estimating the market value of sports facilities

Estimating the Market Value of Major League Sports Facilities

Presented By: Tim Wilmath, MAI

Hillsborough County Property Appraiser’s Office

Prepared For: Florida Chapter IAAO Spring ConferenceLake Mary, Florida April 7, 2004

Photo: Raymond James Stadium, Tampa Florida

Topics

• New facility construction.

• Public/Private Partnerships between local government and sports teams. How this partnership has affected value.

• Approaches to Value - Cost/Market/Income - what works - what doesn’t.

• Measuring economic life and depreciation of sports facilities.

• Mass Appraisal and Stadiums/Arena valuation.

Sports Teams

* As of August 2003

Major Professional Sports League Total # of Teams* U.S. TeamsNational Football League (NFL) 32 32National Basketball Association (NBA) 29 28Major League Baseball (MLB) 30 28National Hockey League (NHL) 30 24Total Major League Teams 121 112

Major Professional Sports Teams in North America

Make that

30

Sports TeamsWhere are the Teams and Venues?

The 112 professional hockey, football, basketball, and baseball teams in the United States are located in thirty-nine metropolitan areas. These 112 teams play in 102 sports venues.

Sports Venue ConstructionStadium/Arena Sports Team League

Year Built

Air Canada Centre Toronto Mapleleafs /Raptors NHL/NBA 1999Pepsi Center Colorado Avalanche Denver Nuggets NHL/NBA 1999Philips Arena Atlanta Thrashers , Atlanta Hawks NHL/NBA 1999Raleigh Entertainment & Sports Arena Carolina Hurricanes NHL 1999Staples Center Los Angeles Kings/Lakers NHL/NBA 1999Conseco Fieldhouse Indiana Pacers NBA 1999New Orleans Arena New Orleans Hornets NBA 1999Safeco Field Seattle Mariners MLB 1999Cleveland Browns Stadium Cleveland Browns NFL 1999The Coliseum Tennessee Titans NFL 1999Excel Energy Center Minnesota Wild NHL 2000Nationwide Arena Columbus Bluejackets NHL 2000Comerica Park Detroit Tigers MLB 2000Great American Ball Park Cincinnati Reds MLB 2000Minute Maid Park Houston Astros MLB 2000Pacific Bell Park San Francisco Giants MLB 2000Paul Brown Stadium Cincinnati Bengals NFL 2000American Airlines Center Dallas Stars /Mavericks NHL/NBA 2001Miller Park Milwaukee Brewers MLB 2001PNC Park Pittsburgh Pirates MLB 2001Heinz Field Pittsburgh Steelers NFL 2001Invesco Field at Mile High Denver Broncos NFL 2001SBC Center San Antonio Spurs NBA 2002Ford Field Detroit Lions NFL 2002Seahawks Stadium Seattle Seahawks NFL 2002Gillette Stadium New England Patriots NFL 2002Reliant Stadium Houston Texans NFL 2002Lincoln Financial Field Philadelphia Eagles NFL 2003Citizens Bank Park Philadelphia Phillies MLB 2003Glendale Arena Phoenix Coyotes NHL 2003Petco Park San Diego Padres MLB 2004Toyota Center Houston Rockets NBA 2004FedEx Forum Memphis Grizzlies NBA 2004Cardianals Stadium Arizona Cardinals NFL 2005Cardinals Field St. Louis Cardinals MLB 2005Charlotte Arena Charlotte Bobcats NBA 2005

Of the 102 professionalsports venues in the U.S.,71 have been built since 1990. As the adjoining table illustrates, 37 have been built since 1999.

Sports Venue Construction

2 2 0 1 18 7

11

44

27

0102030405060

1910s 1920s 1930s 1940s 1950s 1960s 1970s 1980s 1990s 2000sNote: Includes all operat ing U.S. and Canadian major league sports venues as of 4/1/2005

Year Built of Current Major League Sports Venues

Public/Private Partnership

• Since the 1960’s, the burden of paying for the construction of new sports facilities has fallen more and more on local government.

• Local governments shoulder the cost of these new sports venues because they perceive various benefits from hosting professional sports teams in their cities.

• When cities resist paying for the construction of new facilities, teams threaten to relocate (and often do).

Public/Private Partnership

The partnership between local government and professional sports teams is critical in the estimate of market value for stadiums and arenas.

Both local government and sports teams are “market participants” in the construction, purchase, ownership and operation of sports venues.

Government-built and -owned ballparks transformed teams from

owners to renters. It is always easier for a renter to move to get a

better deal. So, government officials who advocate taxpayer-funded

sports facilities to attract or keep a team virtually ensure that teams

will continue issuing threats and moving.

“Build it and they will Leave”

Photo: Charlotte Bobcats NBA Arena currently under construction.

