By Alan Prendergast
By Michael Roberts
By Michael Roberts
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By Patricia Calhoun
By William Breathes
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By Melanie Asmar
Former Denver auditor Bob Crider hasn't seen the latest Pepsi Center deal. But he's a forceful critic of the agreement announced last January, the terms of which aren't likely to change radically in the latest round of bargaining. According to Crider, the deal forged earlier this year was sweeter than a Pepsi for the Nuggets' wealthy owners.
"[Comsat] was going to get the seat tax, concessions and parking," says Crider. "They were going to get it all. There was no way they could lose. It was a godsend for them. The city made $4.5 million in 1993 with McNichols and the Coliseum. What we were getting was $2 million for thirty years."
Crider also is skeptical of Comsat's claim that it will pull the Nuggets and Avalanche out of Denver if it can't get a new arena. And he has another question: "If they make this deal for the Nuggets, what are they going to do for the Broncos?"
Leiweke now watches events in Denver from a safe distance. Ensconced at the U.S. Ski Team headquarters in Park City, Utah, he says he's surprised by the falling-out between Anschutz and Comsat and wonders if the deal would have come apart if he were still leading the charge for a new arena. "I feel terrible, because I feel partly responsible," he says. "I hope my leaving didn't cause it."
But Leiweke, who acknowledges being "intimately involved" in the opening of the Target Center, remains an ardent booster of Denver's arena project. Huge debt on poor terms sunk the arena in Minneapolis, he says. "There may be some comparisons, but the Pepsi Center is a different situation. I've seen the financial side of both of those projects. I think the Pepsi Center is a much better deal."
Better financing, a resident hockey team and the incredible $68 million that Pepsi agreed to pay for naming rights--an amount that ensures rival Coca-Cola will be nowhere in sight at the arena--will make Denver's new arena profitable, claims Leiweke. And city officials also downplay the prospect of a Minneapolis-style fiasco.
"When we started this process that whole experience was in the headlines," says city finance director Liz Orr, Denver's chief negotiator on the Pepsi Center. "The way this deal is structured is to make sure what happened there couldn't happen here."
The biggest difference, Orr says, is that Denver will take possession of the Pepsi Center and assume no debt. Minneapolis had a lease on the land under the Target Center, but otherwise had no control over the arena.
"What has to be delivered to us is clear title on the arena with no debt," Orr says. "We'll also have a new thirty-year lease with the Nuggets that's independent of that. It's a very different deal than Minneapolis."
Comsat and its partners will use revenues from the arena and whatever profit they make managing the other city facilities to pay off the debt taken on to build the $132 million project. The city would have no legal responsibility for that debt. But as Denver's past dealings with the Nuggets make clear, the team's problems have a way of becoming the city's problems.
For example, though Mayor Webb has made much of the Nuggets' willingness to sign a thirty-year lease at the Pepsi Center, the mayor himself has already demonstrated that the team's leases are made to be broken. Webb renegotiated an earlier lease the Nuggets had with the city in 1992, when the team was performing poorly and asked Denver for help. The new lease Webb signed runs well into the 21st century--and it, too, will have to be broken in order for the Pepsi Center deal to go through. What would prevent the Nuggets from trying to break their third lease if attendance at Nuggets and Avalanche games falls off a cliff? Nothing, acknowledge city officials.
"We'd all be kidding ourselves if we didn't say over time a team could come and ask for a renegotiation of the terms," says Orr. But she insists that the risk in the Pepsi Center deal is "overwhelmingly" on Comsat and its partners.
And any risk Denver may incur, Orr adds, is worth it. The city has a vital interest in keeping the Nuggets and the Avalanche in town, she says: "Look at what cities that have lost teams have done to get them back. The Nordiques asked for a new arena in Quebec and didn't get it. It's not an idle threat."
Orr says local sports teams are important to Denverites and bring money-spending suburban residents into the city. "People in this area see sports teams as a source of civic pride; that's the principal reason you should do these things," she says. "Estimating the economic impact is sometimes difficult, but those impacts are real. You get a lot of national coverage and media attention. A lot of businesses think it's a major amenity whenever they're making relocation decisions."
Arthur Johnson at the University of Maryland has been studying the economic impact of the national arena craze. He predicts the construction of the Pepsi Center will simply shift dollars now spent at McNichols to the new arena, and there will be no net gain. "The arena itself won't be the economic generator the boosters claim, but that doesn't mean the project is not worth it," he says. "You have to look at the spinoffs it might produce."