“Coliseum Reboot” Coliseum City – Oakland Raiders Stadium Spreadsheet Assumptions

MEMO (Note: latest spreadsheet is below)

To: Oaklanders, Raiders Fans, and Oakland Sports Fans

From: Zennie Abraham

Re: About Spreadsheet Developed To Present Coliseum City / Stadium Concept Asked For By Oakland Raiders Owner Mark Davis

Date: August 23rd 2015

Hello,

This memo is based on one submitted to interested parties on August 19th, and focuses on key assumptions in the newest version of the spreadsheet I originally sent to Oakland Raiders President Marc Badain, and Raiders PR Head Will Kiss at the behest of Mr. Davis at the 2015 San Francisco NFL Spring League Meeting. (This deals with the Raiders stadium side.)

The primary objectives were: stadiums for A’s and Raiders using no public subsidy. This proposal proves that can be done, and it was reviewed by Piper Jaffray Investment Bankers.

I must note that these revenue splits are but one “take” on how to do this. What you need to make sure you have is a running computer open with a spreadsheet to test other revenue split ideas. But the one factor remains and that is that these revenue estimates are robust and care was taken to under-estimate and not over estimate.

Thus, naming rights revenue should be at $200 million or greater, but I did not want that to be a factor in stadium construction but an “extra” revenue source that the Raiders could offer for use, or keep – so I set it at $50 million, just to show it wasn’t a deal-breaker for the project. The idea is for revenues that were “absolute” to drive the project.

Before we begin, here’s a video-blog I made to present the design concept:

Stadium Cost of $790 million – an assumption based on total new cost of $1 billion for stadium, then we maintain East Side BUT give it several improvements to about $25 million, and a curtain wall like University of Phoenix Stadium. That saves 22,000 seats, leaving us to demolish the rest at $7 million, then build 46,000 new seats in West, North End Zone, and South End Zone, or about 68 percent of the stadium would be new, which is $680 million, so we’re over-budget here. (In Chicago last week, I talked to Mr. Davis about this, and he was receptive and because I told him I could not afford the other option without a subsidy. Rather than guess, let’s really take a good look at a stadium that has one cool design around it, and includes the upgraded East Side within it. The result would be a brand-new stadium, and it would look brand new and not at all like a renovation, and any claim to the contrary is not true.)

Naming Revenue – set at deliberately low $50 million. Stadium JPA developer/ operator would keep 30 percent; 70 percent to Raiders. This could be 100 percent to Raiders and project would not go into red.

Sponsorship Revenue – set at set at deliberately low $20 million. Stadium JPA developer/ operator would keep 30 percent; 70 percent to Raiders. This could be 100 percent to Raiders and project would not go into red.

Mello Roos Funding – set at zero. Oakland Mayor Libby Schaaf asked for no public funding. But if such were necessary, this could be used, but would cause push for voter approval.

Oakland Raiders Cash Contribution – $100 million, based on reports and knowledge of Raiders fiscal position from conversations, and work on past study with Sports Illustrated.

NFL G4 Loan – $250 million and recently increased from $200 million.

Total Suite Revenue – $900 million based on 300 suites, avg cost of $125,000, sale rate of 60 percent, over 40 year period.

Total Ticket Revenue – $1.608 billion or 68,000 seats times 60 percent sales rate time average per seat cost of $65, times ten games, over 40 year period.

Total Seat Option Revenue – $54 million, or 45,000 times average one time cost of $2,000, times 60 percent sell rate, time one (for lifetime and lowest in NFL for new stadium).

Total Concession Revenue – $130.5 million, or 68,000 seats, 60 percent sales, $8 per person spending, times 40 seasons over 10 game seasons.

Raiders Keep 70 percent of Total Concession Revenue in this scenario; JPA keeps 30 percent, and uses 50 percent of that for stadium operations revenue.

Retail in Stadium of 45,000 square feet; gross retail revenue over 40 years of $26.67 million.

40 percent of retail revenue for stadium construction.

Coliseum City Area-Wide Event Surcharge Fee of 50 cents bringing in estimated net of $35 million per venue (Raiders and A’s) over

Ticket Surcharge Revenue of $122.4 million over 40 years, or 68,000 seats, times 60 percent sales rate, times $7.50 (tiered location pricing), times 10 games, over 40 years

Ticket Revenue To NFL (G4 Loan Repayment) – $360.672 million, or 34 percent of total ticket revenue over 40 years (need to ask league permission to extend loan payback period to 30 years, or use club seat revenue to help pay back loan faster.

