June 29, 2001
Arena to be beacon for Memphis
By David Williams
So, what will a $250 million basketball gym look like, anyway?
Will the home of the NBA's Memphis Grizzlies be built with a nod to the past, as with Indianapolis's retro-minded Conseco Fieldhouse? Or might it reflect Memphis, as with San
Antonio's home-to-be, the SBC Center, which the team says will have a "South Texas look and feel."
City, county and team officials say they haven't decided yet. They say the more pressing concern is selecting the site from two downtown possibilities - Union near AutoZone Park, or south of
Beale near the Gibson Guitar plant.
But they can tell you this: While the arena will be designed primarily for basketball,
it will be less a gym than a public icon, gathering place and destination point.
"It's (going to be) an amazing complex," said J. R. `Pitt' Hyde III, who leads the local investor group buying a share of the Grizzlies.
Plans call for the arena to have:
A capacity of 18,500.
At least 75 luxury suites.
2,500 club seats.
An attached parking garage with at least1,800 spaces.
The arena also will include retail andrestaurant areas, public meeting facilities,team practice and training facilities,space for a second major tenant and apro-sized ice rink.
It will also have a corporate name -FedExForum, perhaps?
FedEx Corp. will pay the Grizzlies anundisclosed amount in a long-term arenanaming rights deal.
Barbara Hyde, a member of the localinvestor group buying a share of the Grizzlies,
said her enthusiasm for a new arena soaredafter visiting recently built facilitiesaround the league.
She toured Conseco Fieldhouse in Indianapolisand Atlanta's Phillips Arena, and saw,
"in bricks and mortar, what these first-class,state-of-the-art arenas are all about.
Press Release October 16, 2002
FedEx, Area Leaders Unveil Name of New Memphis Arena
MEMPHIS, Tenn.--(BUSINESS WIRE)--Oct. 16, 2002--FedEx Corp.(NYSE:FDX - News) and the Memphis Grizzlies today unveiled the name ofMemphis' newest entertainment venue: FedExForum.
FedEx acquired naming rights for the arena after the MemphisGrizzlies became the city's first NBA and major-league sportsfranchise last year. Company officials said the facility wouldsignificantly add to other public projects that are part of thevibrant and growing downtown area, including AutoZone Park, home ofthe Memphis Redbirds.
"FedEx strongly believes the Memphis Grizzlies will continue tobring tremendous benefits to the Memphis area, the place FedEx hascalled home nearly 30 years," said T. Michael Glenn, FedEx Corp.executive vice president of market development. "Through thisagreement, FedEx is building upon our commitment to the Memphiscommunity and our employees, providing FedEx with a high return oninvestment by extending the company's visibility, building brandawareness through a positive sports-marketing arrangement andenhancing our ability to attract and retain world-class employees."
Glenn said FedExForum was a logical choice for the name becausethe arena will be used for sports and other entertainment. It is alsounique in that no existing NBA arena has "forum" as part of its name.
"A forum is a public place, and this arena will be a showcase forprofessional sports and family entertainment that will serve theMemphis area well for years to come," Glenn said.
He added that FedEx has a strong history in sports marketing,which FedEx uses to enhance its brand worldwide. FedEx has severalmarketing sponsorships in professional sports, including football,golf and auto racing.
"This is an historic moment for the Memphis area and theGrizzlies," said Jerry West, Grizzlies president of basketballoperations. "Today's announcement speaks highly of the FedExcommitment to the city, and serves as reinforcement that the Grizzliesare here to stay long term. Our fans can watch this building grow andsoon enjoy an arena equal to or better than any in the NBA. Equallyimportant, FedExForum will be the home to a team that will makeeveryone proud."
Scheduled to open in fall 2004, FedExForum is designed to provideoutstanding guest comfort, excellent sightlines and acoustics, and theflexibility to host a variety of events. As the new home of theMemphis Grizzlies, the arena will seat 18,400 spectators over fivelevels for NBA basketball.
