What does it cost to run an arena like Glendale’s Jobing.com? You would have better luck in searching for the Holy Grail than in gathering this kind of information. A majority of sports venues nationally are publicly built and privately run. In a few cases where the venue was financed by a public-private partnership there is usually a mechanism to repay the private entity for its initial investment in the construction of the facility. The private entities that actually operate and maintain these venues consider their information as proprietary.
There are two organizations that might be able to shed more light, the International Facility Management Association (IFMA) and the International Association of Venue Managers (IAVM). I have learned that the IAVM conducted a survey of the operating expenses of sports venues throughout the country. It was due for release in December, 2012. However, one must be a member of this organization to access the survey. Alas and alack, I am not. If there are industry-wide benchmarks for sports venue operating and maintenance costs they are not available.
However, we can look at the following report, Comparison of Operating Costs for Similar Arenas, issued January, 2012. It was prepared by TLHocking & Associates LLC for the City of Glendale. Some will immediately discount the information it contains because it was a commissioned study paid for by the City and therefore it must be biased in favor of making a case for the City. Consultancy firms rely upon their reputation in their field to be considered for work. They make every effort to protect the integrity of their work. The City used TLHocking when considering the construction of the arena but I believe the firm tried to present facts without interpretation in this survey.
I did want to offer some quotes from page 2 of the study, “The information on comparative arena costs provided in this report was gathered from research of public information and relevant websites as well as from information provided voluntarily on a confidential basis by the representatives of specific venues.” And “…this report reflects the operating costs only without any offsets of operating revenues or contributions and/or subsidies from other parties
Arena No. 1 is publicly owned and privately operated. It is unnamed because its information is proprietary. It has a single anchor tenant an NHL hockey team and has about the same seating capacity as Jobing.com arena. Its figures reflect total annual operating costs including non-hockey events (TLHocking, p.3).
Calendar Year Annual Operating Costs
2011 Estimate $16,610,087
2012 Budget $16,538,291
The Sacramento Entertainment and Sports Complex is publicly owned and privately operated. The costs range from a low of $11.8M to a high of $14.9M annually (TLHocking, pp. 4-5)
On pages 5 and 6 of the TLHocking study it describes Conseco Fieldhouse, home to the Indiana Pacers. The TLHocking study obtained a 2010 major study prepared by Hunden Strategic Partners entitled “Impact of the Indiana Pacers.” It demonstrated that the Pacers were important to the venue and stated that the operating costs with the Pacers averaged $17.4M a year and without the Pacers averaged $21.1M a year. But the more relevant part of the Hunden study created a benchmark cost for running an arena based on the cost per seat. The HSP study was based on NBA facilities but it is also relevant for NHL facilities. The TLHocking study on page 6 quotes from the Hunden survey, “HSP studied a number of large, NBA facilities (or those that are NBA-ready) and observed that revenue and expenses vary but generally follow a line with an average $777 per seat with an average deviation of seven percent, suggesting a reasonable operating expense per seat of $722 to $831 per seat. The estimated expenses at Conseco are $819 per seat, six percent above the average of this sample and within the average range of costs.”
The use of a per seat cost seems to be the most accurate measure of arena operating costs. Based upon the figures used in the HSP study using the seating capacity of Jobing.com publicly listed as 17,799 and an average cost per seat of $777 the cost of operating Jobing.com would be $13,829,823. It then seems reasonable to peg any lease management agreement for Jobing.com arena at $14M annually with some kind of CIP escalator included.
I promised to offer information on the MOU for the Seattle Sports and Entertainment Facility. That will have to wait for another day.I have done enough research for today.