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March 26, 2012
Old Orlando arena dies at age 23 of being insufficiently subsidized
The Orlando Magic's old Amway Arena was demolished yesterday, if "old" is the right word for it: The arena was just 23 years old, and had been targeted for replacement by its NBA tenants pretty much since it opened.
The Magic's owner (Amway kingpin Rich DeVos) complained from the start that the building was economically obsolete, because it lacked the kind of luxury and club seats that other, newer arenas built in the 1990s had. To put that in context, consider these quotes from the old arena's Wikipedia page:
Major renovation was beginning to seem unfeasible in 1997 when the task-force determined that the cost of implementing everything that the team wanted would reach up to $75 million. The revenues brought in by the changes likely would not be enough to cover mortgage payments on money that would have to be borrowed to pay for the renovation...
On September 29, 2006, the City of Orlando and Orange County finally came to an agreement on a $1.1-billion improvement package that included $480 million for a new arena. The Magic would provide $114 million in cash and up-front lease payments and guarantee $100 million in bonds toward the arena. The venue plan received final approval on July 26, 2007, and the arena was completed in time for the 2010–11 NBA season.
In other words, the old arena wasn't making enough money for DeVos' tastes, and spending $75 million on renovations would only make profits go down. But an entirely new arena that cost six times that amount was just what the doctor ordered, so long as taxpayers paid most of the tab and the Magic kept all the revenues.
If you want the template for stadium and arena development over the last 20 years, there it is in a nutshell.
The Corporate Welfare Bums are at it again.
Wayne
All sports teams want tax subsidies for their for profit forums just like the left wing politicos want tax payers to subsidize their for profit schemes. And the tax payers are looked on like the dupes that they are.
Posted by Ron Hoel on March 26, 2012 09:46 AM
Have you all been to the old O-Rena? It was bad. Single concourse, looooong bathroom lines, too few concessions and an awful parking/transportation situation. It is THE reason the Magic lost $23 million in 2008-2009 despite making the NBA Finals.
I think the real lesson here is that if the peoPle believe that the stadium stinks and the owner convinces everyone that he is committed to trying to win, then taxpayers will bestow untold fortunes on you. Clearly that is Stu Steinberg's gambit with the Rays in Tampa, and I'd bet dollars to donuts (a cliche that no longer works, admittedly) that it will eventually work out for him.
Posted by Ben Miller on March 26, 2012 12:32 PM
Ben Miller, really? Paying an entire team $60 million plus had nothing to do with it, the coach and GM millions too? People will come to see professional basketball at a barn. They don't care what the arena looks like. I think people care more about where it is than anything else. The owners are fooling you.
Posted by Roger C. on March 26, 2012 10:23 PM
As an Orlando native, I was against the way the new arena was funded, but I agree the old arena in its current state was terrible. It was probably the worst in sports, major, minor, or college. It wasn't like the Rays who have suites, restaurants, and the such, but have an ugly venue in the middle of a slum. We're not talking just for luxurious properties to make owners millions. It sucked to be a fan there at times.
One concourse for 17,000 people. Four men's rooms. You'd wait 20-30 minutes to get food, all while swimming through a 20 foot concourse that pinched In the corners and trying to stay in touch with what was going on via a collectin of 13 inch TVs. All of that could have been fixed via renovations.
The location sucked. Nothing around it but a school board HQ, a Salvation Army, and a handful of crack houses. That would probably never change.
The building was designed in the mid 80s. The original layout was for 15,000 seats. They lowered the seat size from 22-23 inches to 19-20 to cram in 17,000 in the mid 90s.
Designs were tempered because there was no guarantee the NBA was coming whether it was built or not. The NBA (much like they did in Miami) told the city/planners to scale back arenas in case the NBA decided to relocate. (If you'll recall, Miami's arena lasted 10 years)
They could have renovated (Which was severely needed), howeer, It would have been a short term solution as I'm sure the Magic would have asked for a new arena within 10 years, much like Seattle and now Oakland are dealing with. At least they were honest.
Should the city/county have dropped their pants the way they did? No. Rich DeVos wasn't ready to leave town if it could be worked out, and it would have been. In the end I wouldn't have blamed them for jetting. That arena lacked everything new arenas had. At least a place like Sacramento has suites, wide concourses, and more than four bathrooms. (I'm not lying. 4 bathrooms.
I'll miss the old arena, but merely for the emotional ties. It's one of the few venues in America that was actually a "community venue" that hosted HS graduations, catholic masses, and other various junk sales of the sort.
The new venue won't ever do the same. It's so over the top it's the complete opposite of the old arena. So gaudy and full of superfolous items that most will never use, all designed to make money. (And I'll admit, I've sat in te suites at the new arena for games. I've had a beer in the gaudy lounges. I've gone early to eat in the restaurants.
I went and watched her go down Sunday. Oh well. I guess it's better that we spend the money on a venue that gets used half the year than a football stadium that gets used 10 days or a baseball stadium for 81. Good luck Minnesota.
Posted by Matt on March 27, 2012 07:35 PM
As an Orlando native, I was against the way the new arena was funded, but I agree the old arena in its current state was terrible. It was probably the worst in sports, major, minor, or college. It wasn't like the Rays who have suites, restaurants, and the such, but have an ugly venue in the middle of a slum. We're not talking just for luxurious properties to make owners millions. It sucked to be a fan there at times.
