“Spurs Arena Delivers No Profit-Sharing to the County”
San Antonio Express-News
October 11, 2015
After winning five NBA titles and producing several Hall of Fame players, the San Antonio Spurs have become one of the most admired teams in professional sports. But the team never discloses its finances or profits from its home court, the AT&T Center, which was financed mostly with tax revenues and is owned by the county.
Business reporter Richard Webner lifted the lid on the Spurs arrangement with the county and for the first time showed the Spurs offered local voters a share of revenue at the arena that has never materialized.
Voters approved funding for the $193 million arena in 1999 after the Spurs agreed to contribute more than $46 million to the cost and to share a portion of the annual profits. But, little known at the time, the contract also set up a Spurs subsidiary to manage the AT&T Center and its finances.
The subsidiary, Community Arena Management, files annual reports with the county. Webner obtained the original contract, CAM’s financial reports, and a county audit of CAM’s performance through open-records requests. While the contract entitles the county to 20 percent of the profits, a provision shows revenue-sharing kicks in only after CAM earns $4.75 million a year.
But Webner found that, while the Spurs are profitable, CAM loses millions of dollars a year, accumulating total losses of $82 million. Why? Because, as the audit noted, “most revenues belong to the Spurs and most expenses belong” to CAM. The bottom line is such a deep hole that the county is unlikely to ever get a piece of Spurs profits.
Webner compared the deal to others in Texas professional sports and found it unique. Major sports teams in Dallas and Houston all pay their host cities millions in fees every year.
So why cut such an uneven deal? At the time of the vote, the Spurs were playing in the Alamodome, a football stadium, and were threatening to leave the city if the team couldn’t get a new arena. One county official put it this way: “Give them a chance to make a profit, and keep them in town, that was our assignment.”
Today, after a $230 million public investment in the arena and recent upgrades, the public still hasn’t seen a penny from the revenue-sharing agreement.
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Submitted by Jamie Stockwell.