Market Value

Some argue that the benefits local government receives fromtheir participation in sports venue construction and ownershipare largely non-economic and should be ignored in an estimate of market value.

Photo: St. Pete Times Forum, Tampa, Florida

This argument is typically raised in ad-valorem tax cases in

an effort to reduce the property’s tax assessment.

Valuation Approaches

1. Sales Comparison Approach

2. Income Approach

3. Cost Approach

Sales Comparison Approach

The sales comparison approach is a method whereby the appraiser estimates value by comparing the subject to similar properties which have recently sold. Adjustments are then considered for various applicable factors.


After the Lakers and Kings moved to the new Staples Center, the Great Western Forum in Los Angeles sold in December 2000 for $22.5 million. The purchaser was the Faithful Central Baptist Church, who converted the Forum to church use.

The change in use from a major league sports facility to a church would render this sale unusable for valuing existing (and operating) major league sports facilities.


The Pepsi Center in Denver Colorado, the NBA Nuggets, and the NHL Avalanche sold in July 2000 for a reported price of $460 million to real estate developer Stan Kroenke.


The Savvis Center in St. Louis and the St. Louis Blues NHL team sold in September 1999 for a reported price of $100 million to Wal-Mart heirs Bill and Nancy Laurie.


The Jack Kent Cooke Stadium and the Washington Redskins sold in January 1999 for a reported price of $800 million (a record price for a U.S. sports franchise) to a group headed by Daniel M. Snyder.

The three previous transactions included the stadium or arena, a professional sports team, and personal property. There is no accepted appraisal methodology for allocating the purchase price between the franchise, venue, and personal property. Accounting allocations are largely subjective with tax implications as the primary consideration.


Purchase Price Allocation

Stadium

SportsTeam

PersonalProperty


An accurate analysis of a transaction would require complete access to the purchase documents and the financial records of the team and venue.


Gary A. Battuelo, MAI cautioned against using sales that included both real estate and business in his article entitled Appraisal Issues in the Valuation of Extremely Large Buildings, (Appraisal Journal, October 1996):

“A building that is part of a business sale and has a price allocated to it as a portion of the overall going-concern cannot truly be used as an item of real estate market data.”

Photo: Adelphia Stadium, Nashville Tennessee

Cost Approach

The Appraisal of Real Estate 12th Edition notes the following:

The sales comparison approach is usually not applied to special-purpose properties because few similar properties may be sold in a given market, even one that is geographically broad. To value special-purpose properties, the cost approach may be more appropriate and reliable (Page 419).

Photo: New Orleans Arena - Home of the New Orleans Hornets

Income Approach

The Income Approach reflects the value of a property's earning power based on the capitalization of its income.

Income Approach

1. Direct Capitalization method using market rent, expenses, vacancy, and capitalization rate.

2. Valuation of going concern then allocating value to Real Estate.

3. Discounted Cash Flow with projections of team/venue cash flows.

Options for applying Income Approach

Income Approach

Landlord Tenant

Most professional sports venues are owned by local government and leased by a professional sports team. Rent is often“free” or well below a rate that would justify construction (below market). Lease rates are not based on an expected return to the investment.

Income Approach

Why do local governments give stadiums away or rent them to sports teams for below-market rent?

$ Stadiums and teams create jobs and revenue$ Stadium construction brings $ into local economy$ New businesses$ Urban Renewal$ Media & tourism draw$ The intangible benefits of community pride in

becoming a “major league sports city.”

Income Approach

Measuring the market value of a sports venue using “below market” rental rates between local government and sports teams would be improper because the rental rates do not reflect all the benefits that accrue to the landlord.

Photo: Gaylord Entertainment Center, Nashville, Tennessee

Income Approach

This relationship between landlord and tenant is not unique. Regional mall owners often lease buildings to “anchor” department stores at below market rental rates to attract tenants to in-line mall space and to obtain the free advertising that mall anchors provide.

Income Approach

Measuring the going concern value for an operating sports team and then allocating this value between team and arena is unreliable. There is no accepted appraisal methodology for making this allocation (as there is in hotel valuation).

Income Approach

Utilizing a discounted cash flow with business income and expense projections is also unreliable because sports franchise cash flows are notoriously unstable and unpredictable; therefore, any forecasting is subjective at best.

Photo: Paul Brown Stadium, Cincinnati, Ohio

Income Approach

N. Y. Yankees v. The Tax Commission of the City of New York

In the reproduction cost less depreciation approach to valuation, income of a business operated on the premises is no evidence of value of the real estate…..the court is of the opinion that the proper method of evaluating the stadium is by the reproduction cost less depreciation.

