No sure pro shot

But proposed site could turn profit without team

New arena for Baltimore

July 25, 2008|By Childs Walker | Childs Walker,Sun Reporter

A new arena is a poor risk for Baltimore if the city is counting on attracting an NHL or NBA franchise, sports business experts say, but some agree with city leaders that a proposed 18,500-seat venue could be profitable without such an anchor tenant.

Neither the NBA nor the NHL offers many relocation or expansion prospects, analysts said, and the presence of basketball and hockey teams in Washington make the odds even longer for Baltimore.

"The market, which, whether we like it or not, is actually the Baltimore-Washington market, is pretty saturated as it is with sports," said John Moag, former chairman of the Maryland Stadium Authority and head of a Baltimore-based investment firm that specializes in sports. "And there's certainly not going to be any expansion in the NBA."

Franchise mobility might be greater in the NHL, he added, but the Washington Capitals struggle to sell tickets now, so there's no reason to believe the market could support two hockey teams.

Given such reservations, the announcement yesterday that Baltimore would seek developers for a pro-sized arena was a surprise (city and state officials say the arena will benefit Baltimore with or without a major team). Such a facility would cost at least $300 million, as much as 50 percent more than a 15,000-seat arena, Moag said. And it's unlikely such a price tag could be covered without public financing.

Some analysts think it's a good idea regardless.

"It's a resume-builder for Baltimore," said Don Hinchey, vice president of communications for the Bonham Group, a Denver-based sports marketing firm. "Without an arena, you're left out of the franchise discussion. A state-of-the-art facility is the price of entry."

Though the relocation market seems tepid at the moment, it's always fluid, Hinchey added.

In a conference call this year, NBA commissioner David Stern dismissed the idea of expansion but said relocations are possible.

"There's a very strong recognition - because of the pressures of revenue sharing - that if particular cities ... can't support a team, we should consider moving them to cities that can," Stern said. "I'm not totally on board with that approach, but it's increasingly gaining some steam among a strong group of owners."

Asked about the issue yesterday, league spokesman Tim Frank said: "At the moment, we do not have expansion plans nor do we have any teams looking to relocate."

NHL spokesman Frank Brown said the league has no plans for expansion or relocation, though several cities have expressed interest. He said questions about the Capitals' sharing a market with another team are "way too hypothetical for me to answer."

Larger arenas can break even or turn small profits on revenues from minor league teams, concerts, ice shows and one-time sporting events such as the NCAA basketball tournament, said Kevin Reichard, publisher of the trade publication Arena Digest.

"It can be done very easily," he said. "I think people buy into this myth that you need a major sports tenant. But it's just that - a myth."

Large concert acts such as Bruce Springsteen and Garth Brooks are actually far more profitable than most NBA or NHL games, Reichard said. Events such as the NCAA basketball tournament bring tens of thousands of out-of-towners to city hotels and restaurants. Baltimore could seek NCAA regional games and tournaments for the Atlantic Coast Conference and other, smaller leagues.

But filling out an arena calendar becomes more stressful without a major league team to suck up 40 dates. That steady cash flow and the security it affords are attractive to city officials and arena operators. Cities rarely build NHL- or NBA-sized arenas without some hope of attracting a major league team. It's always the ultimate goal.

The gamble has paid off for several cities in the past 15 years. Nashville, Tenn., completed an arena in 1996 and lured an NHL expansion team two years later. New Orleans finished its facility in 1999, and the Hornets moved there from Charlotte, N.C., three years later. Oklahoma City opened an NBA-sized arena in 2002, auditioned for the league by hosting the Hornets in the two years after Hurricane Katrina and landed the SuperSonics from Seattle this year.

Tulsa, Okla., is opening an 18,041-seat arena this summer and is hoping to draw big events - even some games, if possible, of the former Sonics.

But most experts point to Kansas City, Mo., as the best comparison to Baltimore. The $276 million Sprint Center opened last fall and has attracted major events from Springsteen to Brooks to the NCAA tournament. But flirtations with several pro teams, including the Pittsburgh Penguins and Nashville Predators from the NHL, and the Sonics from the NBA, have led to no payoff.

The city and the arena's operator, Anschutz Entertainment Group, have made it clear that luring a pro team remains a top priority. Moag spoke of Kansas City as a negative example for Baltimore. "They built it and nobody's come," he said.

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