With a variety of seating layouts, as well as an integrated icefloor, the facility will also be able to host events ranging fromconcerts and hockey to iceskating, exhibitions, circuses, familyshows, rodeos and indoor motorsports.
Located one-half block south of historic Beale Street in downtownMemphis, the FedExForum will tie directly into the surrounding area,with outdoor entertainment and party areas and a 35,000 square-footexterior plaza. Inside the facility, guest comforts and amenitiesinclude wider seats and aisles, two main concourses with more than 100points of sale for concession and retail items, a Grizzlies teamstore, casual sports bar, premium restaurants and lounges, andinteractive displays and exhibits--all showcasing the unique flavor ofMemphis.
EDITOR'S NOTE: FedExForum is one connected word, with an upper-case "F" in Forum.
With annual revenues of $21 billion, FedEx Corp. is the premierglobal provider of transportation, e-commerce and supply chainmanagement services. The company offers integrated business solutionsthrough a network of subsidiaries operating independently, including:FedEx Express, the world's largest express transportation company;FedEx Ground, North America's second largest provider of small-packageground delivery service; FedEx Freight, the largest U.S. provider ofregional less-than-truckload freight services; FedEx Custom Critical,North America's largest provider of expedited time-critical shipments;and FedEx Trade Networks, a provider of customs clearance,international freight forwarding and trade facilitation.
THE ULTIMATE SPORTS ROAD TRIP
By: Andrew Kulyk & Peter Farrell
November 10, 2004 - It was the end of the 2001 season when the Grizzlies announced that they were pulling up stakes in Vancouver, where they had struggled through several dismal seasons, and were moving to Memphis. What Memphis did not have was a state of the art venue, so for the first few seasons, the team would play at the Pyramid, the home of the University of Memphis Tigers. This is a distinctive venue located on the riverfront and shaped like, well... a pyramid. Plans were put in motion for the Grizzlies new home... a site was selected adjacent to the historic Beale Street entertainment district, and in October of 2004, the FedExForum opened
its doors for the first time. The Memphis Grizzlies would be setting up shop in their third venue in their brief history, here, in the middle of the birthplace of Blues and Soul.
|FedExForum Ranking by USRT|
|Fan Support|| 5.5|
|Concourses/Fan Comfort|| 7.5|
|Bonus: Rock & Soul Museum|| 2|
|Bonus: Beall Street|| 2|
|Total Score|| 58.5|
Getting to the Venue
The arena is located on the south side of downtown and right adjacent to the Beale Street district. Highways I-55, I-40 and I-240 offer convenient access and signage to get you to the venue, which can easily be spotted from most major highways. This is very much a driving city, so public transportation is not really that great an option, although a downtown trolley line loops through the business district and can be a fun option to get to the venue. The Beale Steeet or Linden stops still means about a three to four block walk to the venue. With everything else going on around downtown, parking can be a bit tight. The parking ramp adjacent to the venue is reserved for season ticket holders, and surface lots around the arena run about $10 to park. Some
of the side streets south of the venue do offer free street parking.
Outside the Venue
Man oh man, what a perfect location for the arena. Memphis is a bustling city, and shopping, hotels, restaurants, nightclubs are all nearby. One block north is Peabody Place, a multilevel indoor/outdoor shopping mall. Autozone Park, the home of the AAA Memphis Redbirds, is another block away. But it is the exciting Beale Street entertainment district which lies at the feet of the FedExForum entrance plaza. This historic area is packed with cafes, clubs, restaurants and live music venues all celebrating the historical musical contributions that this area has made to our American heritage. New construction of office space and condominiums outside the arena were designed to architecturally match the older structures along Beale Street and blend in seamlessly.
A large public plaza and meeting area is outside the arena's main entrance, and ticket offices and the Rock and Soul Museum share space in this area.
A large glass atrium lobby greats you inside the door, with a back lit movie theatre type marquee running along the inside fascia. On the right is a glassed in practice court, where visitors can walk in during the day and watch the team do their thing. On the left is a large team store called the "Grizzlies Den", as well as a sports bar called the "Jack Daniels Grill".