Cost Approach

The cost approach reflects the current cost of reproducing or replacing the improvements, minus the loss in value from depreciation, plus land value.

Photo: Fleet Center, Boston, Massachusetts

Cost Approach

Components of the Cost Approach

1. Replacement Cost

2. Depreciation

3. Land Value

Photo: Great American Ballpark under construction in Cincinnati, Ohio (2000)

Cost Approach

Arena Year Opened Seating Capacity Reported Cost Cost Per SeatMellon Arena 1961 17,537 $22,000,000 1,254$ Madison Square Gardens 1968 18,200 $85,000,000 4,670$ Nassau Veterans Memorial Coliseum 1972 16,297 $31,000,000 1,902$ Joe Louis Arena 1979 19,983 $57,000,000 2,852$ Continental Airlines Arena 1981 19,040 $85,000,000 4,464$ America West Arena 1992 17,500 $90,000,000 5,143$ Compaq Center at San Jose 1993 17,483 $162,500,000 9,295$ Arrowhead Pond of Anaheim 1993 17,174 $120,000,000 6,987$ Savvis Center 1994 19,260 $170,000,000 8,827$ The United Center 1994 20,500 $175,000,000 8,537$ The Fleet Center 1995 17,565 $160,000,000 9,109$ HSBC Arena 1996 18,690 $127,500,000 6,822$ St. Pete Times Forum 1996 19,500 $130,500,000 6,692$ First Union Center 1996 19,519 $206,000,000 10,554$ Gaylord Entertainment Center 1997 17,500 $144,000,000 8,229$ MCI Center 1997 19,700 $260,000,000 13,198$ National Car Rental Center 1998 19,452 $212,000,000 10,899$ Staples Center 1999 18,500 $400,000,000 21,622$ Philips Arena 1999 19,008 $213,500,000 11,232$ Pepsi Center 1999 18,129 $180,000,000 9,929$ Raleigh Entertainment and Sports Arena 1999 18,176 $158,000,000 8,693$ Nationwide Arena 2000 18,138 $150,000,000 8,270$ Excel Energy Center 2000 18,834 $130,000,000 6,902$ American Airlines Center 2001 18,000 $325,000,000 18,056$ Source: 2001 Inside Ownership of Pro Sports

Arena Cost Comparison

Replacement cost is fairly easy to estimate.

Cost Approach

Land value is also a straight-forward approach using comparable sales. The fact that the site is improved with an arena or stadium has no bearing on the land, as though vacant.

Cost Approach

Since estimating market value for professional sports facilities requires reliance on the cost approach, the accurate estimate of depreciation becomes imperative.

Physical Depreciation - Loss in value due to wear and tear

Functional Obsolescence - adverse effect on value resulting from defects

in design that impair utility.

External Obsolescence - adverse effect on value resulting

from undesirable factors external to the property

Cost Approach

Physical Depreciation - Loss in value due to wear and tear. The most

common method of measuring physical depreciation is the age/life method.

Effective Age/Useful Life = Physical Deprecation %

Effective age is an observed value based on the overall condition

of the property. Useful life is defined as the period over which

a structure may reasonable be expected to perform the function

for which it was intended.

So how long do major Sports Facilities last?

Photo: Three Rivers Stadium demolition - 2001 , Pittsburgh, Pennsylvania

Cost Approach

The emperor Titus opened the Colosseum in Rome in AD 80,

approximately 2000 years ago. Although gladiators no longer battle at the

Colosseum, the structure still exists. Sports venues constructed in

the 20th Century have not been so enduring.

Cost Approach

City Venue Year Built Year Demolished Useful LifeChicago, IL Comiskey Park 1910 1991 81San Francisco, CA Kezar Stadium 1922 1990 68Pittsburgh, Penn. Pitt Stadium 1925 1999 74Boston, Mass Boston Garden 1928 1997 69Chicago, Ill Chicago Stadium 1929 1995 66Cleveland, Ohio Cleveland Municipal Stadium 1931 1996 65St. Louis, MO Kiel Auditorium 1932 1992 60Denver, Colorado Mile High Stadium 1948 2002 54Baltimore, Maryland Memorial Stadium 1950 2002 52Milwaukee, Wisconsin Milwaukee County Stadium 1953 2001 48St. Louis, MO St. Louis Arena 1955 1999 44Arlington, Texas Arlington Stadium 1965 1994 29Atlanta Georgia Atlanta Fulton County Stadium 1965 1997 32St. Paul, Minn Met Center 1967 1994 27Tampa, Florida Tampa Stadium 1967 1999 32Salt Lake City, Utah Salt Palace 1968 1994 26Pittsburgh, Penn. Three Rivers Stadium 1969 2001 32Cincinatti, Ohio Cinergy Field (Riverfront Stadium) 1970 2002 32Foxborough, Mass Foxborough Stadium 1971 2002 31San Antonio, Tx Hemisfair Arena 1972 1995 23Atlanta, Ga Omni 1972 1997 25Cleveland, Ohio Richfiled Coliseum 1973 1999 26Landover, MD US Air Arena (Capital Centre) 1973 2002 29Indianapolis, IN Market Square Arena 1974 2001 27Denver, Colorado McNichols Arena 1975 2000 25Seattle, Washington Kingdome 1976 2000 24

Note: Includes all Major Professional Sports Venues demolished since 1990.

