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PBW Realty Advisors, LLC
Public/Private Financing of Sports Facilities
Presentation to the Council of the District of Columbia
November 15, 2004




Dorothy Brizill
Bonnie Cain
Jim Dougherty
Gary Imhoff
Phil Mendelson
Mark David Richards
Sandra Seegars


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Chief Financial Officer’s comment on this proposal, November 18, 2004

BWA Stadium Finance Team

  • BWRA-Structuring Agent and Transaction Advisor/Coordinator
  • Rubin, Winston, Diercks, Harris & Cook - Transaction Counsel
  • LCOR - Stadium Developer
  • Lehman Brothers - Debt Placement Agent
  • Capstar Partners - Equity Placement Agent
  • Marshall & Stevens - Project Appraiser
  • Shaw Pittman LLP - Tax Counsel
  • PricewaterhouseCoopers - Accountants

BWRA Financing Model

Unique leveraged lease structure that:

  • Joins public entities with private capital markets to enhance benefits for both
  • Produces low-cost, fixed-rate, long-term financings for sports franchises
  • Substantially reduces level of public financing required

Issues Facing Municipalities

  • Limited capital budgets for 100% financing
  • Uncertain political support for public financing
  • Need to capture benefit in exchange for expediture of public money
  • Uncertainty of revenue streams generated by new facilities

BWRA’s Benefits for the District of Columbia

  • City's contribution limited to $125MM for land, environmental cleanup and RFK improvements
  • Ultimate ownership of Stadium by The District
  • Financial burden/risk shared with private owners
  • Minimzed the amount required from gross receipts taxes

BWRA’s Benefits to Team

  • More up-front cash than provided by traditional debt financing
  • Construction of Stadium without encumbering Team's other assets or requiring Team's capital infusion
  • Operating leaseback providing attractive, long-term, fixed-rate rent with renewal options
  • Full control of Stadium during the lease term

Transaction Structure: Construction of a New Baseball Stadium in The District of Columbia

  • D.C. Government entity leases ground to Private Stadium Owner for 65 years
  • Rent accrues for first 25 years

  • Primate Stadium Owner raises debt and equity on credit of Stadium-generated taxes and other credit support
  • LCOR constructs new Stadium to team specifications
  • Insured construction contract with on time/on price delivery

  • Stadium leased to Team at attractive fixed-rate rent with operating lease treatment for Stadium Lease

What Happens When the Accrued Ground Rent Must Be Paid After 25 Years?

  • Ground Lease ends at 25, 50 or 65 years or whenever Private Stadium Owner fails to pay ground rent
  • Ground and Stadium then belong to D.C. Government

Strategy A: Private Stadium Owner Surrenders Stadium

  • Private Stadium Owner forfeits remaining term of Ground Lease and Stadium to D.C. Government
  • D.C. Government may lease Stadium to Team for an additional term(s)
  • D.C. Government owns Stadium free and clear of other interests and can realize future appreciation

Strategy B: Ground Rent Accrual Payoff

  • Private Stadium owner pays D.C. Government the accrued ground rent and interest in cash
  • Private Stadium Owner pays new FMV ground rent currently to D.C. Government
  • Private Stadium owner will offer to re-lease Stadium at FMV to Team
  • D.C. Government receives Stadium at end of Ground Lease (50-65 years)

Team Options on 25th Year

  • Team extends Stadium Lease with Private Stadium Owner or D.C. Government
  • At D.C. Governement's option, Team may share in future appreciation (under Strategy A) or FMV ground rent payment (under Strategy B)

BWRA’s Role as Transaction Advisor

  • Structure Transaction to maximize results for all parties (D.C. Government, Team)
  • Coordinate with Major League Baseball
  • Coordinate transaction financing by working with D.C. Government and all Finance Team members
  • Oversee legal and documentation process
  • Manage transaction closing

BW Realty Advisors LLC

Richard A. Gross, Manager, rgross@bwra.com
Sandra Spalletta, General Counsel, sspalletta@bwra.com
Ross A. Pascal, Capital Markets, rpascal@bwra.com
D.R. Dugan, Finance, ddugan@bwra.com
915 15th Street, NW
Washington, DC 20005
(202) 347-4900

Michael Sununu, Manager, mcs@jhsassociates.com
24 Samoset Drive
Salem, NH 03079
(603) 890-1630

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An Innovative Approach to Financing Sports Facilitites
Financing Details

Project Costs and Sources of Funds

Ballpark Hard Cost 244,100,000
Hard Cost Contingency 19,500,000
Total Hard Costs 263,600,000
Ballpark Soft Costs 35,300,000
Soft Cost Contingency 1,800,000
Total Soft Costs 37,100,000
Land Purchase 65,000,000
Land Remediation 35,000,000
Total Land 100,000,000
On-site Parking 45,000,000
Capitalized Interest 35,000,000
PROJECT 480,700,000
Project Fees 24,035,000
TOTAL PROJECT 504,735,000
Private Financing 404,735,000
Private Bonds 330,000,000
Equity 74,735,000
Private Funds 404,735,000
City (Land) 100,000,000
Total Funds 504,735,000

Revenue Assumptions

Ticket Tax 4,384,000
Player Payroll Tax 4,950,000
Parking Tax 1,446,000
Concession Tax 3,411,000
Game Day Parking 6,318,000
Non-Game Parking 3,949,000
Primary Revenue 24,458,000
Team Rent 5,500,000
Total Revenue 29,958,000
Finance Lease Payment 29,916,000
Surplus/(Deficit) 42,000

Revenue Assumption Notes

  • Ticket Tax - Assumption based on 41,000 seat stadium, 66% capacity, league average ticket price of $19,82 and 10% DC ticket tax. (Source: 2004 Fan Cost Index)
  • Player Payroll Tax - Assumption based on $55 million player payroll (on par with Minnesota Twins and Oakland Athletics 2004 player salary - ranks 19 out of 30 teams) and 9% DC payroll tax. (Source: MLB)
  • Parking Revenue/Tax - Based on 5000 pace parking facility, $20 per game parking, 100% capacity for games. Game day parking revenue assumes first 1,100 spaces of parking goes to team as per current "Baseball Stadium Agreement". Non-game parking assumes 30% capacity for 270 days/year and $9.75 per day. Tax assumes 12% DC parking tax.
  • Concession Tax - Assumes $15.57 of concessions per person per game and 10% DC concession tax. (Source: 2004 Fan Cost Index)
  • Rent - Assumes fixed rent payment with no escalation over the life of the lease.

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