What makes this venue unique, special and gives this building its distinctive character is the meticulous effort that was made to celebrate the history of music, Memphis style, through a collection of murals, displays, concession canopies and signage. Everything here oozes music. Concourse areas are themed according to Blues, Jazz, Gospel, Soul and Memphis music today. The faces of musical icons Elvis Presley, B.B. King. Duke Ellington and Johnny Cash, among many others can be seen everywhere. It is all done with great taste and Memphis flair. Dare we say it, but the plaza, lobby and concourse layout bears a certain resemblance to Indianapolis' Conseco Fieldhouse, as if they lifted the blueprints to the place. But thankfully, they did not emulate the Pacers' "retro" look, which is so appropriate in the Hoosier State but would be so
totally out of place here. Instead, they developed their own unique look and feel in a musical way.
Again, the seating sections and bowl design have the look and feel of Conseco Fieldhouse. The playing surface is below grade, so lowest seats are accessed by going down stairways from the concourse. The top of the upper deck is a bit high compared to other venues, with over 20 rows of seats to the top. Here they have not one but two separate 360 degree surround ribbon boards, and they match up to dot matrix boards at the base of the scoreboard, which has four sided video panels. Large stat boards hang high above each end zone. All seats are colored medium/dark blue.
In keeping with the music theme, we have to make mention of the cool concession canopies, many of which look like old style 50s diners. Names such as "Spin Pizza", "Flip Side Diner", "Rock Around the Clock Grill", "Crosstown Cafe" and "Juke Joint Subs" all tie in to the building's theme. From our perch it is just an amazing food selection... grilled burgers, Memphis wings, bbq specialties, chili dogs, toasted subs, salads,
frozen drinks. But our favorite has to be the barbecued pulled pork nachos, a special Memphis treat. Other local favorites include the fried catfish and popcorn chicken.
Besides the suites which ring the building at the top of the 100 level and the sidelines of the 200 level, there are three different premium seating options here, all on the 200 level. Club seats straddle the sideline, and one end zone has a fine dining restaurant called "Opus", with views of the playing surface from many tables. At the other end zone is a restaurant called "Blue Note Lounge", and hybrid club seat/suites with ledge seating and TV monitors at every box offer a unique seating option. Yet another premium restaurant, called "Backstage", is located at floor level and is available for courtside ticket holders.
Banners and Retired Numbers
This franchise has had a sorry and wretched history, and in 2004 they finally attained their first playoff berth and things here are looking bright for the future. Thankfully, the front office didn't manufacture some silly accomplishment and hang some dopey banner. For now, the rafters remain empty.
Slam Dunks, Assists, Fouls...
Assist - Sharing space with the teams' administrative offices right next door is the Rock and Soul Museum, offering a great walking tour of this region's rich musical history and many artifacts on loan from the Smithsonian.
Slam Dunk - and special thanks to Grizz' staffers Don Hardman and Paula Yancey, who took us on a special tour through the venue to show off the building's finer points and answer questions. We first met up with Don in Vancouver back in 2001, and as he pointed out, the Grizzlies have the unique distinction of hosting three official USRT visits... General Motors Place in 2001, the Pyramid in 2002 and now the FedExForum.
Technical - to the "Church of God In Christ" convention, which tied up every hotel room in Memphis and forced us to find accommodations in and commute from way out in suburban Bartlett.
Slam Dunk - to MEMPHIS, which really is a great city and one of our favorite cities to visit. Great downtown, Beale Street, live music, barbecue, Graceland, Autozone Park, Peabody Place, nice waterfront, just lots to see and do here, and now this nice new arena. We will come back anytime!
Slam Dunk - to the USRT Karma, which delivered the home team a 110-87 win over the Los Angeles Lakers. Andrew's favorite, Pau Gasol had 22 points for the Grizz, and at one point they were up by 33 points in beating up on LA. We put the USRT curse on the Lakers a while back after the disgusting treatment we endured from their staff at Staples Center and LA is now 0-4 in our presence. Take that, Lakers!!! Oh, but as far as another good sphincter police story, please read on...