Demolition and Useful Life of Professional Sports Venues (sorted by useful life)

Cost Approach

26 professional

sports venues

have been

demolished

since 1991

Add Philadelphia’s

Veteran Stadium

Note: Facilities built after 1960 are only lasting 25 - 30 years.

That’s not to say that all “older” venues are obsolete, however,

it is fair to say they are becoming an “endangered species”.

Trend in Useful Life for Professional Sports Venues

0102030405060708090

100110120

Year BuiltNote: Based on Professional Sports Venues demolished between 1990 and 2002

Act

ual

Use

ful

Lif

e (i

n y

ears

)

Cost Approach

Endangered List

Civic Arena (Mellon Arena),

Pittsburgh, PA, built in 1959

Busch Stadium,

St. Louis, MO, built in 1966

The Houston Astrodome,

Houston, Texas, built in 1965

Yankee Stadium,

New York, N.Y., built in 1923

Cost ApproachFunctional Obsolescence - adverse effect on value resulting from defects

in design that impair utility. For sports venues, functional obsolescence may

exist for the following reasons:

• Inadequate parking

• Lack of restaurant facilities

• Lack of retail facilities

• Lack of club seats/sections

• Obstructed sight-lines

• Narrow concourses• Ingress/Egress Problems

These items mostly

affect older venues.

Modern facilities

are typically built

with modern features.

Cost Approach

External Obsolescence - adverse effect on value resulting from undesirable factors external to the property

For “conventional” properties, external obsolescence is estimated by capitalizing income loss caused by external forces or extracting the depreciation from market sales.

Photo: Tropicana Field, St. Petersburg, Florida

Cost Approach

As a special purpose property, economic viability is measured by the ability of the improvements to achieve their intended purpose, i.e., highest and best use.

When factors outside the property cause the improvements to perform at an inferior level, economic obsolescence exists.

Photo: Candlestick Park (renamed 3Com Park at Candlestick Point after a new sponsorship deal in 1996) closed for baseball after the 1999 season as the Giants moved into Pac Bell Park

Cost Approach

The factors that drive a sports venues success include:

Population (both overall and per sports team)Local Market Age ProfileLocal MarketHousehold IncomeEntertainment Spending CharacteristicsCorporate DepthTelevision MarketRadio Market

These same factors are used in feasibility studies to predict if a sports venue will be economically viable.

Cost Approach

A market must have sufficient population to support a professional team. Large populations usually translate into high attendance.

It is no accident that most major professional sports teams exist in the largest U.S. markets.

1 Los Angeles Kings Los Angeles, CA 9,568,6002 New York Rangers New York, NY 9,371,7003 Chicago Blackhawks Chicago, IL 8,337,3004 Philadelphia Flyers Philadelphia, PA 5,114,3005 Washington Capitols Washington DC 4,975,7006 Detroit Redwings Detroit, MI 4,454,7007 Atlanta Thrashers Atlanta, GA 4,198,7008 Boston Bruins Boston, MA 4,018,1009 Dallas Stars Dallas, TX 3,582,300

10 Phoenix Coyotes Phoenix, AZ 3,327,90011 Minnesota Wild Minneapolis, MN 3,001,20012 Anaheim Mighty Ducks Orange County, CA 2,879,00013 New York Islanders Nassau-Suffolk, NY 2,764,80014 St. Louis Blues St. Louis, MO 2,612,10015 Tampa Bay Lightning Tampa, FL 2,420,50016 Pittsburg Penguins Pittsburgh, PA 2,356,10017 Colorado Avalanche Denver, CO 2,145,80018 San Jose Sharks San Jose, CA 1,696,50019 Florida Panthers Miami, FL 1,650,60020 Columbus BlueJackets Columbus, OH 1,544,70021 New Jersey Devils Bergen-Passaic, N.J. 1,380,20022 Nashville Predators Nashville, TN 1,249,90023 Carolina Hurricanes Raleigh, NC 1,212,90024 Buffalo Sabres Buffalo, NY 1,168,700

3,543,013Source: U.S. Census Bureau, Census 2000

Population of U.S. NHL Markets

Overall NHL Average

Rank Population NHL Franchise Market

Cost Approach

The presence of additional teamsin a given marketlikely has an affecton a teams ability togenerate desiredattendance.

