year for the arena a well.  Then there is the Pennsylvania Gaming Economic Development and Tourism Fund which also allocates $7.5 million a year to fund the arena bonds.   By my simple math that comes to $21 million a year cash in dedicated to the SEA to pay for arena financing.
Those numbers in themselves are not that interesting nor suprising; costs a lot to finance an arena that cost ~$325 million to build. 
Yet the bonds the SEA floated to pay for the arena are currenly only costing them 0.27%.  Note the decimal point is in the correct spot.   Anyone want to do the math there.  30 year bonds, 0.27% interest rate.  Principal payment say $11mil/year, interest costs work out to ~$300K. 
Hmmm...

1 Comments:

Anonymous BrianTH said...

One thing we know is that a capital investment of $5 million for a project involving the Civic Arena site (supposedly that is what Triple Properties is willing to offer) indicates either that the investor is getting the deal of the century, or they are planning to grossly underutilize the site.

There are many ways to demonstrate that, the annual rental value of Consol Arena being just one.

Thursday, June 02, 2011 1:52:00 PM  

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