Foul - to the game day staff at FedExForum. To put it bluntly, the ushers here totally suck. Mind you, they will greet you with a smile, but at every entrance, every alcove, every tunnel to the seating bowl, they position themselves strategically and in an aggressive stance, almost daring you to try and pass them without producing a ticket. This nonsense goes on until the final buzzer sounds, they don't let up here in the second half, or for that matter, even after the game. Yet another usher forbade us from taking ANY photos and insisted we put our camera away. If you're like us, and want to tour the venue and perhaps take a couple of snapshots, forget about it. You will be jostled, hassled and turned away, but at least it will be done with a smile.
Side Story Here - we were walking through the club level with our front office hosts and tried to wander into the seating area to take a couple of photos. An usher at the top of the staircase started giving the "none shall pass" routine to us and our guides. Don Hardman explained who he was and who we were and STILL, this $5 an hour snot is giving a team vice president attitude and hard time. We just kept walking, shaking our heads in amazement.
And One More Side Story - two nights after our visit our friends and fellow road trippers Gary Herman and Mike Casiano from NYC made their first visit here for the Grizzlies/Warriors game. The first thing that came out of Gary's mouth when they called to compare notes was "nice arena, but what was up with those *&%*&@ ushers?" So this is not just our take!
Assist - Gotta mention a couple signs on the upper concourse which are designed to mimic radio station canopies. So what do the Grizzlies come up with? "W-G-R-Z" which happens to be the call letters of our NBC affiliate here in Buffalo. We already gave Ed Kilgore and Stu Boyar over at Channel 2 the heads up on this one!
FedExForum earns high marks through and through... great design and architecture, and they could not have picked a better location, right in the heart of a clean, vibrant and exciting downtown center city and the historic Beale Street location to boot. Next, this building has its own unique character and soul, thanks to the thoughtful and splendid placement of murals, artifacts and memorabilia commemorating this region's rich musical history and genres in a great way. Third, the fan amenities - electronic gizmos, concessions, eateries and merchandise stores are top notch. From a bricks and mortar standpoint, we can easily place the FedExForum in the company of the NBA's elite venues in locations such as Indianapolis, Portland and Dallas. But if you know us and know this site, then you know how much emphasis we put on friendly and helpful customer service and game day staff. Here in Memphis, where southern hospitality and southern gentility should be the norm, the Grizz' fail the test and for that we give them big deductions. Fortunately for them, this is a problem that is totally solvable. We'd be happy to come back to Memphis for another evaluation!!
FBI TO REINVESTIGATE PARKING GARAGE DEAL IN MEMPHIS
March 26, 2009
Copyright 2009 MediaVentures
Memphis, Tenn. - They called it Garage-gate, a $20 million scandal that tainted construction of
Memphis' shrine to NBA basketball, the FedExForum arena.
The scandal unraveled when state auditors said Memphis and Shelby County had misused a
$20 million grant awarded to build the arena's parking garage.
Critics called it a massive fraud. Criminal investigations were launched, yet no charges were
But now, five years after FedExForum opened and three years after the Garage-gate probe first
made front-page news, FBI agents and state auditors are again asking questions.
In recent weeks attorneys for the city and county have been given lists of written questions from
the state comptroller's office while others have received furtive visits by agents of the Federal
Bureau of Investigation's local field office.
The inquiries seem to have a common goal: To determine if anyone deliberately misled
authorities who turned loose the $20 million in federal funds to build the garage.
"I could go to my grave happy if somebody exposes this stuff," said former county
commissioner John Willingham, who pushed for an investigation three years ago. Willingham said
he was interviewed by the FBI as recently as June but hasn't been approached since.
One source who asked not to be identified said FBI agents asked last month about the site
location of FedExForum as well as decisions that led to the $20 million grant awarded to build the arena's garage in 2002.