1 New York Islanders Nassau-Suffolk, NY 2,764,800 1 2,764,8002 Los Angeles Kings Los Angeles, CA 9,568,600 4 2,392,1503 New York Rangers New York, NY 9,371,700 4 2,342,9254 San Jose Sharks San Jose, CA 1,696,500 1 1,696,5005 Chicago Blackhawks Chicago, IL 8,337,300 5 1,667,4606 Washington Capitols Washington DC 4,975,700 3 1,658,5677 Columbus BlueJackets Columbus, OH 1,544,700 1 1,544,7008 Anaheim Mighty Ducks Orange County, CA 2,879,000 2 1,439,5009 Philadelphia Flyers Philadelphia, PA 5,114,300 4 1,278,575

10 Carolina Hurricanes Raleigh, NC 1,212,900 1 1,212,90011 Detroit Redwings Detroit, MI 4,454,700 4 1,113,67512 Atlanta Thrashers Atlanta, GA 4,198,700 4 1,049,67513 Boston Bruins Boston, MA 4,018,100 4 1,004,52514 Dallas Stars Dallas, TX 3,582,300 4 895,57515 St. Louis Blues St. Louis, MO 2,612,100 3 870,70016 Phoenix Coyotes Phoenix, AZ 3,327,900 4 831,97517 Tampa Bay Lightning Tampa, FL 2,420,500 3 806,83318 Pittsburg Penguins Pittsburgh, PA 2,356,100 3 785,36719 Minnesota Wild Minneapolis, MN 3,001,200 4 750,30020 Nashville Predators Nashville, TN 1,249,900 2 624,95021 Buffalo Sabres Buffalo, NY 1,168,700 2 584,35022 Colorado Avalanche Denver, CO 2,145,800 4 536,45023 Florida Panthers Miami, FL 1,650,600 4 412,65024 New Jersey Devils Bergen-Passaic, N.J. 1,380,200 4 345,050

1,192,090

Source: U.S. Census Bureau, Census 2000

Population Per Professional Sports Team United States NHL Markets

Overall NHL Average

Total # of Teams

Ratio of populationto Teams

Rank Population NHL Franchise Market

Cost Approach

Sports and entertainment events generally attract a younger audience; hence the age makeup of the local population can affect attendance.

1 Dallas, TX Dallas Stars 23.5% 48.3% 19.9% 8.3% 32.12 Los Angeles, CA Anaheim Mighty Ducks, L.A. Kings 24.3% 46.4% 19.7% 9.6% 32.33 Atlanta, GA Atlanta Thrashers 22.6% 49.0% 20.8% 7.6% 32.94 Raleigh, NC Carolina Hurricanes 20.6% 50.1% 20.7% 8.6% 33.05 Phoenix, AZ Phoenix Coyotes 22.7% 45.3% 19.9% 12.1% 33.26 Columbus, OH Columbus BlueJackets 21.5% 47.3% 21.1% 10.1% 33.67 Chicago, IL Chicago Blackhawks 22.7% 45.7% 21.0% 10.6% 33.78 Denver, CO Colorado Avalanche 21.6% 47.7% 21.8% 8.9% 33.89 Minneapolis, MN Minnesota Wild 22.4% 46.8% 21.3% 9.5% 34.210 Nashville, TN Nashville Predators 20.8% 47.2% 22.1% 9.9% 34.511 New York, NY N.J.Devils, N.Y. Islanders, N.Y. Rangers 20.9% 44.8% 22.0% 12.3% 35.312 Detroit, MI Detroit Redwings 22.2% 43.9% 22.3% 11.6% 35.313 Oakland, CA San Jose Sharks 19.8% 46.4% 22.7% 11.1% 35.614 Washington DC Washington Capitols 21.6% 44.3% 23.0% 11.1% 35.815 St. Louis, MO St. Louis Blues 21.8% 43.4% 22.2% 12.6% 36.016 Boston, MA Boston Bruins 19.9% 45.0% 22.0% 13.1% 36.117 Philadelphia, PA Philadelphia Flyers 21.0% 42.9% 22.1% 14.0% 36.418 Miami, FL Florida Panthers 20.3% 43.6% 21.7% 14.4% 36.519 Buffalo, NY Buffalo Sabres 20.2% 41.2% 22.8% 15.8% 38.020 Tampa, FL Tampa Bay Lightning 18.4% 29.2% 23.1% 29.3% 40.021 Pittsburgh, PA Pittsburg Penguins 18.5% 40.0% 23.9% 17.6% 40.0

21.3% 44.7% 21.7% 12.3% 35.2Source: U.S. Census Bureau, Census 2000

45 to 6465 & over

Overall NHL Average

Age Comparison - U.S. NHL Markets

Rank Market (MSA) NHL FranchiseMedian

AgeUnder 14 15 to 44

Cost Approach

Household income affects a patron’s ability to support the venue throughthe purchase of event tickets, novelties, and concessions.

1 Oakland, CA San Jose Sharks 17.8% 21.9% 19.5% 40.8% $62,0242 Washington DC Washington Capitols 19.5% 25.6% 21.7% 33.2% $54,7513 Minneapolis, MN Minnesota Wild 18.4% 26.7% 23.3% 31.6% $54,3704 Boston, MA Boston Bruins 23.2% 23.9% 19.9% 33.0% $52,6995 Atlanta, GA Atlanta Thrashers 20.1% 27.4% 21.9% 30.6% $51,9486 Chicago, IL Chicago Blackhawks 22.0% 26.1% 20.9% 31.0% $51,5607 Denver, CO Colorado Avalanche 20.3% 28.3% 21.7% 29.7% $51,0888 Detroit, MI Detroit Redwings 24.3% 27.4% 20.5% 27.8% $49,1609 Raleigh, NC Carolina Hurricanes 23.3% 27.7% 20.9% 28.1% $48,845

10 Dallas, TX Dallas Stars 23.0% 29.2% 20.4% 27.4% $47,41811 New York, NY N.J.Devils, N.Y. Islanders, N.Y. Rangers 28.6% 23.9% 17.8% 29.7% $46,69712 Los Angeles, CA Anaheim Mighty Ducks, L.A. Kings 26.7% 26.3% 18.9% 28.1% $45,90313 Philadelphia, PA Philadelphia Flyers 27.3% 26.4% 19.1% 27.2% $45,86214 St. Louis, MO St. Louis Blues 25.3% 29.3% 20.9% 24.5% $45,43215 Columbus, OH Columbus BlueJackets 25.3% 29.9% 21.3% 23.5% $44,78216 Phoenix, AZ Phoenix Coyotes 24.8% 30.9% 20.6% 23.7% $44,75217 Nashville, TN Nashville Predators 25.5% 30.7% 21.0% 22.8% $44,22318 Miami, FL Florida Panthers 32.6% 29.0% 17.7% 20.7% $38,63219 Buffalo, NY Buffalo Sabres 32.8% 29.4% 19.0% 18.8% $38,48820 Pittsburgh, PA Pittsburg Penguins 33.3% 30.1% 18.6% 18.0% $37,46721 Tampa, FL Tampa Bay Lightning 31.6% 32.8% 18.1% 17.5% $37,406

25.0% 27.8% 20.2% 27.0% $47,310Source: U.S. Census Bureau, Census 2000

Household Income Comparison - U.S. NHL Markets

MarketNHL

Franchise

Overall NHL Average

RankMedian

HH Income$0 to

$24,999$25,000 to

$49,999$50,000 to

$75,000Over

$75,000

Cost Approach

1 Minneapolis, MN Minnesota Wild $2,9592 Washington DC Washington Capitols $2,5353 Oakland, CA San Jose Sharks $2,2904 New York, NY N.J.Devils, N.Y. Islanders, N.Y. Rangers $2,2295 Denver, CO Colorado Avalanche $2,1816 Dallas, TX Dallas Stars $2,1807 Detroit, MI Detroit Redwings $2,0718 Chicago, IL Chicago Blackhawks $2,0549 Phoenix, AZ Phoenix Coyotes $2,042

10 Los Angeles, CA Anaheim Mighty Ducks, L.A. Kings $1,96211 Columbus, OH Columbus BlueJackets $1,96112 Boston, MA Boston Bruins $1,93913 Buffalo, NY Buffalo Sabres $1,91514 St. Louis, MO St. Louis Blues $1,87715 Pittsburgh, PA Pittsburg Penguins $1,84016 Philadelphia, PA Philadelphia Flyers $1,66717 Raleigh, NC Carolina Hurricanes $1,60418 Nashville, TN Nashville Predators $1,60419 Tampa, FL Tampa Bay Lightning $1,56820 Atlanta, GA Atlanta Thrashers $1,55121 Miami, FL Florida Panthers $1,483

$1,977

Source: U.S. Census Bureau - 1999 MSA Business Patterns

Entertainment Spending - United States NHL Markets

Overall NHL Average

MarketAnnual

Entertaiment Spending

Rank NHL Franchise

Entertainment spendingis important because itindicates how much ofa local residentsdisposable income couldpotentially be spent on sporting and entertainment events.

Cost Approach

The success of sports arenas in the modern era is largely dependent on corporate support via the purchase of luxury suites, club seats, season tickets, sponsorships, and naming rights.