One concourse for 17,000 people. Four men's rooms. You'd wait 20-30 minutes to get food, all while swimming through a 20 foot concourse that pinched In the corners and trying to stay in touch with what was going on via a collectin of 13 inch TVs. All of that could have been fixed via renovations.
The location sucked. Nothing around it but a school board HQ, a Salvation Army, and a handful of crack houses. That would probably never change.
The building was designed in the mid 80s. The original layout was for 15,000 seats. They lowered the seat size from 22-23 inches to 19-20 to cram in 17,000 in the mid 90s.
Designs were tempered because there was no guarantee the NBA was coming whether it was built or not. The NBA (much like they did in Miami) told the city/planners to scale back arenas in case the NBA decided to relocate. (If you'll recall, Miami's arena lasted 10 years)
They could have renovated (Which was severely needed), howeer, It would have been a short term solution as I'm sure the Magic would have asked for a new arena within 10 years, much like Seattle and now Oakland are dealing with. At least they were honest.
Should the city/county have dropped their pants the way they did? No. Rich DeVos wasn't ready to leave town if it could be worked out, and it would have been. In the end I wouldn't have blamed them for jetting. That arena lacked everything new arenas had. At least a place like Sacramento has suites, wide concourses, and more than four bathrooms. (I'm not lying. 4 bathrooms.
I'll miss the old arena, but merely for the emotional ties. It's one of the few venues in America that was actually a "community venue" that hosted HS graduations, catholic masses, and other various junk sales of the sort.
The new venue won't ever do the same. It's so over the top it's the complete opposite of the old arena. So gaudy and full of superfolous items that most will never use, all designed to make money. (And I'll admit, I've sat in te suites at the new arena for games. I've had a beer in the gaudy lounges. I've gone early to eat in the restaurants.
I went and watched her go down Sunday. Oh well. I guess it's better that we spend the money on a venue that gets used half the year than a football stadium that gets used 10 days or a baseball stadium for 81. Good luck Minnesota.
Posted by Matt on March 27, 2012 07:35 PM
Hey Roger,
I suppose that the jump from $108M to $140M in team revenue when the new arena opened was because the weather was nicer, huh?
The reality is that Orlando is not the type of market that has the leverage to keep an NBA team without subsidizing a building. (And, sadly, my beloved Milwaukee may not be, either.) Now, an argument can be made that the local government let the Magic get too wild (5 concourses?!?!) or asked for too small a contribution, but the notion that fans will deliver the same (or even similar) gate receipts at an outdated area is ludicrous.
Posted by Ben Miller on March 27, 2012 09:09 PM
I don't think it's completely ludicrous...so long as the team is winning. Fans know what's out there. Even college stadiums are having to adapt to luxuries. I'm the type guy who just needs a seat. (I've never paid for luxurious upgrades at the new Amway, my season tickets which are lower priced than they were at the old arena sit top level mid court.) But not everyone is me.
Orlando fans are solid, but I don't completely buy into the idea that fans would pay for a full price NBA ticket to sit in a 19 inch seat, wait 20 minutes to use one of 4 restrooms, and dive through a crowded concourse for food and drink should team digress. Not with HD TV. Not with the venues that make up the league. Or the ones that surround the area. Including UCF's new arena. It's modern sports.
Still, I agree, it's a scheme and sham that we'll be paying off forever while Rich DeVos rakes in millions. Is the price worth it? Probably not. I'll voice my opinion, and move on to rooting for the Magic as I have everyday since 1989. I'm not going to let this racket ruin my enjoyment of the game.
Posted by Matt on March 27, 2012 11:08 PM
Hey, everybody likes a new arena. (Well, not necessarily me, but then I'm also a "sit in the back row for cheap" guy.) But let's not lose sight of the numbers here: The Magic (according to Ben's figures above, which look to be from Forbes) got an extra $32 million a year in revenue out of the new place. (Though this was the first year of the arena, so a good bit of this could be honeymoon effect.) Meanwhile, construction costs were nearly $500 million, which comes out to ... pretty darn close to $32 million a year to pay off.
I guess the happy way of looking at this is that the city of Orlando is subsidizing DeVos' profits by $32 million a year in order to avoid any threat of the team leaving town, and Magic fans get cushier seats and more bathrooms as a side benefit. Um, yay?
Posted by Neil deMause on March 27, 2012 11:26 PM
Neil,
Yes, the figures I posted were from Forbes.
Also from Forbes is that the team continues to lose money (ostensibly because the owner is trying to win a championship in the window he has with a superstar player). I tend to support government subsidies for owners who are willing to put some skin in the game to give locals a winner. What bugs me is owners like Mark Attanasio of my beloved Brewers, who has a paid-for ballpark and still chooses to protect his $12-20 million in yearly operating income instead of retaining a team that is pretty close to a championship.
Posted by Ben Miller on March 28, 2012 12:14 PM
Ben Miller, as we've seen with the Florida Marlins, those numbers that we see are often cooked.
Posted by Roger C. on March 29, 2012 12:19 PM
Does anyone know what is planned for that sight in the future?
Posted by Andy on June 30, 2012 08:54 AM