It was in October of that year that the city signed a grant agreement with the Tennessee
Department of Transportation to accept $20 million in federal funds for the garage. The grant
required the city to build a nonprofit "intermodal transfer facility" and public bus station at the garage to help reduce Downtown traffic congestion and promote mass transit.
The plan included a Memphis Area Transit Authority ticket station at the garage.
But there was a problem: A year earlier, the city and county had signed a contract with owners
of the Memphis Grizzlies basketball team guaranteeing them all revenue from use of FedExForum
and the garage, which was to be run as a for-profit operation.
When MATA officials tried to open the ticket station when the garage opened in 2004 they were
A subsequent TDOT audit of the grant spending led the state to recover $6.3 million, achieved
by dropping funding for two city traffic-improvement projects.
But that didn't end the controversy. Another state audit found the city had failed to adequately
oversee construction of the garage.
"The city of Memphis entered into two agreements that were incompatible - each contract
could not be fulfilled without potentially breaching the other," officials with the state comptroller's division of municipal audit wrote in 2007.
That audit report came at the request of Shelby County Dist. Atty. Bill Gibbons.
Gibbons also asked the comptroller's division of state audit to review the state's oversight of
federal funds used to build the garage - an audit that remains open.
Records of that audit probe show the Memphis City Attorney's Office received a list of written
questions on Feb. 19. The questions were aimed at determining if the city had told the Federal
Highway Administration about the 2001 operating agreement with the Grizzlies and whether
highway administration officials were told the agreement might conflict with federal law.
Another e-mail sent Feb. 24 by state auditor Jason Conner asks if city officials are familiar with a document believed to have been "prepared by someone in the City Attorney's office and
subsequently provided to the FBI."
The document in question involved a timeline listing actions that led to the 2001 operating
agreement and the subsequent $20 million grant contract with the state.
Arthur Hayes, director of the comptroller's state audit division, said last week he expects the
audit to be issued in about a month. He declined to discuss specifics, citing the ongoing
Meantime, FBI agents also are asking new rounds of questions.
For months now, Herenton has been the focus of widely publicized FBI probes involving plans
to move the Greyhound bus station out of Downtown and lavish parties paid for by prominent
In June 2001, Frank Ricks of Looney Ricks Kiss Architects, Memphis Grizzlies owners and
then-County Mayor Jim Rout favored a site on Union Avenue across from AutoZone Park.
But Herenton and his special assistant, Pete Aviotti, fought that idea, preferring the current site of the arena.
By then, Herenton was heavily involved in relocating the nearby Greyhound bus station on
Union to the airport area as part of an effort to redevelop the site.
At the time, Herenton said publicly that his interest in redeveloping the Greyhound property
had no bearing on the arena location process.
Sources now say that Herenton secretly made more than $90,000 by obtaining and selling an
option to purchase the Greyhound site - details that are the focus of an ongoing grand jury probe.
"Supporters of site A (the Union arena site) would say it complements the project we're talking
about, makes it more viable," Herenton said in 2001.
"If I had a selfish interest, it would be that I would want the arena at site A, but that's not my primary interest when it comes to site selection." (Memphis Commercial Appeal)
MEMPHIS ARENA NEEDS HELP WITH DEBT
June 4, 2009
Copyright 2009 MediaVentures
Memphis, Tenn. - The Memphis and Shelby County Sports Authority is asking the city and county
for up to $160 million in new debt so they can lower interest payments which have skyrocketed.
City and county taxpayers would contribute more if revenues dedicated to paying off the
construction debt for FedExForum aren't enough to cover bond payments. Those revenue sources
include sales tax on items sold at the arena, a "seat fee" charged on each ticket sold, car-rental
taxes, city and county hotel taxes, and a contribution from Memphis Light, Gas and Water
The authority originally sold $202 million in bonds to finance the arena which opened in 2004.
In order to reduce payments, the agency refinanced some of its fixed-rate debt to variable-rate
debt. The move cut interest from 5.25 percent to 4.25 percent.
However, as the economy imploded, the interest rates climbed to nine percent. The authority
has been paying for the higher costs from reserve funds, but that cannot continue. It's hoping to
refinance the debt with a fixed rate instrument.