Ticket Revenue To Raiders Net NFL Give – $403 million, or 72 percent of that, net NFL share over 40 years, leaving

Ticket Revenue Used For Stadium Operations – Oakland Raiders may balk at this, but if we give them 100 percent of naming rights, this becomes a good deal for both parties. We need to make sure stadium operates in the black.

Seat Capacity – 68,000 and average ticket cost of $65 per person, per ten game season over 40 years (assumption of 60 percent sales rate used in final total revenue estimates in spreadsheet.)

Total Suite Revenue – $900 million based on 300 suites, avg cost of $125,000 per suite, 60 percent sales rate over 40 years, and with sales tax, leaves net revenue of $821 million, 39 percent used for stadium construction or $281.287 million over 40 years, leaving Raiders with $539.962 million from luxury suites added to $403 million in base net ticket revenue for Raiders, or $943 million in revenue over 40 years free and clear to Raiders.

Hotel is 610 rooms for Raiders Hotel Wing (A’s Hotel Wing is 400 rooms), average cost to build per room plus common areas is $221,000, and construction cost per square foot is $500, or over high-end standard for luxury level hotel (Ritz Carlton) of $463, according to Hawkins Research / USA Today for national unionized labor work. Also, the Hyatt Place Hotel, a upper-to-high-end hotel under construction in Emeryville, is 175 rooms and $37 million, or about $211,458 per room. Moreover, the Emeryville hotel comes at a time when there’s a perceived high demand for hotel rooms for tourism and business travelers. This Raiders Hotel Wing and A’s Hotel Wing at 400 rooms also helps meet that demand, but does so in a unique space.

Operating Cost Per Hotel Room – $75 is industry standard for high end. (We have to make sure we get these costs under contract control. Carson got a union contract agreement with the labor unions at set prices for construction. We can do the same.)

Average Hotel Room Rate – $227 per room (reflects a high-end W-Hotel type product), average with four percent annual inflation rate – which is still below San Francisco Hotel Average Room Rate of $255. I had an email exchange with Alex Quinn of AECOM, who says the overall hotel idea is interesting but too large for the area AS IT EXISTS. I told him that I objected to the AECOM methodology as it does not account for 1) events and tourism and 2) the uniqueness of the design of the hotel as it has no other comparable in the San Francisco Bay Area, and 3) the fact that the hotel will alter the market due to its size and unique role as serving three sports buildings. That’s where we left it and I can share the email; the HVS methodology of determining market potential for a hotel is more desirable for this project as it considers regional factors like uniqueness of property. Also, for a hotel operator, the Internal Rate Of Return would be off the charts, since the hotel operator doesn’t have to pay for any land costs.

Total Hotel Gross Room Revenue Over 40 Years – $1.284 billion, then minus operations cost of $688 million, we have net revenue of $596 million, and 55 percent used for construction gives us $328 million for stadium construction. The remaining 45 percent would go to the hotel fee operator for the JPA, which would be the developer. This is based on a model being used to develop the Downtown Cleveland Hotel and Convention Center now. Cleveland is the developer, and they contracted with a hotel to be the operator and consultant. The hotel operator is, thus, free the costs like property taxes and building liability and earthquake insurance. A good deal for the hotel people. The Raiders could also take part of their luxury suite revenue and hire the hotel as a suite marketer and share the suites for special events.

Parking Revenue Used For Stadium Construction – Capped at $25 million here.

External Retail Revenue Used For Construction – $35.25 million and after $64 million net retail revenue over 40 years, total gross revenue of $118.656 million and $54 million construction cost.

Total Revenue From All Sources Used For Raiders Stadium / Hotel / Retail Construction is $1.284 billion over 40 years; versus Total Construction Cost Of $1.027 billion or $256 million net surplus revenue over 40 years.

Total Hotel Tax Revenue from Raiders Wing – $78 million over 40 years

Total Sales Tax Revenue from Raiders Retail – $91 million over 40 years

Total Surplus Revenue From Raiders and A’s Stadiums Plus Debt Service Reserve – $498 million

Bond Amortization Schedule – Made at the request of Piper Jaffray Investment Bankers, the lower right hand part of the sheet is based on a common, industry standard table for bond coupon rates and resulting debt service.  In reality, the bond issue of $1.8 billion will be in what is called “serial”, which means there are multiple issues, not just one, and they mature at regular intervals. This is a common approach for stadium venue financing.  In this case, we’re looking at a 40-year bond issue and because I could not make a 30-year version “pencil out” without a public subsidy – with this I can.  The average annual debt service is $152 million per year.

I am happy to address any reasonable questions presented. The spreadsheet is below: