If the last year was supposed to be a bad one, nobody told the
The arena, which is operated and partially owned by AEG, had such a good fiscal year ending July 31 that a profit-sharing provision with the city kicked in. The city, which owns the $276 million facility (minus AEG’s $54 million contribution), has seen past revenue come from ticket user fees and sales tax, along with increases to hotel room fees and car rental fees.
And the profit came from concerts.
“The $1.8 million is unanticipated on both the part of the city and AEG,” Sprint Center spokeswoman Shani Tate Ross told Pollstar. “The provision was literally thrown in and based on the performance, in terms of bookings of concerts and family shows, as well as sporting events. That’s how we achieved that provision in the management agreement.”
The profit-sharing is based upon a series of benchmarks that arrived throughout the fiscal year, Tate Ross said. Highlights include the launch of Tina Turner’s world tour, two sold-out Eagles dates, an evening with Celine Dion and a banner year for family shows.
Although the news is good for the concert industry in general, it’s especially good news for AEG and president Tim Leiweke. The Sprint Center was built partially on the hopes of landing a resident professional hockey team that have yet to materialize. The Kansas City Star would occasionally make note of it in opinion pieces and pointed at Leiweke for the unfulfilled promise.
The significant profits gave Leiweke a chance to tell the city a hockey team is not essential to the success of the building.
“The economic model of this building is quite successful,” Leiweke told the Star. “The last thing we or the city want to do is throw away that model and make the arena a loss leader with another tenant.”
He added that the situation would be different if there was a professional team involved that would have blocked out 50 dates from the calendar, plus its ability to block out two months’ worth of potential playoff dates.
“I’m sure we wouldn’t be able to write a check to the city for $1.8 million (if a team was here),” he said.
AEG has a 35-year operation contract.