REPORT QUANTIFIES BENEFITS OF GRIZZLIES, ARENA
October 7, 2010
Copyright 2010 MediaVentures
Memphis, Tenn. - A study shows that after 10 years in Memphis, the NBA Grizzlies and the
FedEx Forum generate $223 million a year in economic benefits to the city, according to the Memphis Commercial Appeal.
The study - which the Greater Memphis Chamber commissioned - says 1,374 full-time-equivalent jobs are created annually from team and arena operations, and 35 percent of arena patrons come from outside Shelby County. Of the $223 million total economic impact, $207 million comes from team and arena operations and the rest comes from visiting team and spectator spending on such things as lodging and retail.
John Gnuschke, director of the Sparks Bureau of Business and Economic Research at the University of Memphis, reviewed the study at the request of The Commercial Appeal.
"Many things are solid and represent models and techniques that everyone uses, including data assumptions and sources," Gnuschke said. "The study looked fine from that perspective.'"
However, Gnuschke said that a large part of the spending from team and arena operations comes from Memphians - resulting in a shifting of local spending patterns rather than new money being brought into the community.
Younger Associates president Sharon Younger noted that the percentage of arena patrons from outside Shelby County - 35 percent for all events, 40 percent for nonbasketball events - was higher than expected. Younger did the research for the Chamber.
The visitors from beyond Shelby County spend an average of $23.40 outside of FedExForum, according to the study.
The study included the Grizzlies' 45 exhibition and regular-season games, as well as the 130 annual non-Grizzlies ticketed arena events such as concerts, mixed-martial-arts competitions and family shows. The study did not include University of Memphis regular-season games because the Tigers already were playing in Memphis.
The arena opened in 2004, with a variety of revenue streams, including hotel and motel taxes, seat-use fees and a rebate of NBA-related sales taxes, to provide annual debt service payments.
If the revenue streams fall short, the city and county are liable for the difference. But the revenue streams have, thus far, been sufficient, the newspaper reported.
GRIZZLES EARN SIGNAGE PROFITS ON CHINESE TELEVISION
December 16, 2010
Copyright 2010 MediaVentures
Memphis, Tenn. - The Memphis Grizzlies used three of its home games that were televised in
China to make additional signage revenues, the Memphis Commercial Appeal reported. In those games, the Grizzlies sold advertising on their tri-vision board along the front of the
scorer's table to Chinese corporations - at a much higher rate than local businesses pay, the newspaper said.
Chad Bolen, Grizzlies vice president of corporate sponsorships, told the newspaper most of the Chinese companies that bought advertising spots are sporting goods companies. The Houston game featured ads from Erke, Peak, Qiaodan and Voit. Each got the company displayed for two minutes. The Grizzlies would not disclose to the Commercial Appeal how much the companies were charged other than to say, "'they pay well."
Three years ago, the Grizzlies had one game against Houston and Chinese star Yao Ming aired back to China. Last year, they got a game against Houston and one against the Lakers, whose Kobe Bryant jersey is the top seller in China. This year, Miami was added to the mix because of James.
Not only have the Grizzlies benefitted from the added business, but local companies like FedEx and International Paper that advertise with the Grizzlies also got exposure in China. Bolen expects to get two or three more games this season.
"What I think is probably more valuable than the money we get from the Chinese companies is the exposure we can help with the local companies that have a presence in China, mainly FedEx and International Paper," Bolen said. "What's good for FedEx is good for all of us.
"These companies don't have to pay anything extra. That's an added benefit of doing business with us, and the NBA."
NBA LOCKOUT COULD IMPACT MEMPHIS ARENA FUNDING
August 4, 2011
Copyright 2011 MediaVentures
Memphis, Tenn. - A year-long NBA lockout could send the fund used to pay off FedExForum
bonds into the red by 2022, forcing the city and county to make up the difference, the Memphis Commercial Appeal reported.
The shortfall could reach $10.6 million by 2029, or about $600,000 annually for each government.