1 New York Rangers New York, NY 6,850 8762 Los Angeles Kings Los Angeles, CA 6124 7223 Chicago Blackhawks Chicago, IL 6,004 8354 Washington Capitols Washington DC 3,470 7715 Philadelphia Flyers Philadelphia, PA 3,349 4736 Boston Bruins Boston, MA 3,099 4537 Atlanta Thrashers Atlanta, GA 2,857 4688 Dallas Stars Dallas, TX 2,691 4649 Detroit Redwings Detroit, MI 2,675 416

10 Minnesota Wild Minneapolis, MN 2,573 37911 Anaheim Mighty Ducks Orange County, CA 2,466 27712 New York Islanders Nassau-Suffolk, NY 1,955 20813 Phoenix Coyotes Phoenix, AZ 1,642 29114 St. Louis Blues St. Louis, MO 1,640 27615 Pittsburg Penguins Pittsburgh, PA 1,616 27416 San Jose Sharks San Jose, CA 1,562 22317 Colorado Avalanche Denver, CO 1,510 24718 New Jersey Devils Bergen-Passaic, N.J. 1,353 14319 Tampa Bay Lightning Tampa, FL 1,188 20420 Florida Panthers Miami, FL 952 10921 Columbus BlueJackets Columbus, OH 900 20122 Nashville Predators Nashville, TN 856 15023 Buffalo Sabres Buffalo, NY 685 11124 Carolina Hurricanes Raleigh, NC 655 162

2,445 364Source: Dunn & Bradstreet (June 3, 2002)

Corporate Depth - United States NHL Markets

Overall NHL Average

RankCompanies with sales

> $10 Million

Companies with over 500

employeesNHL Franchise Market

Cost Approach

1 New York Islanders Nassau-Suffolk, NY 1,955 1 19552 New York Rangers New York, NY 6,850 4 17133 San Jose Sharks San Jose, CA 1,562 1 15624 Los Angeles Kings Los Angeles, CA 6124 4 15315 Anaheim Mighty Ducks Orange County, CA 2,466 2 12336 Chicago Blackhawks Chicago, IL 6,004 5 12017 Washington Capitols Washington DC 3,470 3 11578 Columbus BlueJackets Columbus, OH 900 1 9009 Philadelphia Flyers Philadelphia, PA 3,349 4 837

10 Boston Bruins Boston, MA 3,099 4 77511 Atlanta Thrashers Atlanta, GA 2,857 4 71412 Dallas Stars Dallas, TX 2,691 4 67313 Detroit Redwings Detroit, MI 2,675 4 66914 Carolina Hurricanes Raleigh, NC 655 1 65515 Minnesota Wild Minneapolis, MN 2,573 4 64316 St. Louis Blues St. Louis, MO 1,640 3 54717 Pittsburg Penguins Pittsburgh, PA 1,616 3 53918 Nashville Predators Nashville, TN 856 2 42819 Phoenix Coyotes Phoenix, AZ 1,642 4 41120 Tampa Bay Lightning Tampa, FL 1,188 3 39621 Colorado Avalanche Denver, CO 1,510 4 37822 Buffalo Sabres Buffalo, NY 685 2 34323 New Jersey Devils Bergen-Passaic, N.J. 1,353 4 33824 Florida Panthers Miami, FL 952 4 238

8261) Companies with annual sales greater than $10 million.

2) Includes NFL, NBA, NHL, & MLBSource: 2001 Inside Ownership of Pro Sports & Dunn & Bradstreet (June 3, 2002)

Corporations per Professional Teams - United States NHL Markets

Rank MarketTotal # of

Professional Teams

Number of

Corporations1

Overall NHL Average

NHL FranchiseRatio of Businesses

to Professional Teams

Similar to population,the presence of additional teamsin a given marketlikely has an affecton a teams ability togenerate desiredsponsorships, clubseat sales, and namingrights deals.

Cost Approach

Another important factor for gauging the potential success of a major league sports venue is the depth of the local television market which is measured byNielsen Media Researchthrough the “DominantMarket Area (DMA).

