San Jose Sharks extend lease until 2025 in exchange for 100M

[mikecubs]

Sharks and City of San Jose Agree to Long-term Lease Extension at SAP Center

San José Mayor Sam Liccardo (@sliccardo) and the San Jose Sharks (@sanjosesharks) announced that an agreement has been reached between the Sharks and the City of San José (@sanjoseinfo) for a lease extension to allow the Sharks to remain at SAP Center at San Jose (@sapcenter) potentially through 2040.

The terms of the agreement will be discussed by the Mayor and City Council in a public hearing on Tues., May 19 in the San José City Council Chambers.

The Sharks have called SAP Center home since the building’s inception in 1993. The current lease agreement between the City and the Sharks, amended in 2001, runs through June 30, 2018. The newly-negotiated extension states that Sharks Sports & Entertainment will continue to manage and operate the City-owned SAP Center and that the Sharks will play their home games at the facility on a fixed-term through 2025 – ten calendar years from today’s date. Beginning in 2026, the lease will renew on an annual basis through the year 2040.

“I am very pleased that we have been able to reach an agreement with the City of San José to keep the Sharks where they belong – in downtown San José,” said Sharks Sports & Entertainment Majority Owner Hasso Plattner. “I love this arena and this is the only place we want to call home. I want to thank Mayor Liccardo and the City Council for their support throughout these discussions. Our fans are what truly make SAP Center a special place – the best home-ice advantage in hockey – and we’re excited that the Sharks will remain here long term.”

“Since its opening two decades ago as the home of the San Jose Sharks, the SAP Center has consistently ranked amongst the busiest indoor sports and entertainment facilities in the country,” said San Jose Mayor Sam Liccardo. “The Sharks are a major tenant to our downtown, generating millions in economic development for our City, and their success is paramount as we plan for the future. We thank Sharks Sports & Entertainment for their commitment to San José and for the significant investments and contributions that it makes in the community.”

“We are excited to extend the wonderful partnership the City of San José and the Sharks have had for more than 20 years,” said Chief Operating Officer John Tortora. “SAP Center has generated tens of millions of dollars for the City and hosted unparalleled events for San José residents, bringing millions of visitors to the downtown area and filling local hotels and restaurants. This deal ensures that Sharks Sports & Entertainment can continue to operate a world-class facility for the citizens of San José and the region.”

"The agreement between the City of San Jose and the San Jose Sharks to extend the team's lease is wonderful news for the National Hockey League, for the Sharks – and, most importantly – for the great fans in San Jose, who make 'The Shark Tank' one of our loudest and most exciting arenas," NHL Commissioner Gary Bettman said. "The lease extension underscores Hasso Plattner's commitment to the San Jose community, provides the long-term continuity that he always has prioritized, and ensures that one of our proudest and most-successful franchises will stay at SAP Center for many years to come."

SAP Center is annually ranked by Pollstar Magazine as a top-five arena in the United States and a top-ten arena in the world in terms of non-sports tickets sold each year, and hosts an average more than 150 events per year. That number is slated to increase this year with the addition of the American Hockey League’s San Jose Barracuda, who are relocating to San José beginning this October.

Since SAP Center’s opening on Sept, 8, 1993, nearly 35 million people have stepped through the arena’s doors, attending a wide variety of world-class sports entertainment, including: San Jose Sharks hockey, NCAA men’s and women’s tournaments, U.S. Figure Skating Championships, US Olympic Trials - Gymnastics, ATP Tennis, WWE wrestling events, and the AFL ArenaBowl.

Outside the sporting world, many of the world’s most beloved personalities have appeared in San José and graced the SAP Center stage, including Paul McCartney, the Rolling Stones, Barbra Streisand, Bruce Springsteen, The Three Tenors (Carreras, Domingo, Pavarotti), Madonna, The Who, George Strait, Rev. Billy Graham, Garth Brooks, the Eagles, Eric Clapton, U2, Simon & Garfunkel, Prince, Fleetwood Mac, Jay-Z, Vicente Fernandez, Elton John, Billy Joel, Oprah Winfrey, Taylor Swift, Disney On Ice & the Ringling Brothers Circus – to name only a few.

sharks.nhl.com/club/news.htm?id=766979&navid=TW

[mikecubs]

San Jose could be about to approve $100m+ in lease breaks for Sharks in exchange for diddly-squat
Posted on May 18, 2015 by Neil deMause
The San Jose city council is set to vote tomorrow on a lease extension for the Sharks on their current arena while talking about whether to build a new one. You can read the proposal here; it’s a bit convoluted and I haven’t made sense of it all yet, but Marc Morris of Better Sense San Jose has sent along his analysis, which is this:

1. The Sharks get immediate relief from previously obligated rent payments (total reduction is $7.25M = $2M for the Arena and $5.25M for the Ice Center, where the Sharks and their new AHL farm team practice).
2. Starting in 2018, the Sharks stop paying any rent at all (that’s $0 per year) for the city owned Arena, down from roughly $5M per year.
3. The City in the short term kicks in $6M and then, starting in 2018, pays $2.6M for ‘capital and modernization needs’ for the Arena. That of course will be financed by the $0 a year rent.
4. The Sharks get to spend a lot of this ‘capital’ money for revenue enhancing improvements; for its efforts, the City gets precisely none of the enhanced revenue.
5. Just to rub it in, the agreement also explicitly prohibits the City from getting any new revenue from its own Arena, like maybe adding a ticket tax.
6. It appears that the City will take on the interest rate risk for the bonds on the Ice Center, making the current ultra-low rates the new baseline for the rent calculation. After all, there’s little to no probability that rates will go up in the next 10 to 20 years.
7. And, although this never gets mentioned, the City will continue to pay over $10M a year in interest on the bonds that paid for construction of the Arena in the first place. In the best case, the net loss to the City from the Arena is over $8M a year.

Like I said, I haven’t done the math on this myself, but if Morris is correct, that could easily be more than $100 million in concessions that the city would be providing to the Sharks — all for a team that doesn’t have an immediate alternative option to play in, and which isn’t even agreeing to a long-term lease deal in exchange. (They’d have to stay put through 2025, but it’s unlikely they could get a new arena built much before then anyway.) That’s the kind of thing you might think you’d want to have a hearing on, or even a financial study, before voting on whether to approve it, but that’s apparently not the way the San Jose city council rolls.

www.fieldofschemes.com/2015/05/18/9086/san-jose-could-be-about-to-approve-100m-in-lease-breaks-for-sharks-in-exchange-for-diddly-squat/#respond