1 N.J.Devils, N.Y. Islanders, N.Y. Rangers New York, NY 20,386,5002 Anaheim Mighty Ducks, L.A. Kings Los Angeles, CA 16,429,1003 Chicago Blackhawks Chicago, IL 9,407,6004 Philadelphia Flyers Philadelphia, PA 7,581,8005 San Jose Sharks Oakland, CA 6,813,5006 Boston Bruins Boston, MA 6,155,3007 Dallas Stars Dallas, TX 5,910,5008 Washington Capitols Washington DC 5,733,8009 Atlanta Thrashers Atlanta, GA 5,344,000

10 Detroit Redwings Detroit, MI 5,012,30011 Minnesota Wild Minneapolis, MN 4,197,00012 Phoenix Coyotes Phoenix, AZ 4,120,80013 Florida Panthers Miami, FL 4,069,10014 Tampa Bay Lightning Tampa, FL 3,785,60015 Colorado Avalanche Denver, CO 3,536,20016 Pittsburg Penguins Pittsburgh, PA 2,885,90017 Carolina Hurricanes Raleigh, NC 2,465,30018 Nashville Predators Nashville, TN 2,298,80019 Columbus BlueJackets Columbus, OH 2,131,90020 St. Louis Blues St. Louis, MO 2,039,00021 Buffalo Sabres Buffalo, NY 1,598,900

5,804,900

1) Dominant Market Area Source: Nielsen Media Research (September 2001).

DMA1

Population

Television Market- United States NHL Cities

Overall NHL Average

Rank MarketNHL Franchise

Cost Approach

The market area for sportsarenas is also defined by the geographicarea covered by local radio.

Radio broadcast mediarefers to radio coverage as the “Continuous Market” (CM) population.

1 New York Rangers New York, NY 14,487,9002 Anaheim Mighty Ducks, L.A. Kings Los Angeles, CA 10,489,8003 Chicago Blackhawks Chicago, IL 7,191,3004 Philadelphia Flyers Philadelphia, PA 4,081,3005 Dallas Stars Dallas, TX 4,005,3006 Detroit Redwings Detroit, MI 3,836,6007 Boston Bruins Boston, MA 3,741,2008 Washington Capitols Washington DC 3,728,8009 Atlanta Thrashers Atlanta, GA 3,297,200

10 Florida Panthers Miami, FL 3,200,70011 Phoenix Coyotes Phoenix, AZ 2,480,50012 Minnesota Wild Minneapolis, MN 2,355,000

13 New York Islanders2 Nassau-Suffolk, NY 230670014 St. Louis Blues St. Louis, MO 2,122,00015 Tampa Bay Lightning Tampa, FL 2,026,70016 Pittsburg Penguins Pittsburgh, PA 1,974,50017 Colorado Avalanche Denver, CO 1,927,500

18 San Jose Sharks3 Oakland, CA 1,455,800

19 New Jersey Devils4 Middlesex-Somerset, NJ 129940020 Columbus BlueJackets Columbus, OH 1,287,60021 Nashville Predators Nashville, TN 990,30022 Carolina Hurricanes Raleigh, NC 963,50023 Buffalo Sabres Buffalo, NY 951,800

3,487,0171) CM is an abbreviation for Arbitron's "Continuous Market"

Source: Arbitron 2001.

CM1

Population

Radio Market- United States NHL Cities

Overall NHL Average

Rank MarketNHL Franchise

Cost Approach

Although the previous demographic, social, and economicfactors are important measures of an arena’s potentialsuccess, actual performance in the following categoriesshould also be reviewed.

AttendanceAverage Ticket PricesLuxury Suite SalesSponsorshipsBroadcast RevenueArena Naming Rights

Cost Approach

Green Bay ranks 125th in terms of population among U.S. Metropolitan Statistical Areas. Regardless of Green Bay’s small population, annual attendance at Green Bay Packer football games has exceeded 97% since the construction of Lambeau Field in 1957.

Cost Approach

Poor team performance is often cited as the source for poor stadium or arena attendance. A review of attendance over a five-year period should provide a reasonable indication of market support.

Cost Approach

In addition to attendance, other actual performance factors include average ticket prices, luxury suite sales, broadcast revenue, and naming rights deals.

Cost Approach

NFL teams obtain the vast majority of their revenue from televisionrevenue, while NHL teams obtain most of their income from gate receipts. Poor attendance does not affect NFL teams to the degree that it does NHL teams.

$2.2 Billion

$660 Million $553 Million

$120 Million

$-

$500,000,000

$1,000,000,000

$1,500,000,000

$2,000,000,000

$2,500,000,000

NFL NBA MLB NHL

Source: Kagan's - The Business of Hockey 2001

2001 Annual National Television Revenue by League

Cost Approach

Does team performance affect the value of the real estate?

*A major league sports facility cannot achieve highest and best use without the presence of a major league sports team.

Mass Appraisal

The IAAO’s text, Property Assessment Valuation states:

The assessor needs skills in both mass appraisal and single-property appraisal - mass appraisal skills for producing initial values in a revaluation, and single-property appraisal skills to defend those values and to appraise exceptional special-purpose properties that do not lend themselves to mass appraisal techniques (Page 286 – Green Book).

Mass Appraisal

The dilemma for tax assessors is how far should they go to arrive at a supportable estimate of value?

The End