The lockout was one of three scenarios presented to the Memphis and Shelby County Sports Authority by Lisa Daniel, managing director at Public Financial Management, the group that advises the authority. The other two scenarios each envisioned an uninterrupted NBA season but a prolonged weak economy - with projections ranging from a small surplus to a shortfall starting in 2025, the newspaper said.
The bonds, authorized in 2002 by the sports authority, are paid with six different revenue streams. Sales tax rebates from NBA-related sales, such as tickets and concessions to Grizzlies games, and seat rental fees would be most affected by a lockout.
With the loss of revenue associated with a lockout, projections show the current surplus fund of $10.8 million whittling into the red in time for the senior bonds' Nov. 1, 2022, payment.
The lockout projections are based on the 1.5 percent growth in NBA revenue and car rental taxes and 65 percent of original projections on seat rentals Ð "the worst-case scenario," board chairman Bill McGaughey said.
Daniel also presented projections based on two models of a weak economy but with no lockout. Assuming two percent growth in the NBA sales tax rebate and car rental taxes, the bonds would be paid off without shortfall and with a $2.7 million surplus. Assuming 1.5 percent growth in those revenue streams, a shortfall would begin in 2025.
But though there is the potential for problems in the future based on conservative projections, authority members were told that there are no signs of imminent stress for the bonds, which paid for the $250 million project that opened in 2004.
"Even with the lockout, the senior bonds are safe for the next several years," Daniel told the members.
The Commercial Appeal noted an economic uptick or increase in NBA-related revenue, assuming the resumption of play, could help turn the surplus fund away from the red.
MEMPHIS MAY SUE NBA IF GAMES ARE MISSED
October 20, 2011
Copyright 2011 MediaVentures
Memphis, Tenn. - The Memphis City Council approved a resolution asking the council's
attorney to "explore all options" - including a lawsuit against the NBA - to recover revenue that may be lost due to the lockout, the Commercial Appeal reported.
"Everything is on the table to recover the funds, if any are lost," council chairman Myron Lowery, who sponsored the item, told the newspaper.
A year-long lockout could send the fund used to pay off FedExForum bonds into the red by 2022, forcing the city and county to make up the difference.
The shortfall could reach $10.6 million by 2029, or about $600,000 annually for each government.
Earlier this month, NBA commissioner David Stern canceled the first two weeks of the season after failing to reach an agreement with the players union.
The FedExForum bonds, authorized in 2002 by the sports authority, are paid with six different revenue streams.
Sales tax rebates from NBA-related sales, such as tickets and concessions to Grizzlies games, and seat-rental fees would be most affected by a lockout.
"We get a per-seat fee for each NBA event and for each NBA event missed that is revenue we are missing," said Lowery.
Council attorney Allan Wade said the likelihood of the city filing suit against the NBA will rise with every missed game.
"If (the lockout) becomes protracted and we lose more revenue, it becomes a real issue for us," Wade said.
MEMPHIS OFFERED FUNDS TO OFFSET NBA LOSSES
November 17, 2011
Copyright 2011 MediaVentures
Memphis, Tenn. - A $13 million surplus fund will help the city and county endure the financial
impact from a long-term NBA lockout, the head of the Memphis and Shelby County Sports Authority told City Council members.
"We've been able to build up our reserves over the last eight years," said Bill McGaughey, chairman of the Sports Authority. "That's what they were designed for, to deal with any lockout or downturn in the economy."
The NBA players' association rejected the league's latest proposal for a new labor deal and began disbanding, paving the way for a lawsuit that throws the season in jeopardy. And earlier, the NBA announced that it was canceling games through Dec. 15.
The Memphis Commercial Appeal reported that Sports Authority officials said a year-long NBA lockout would likely mean a loss of about $4.5 million in revenue at FedExForum from a $1.15 seat-use fee and from tax on NBA sales in Shelby County.
The funding used to pay the FedExForum annual bond debt service of roughly $18 million comes from a county hotel/motel tax; Memphis Light, Gas and Water Division annual payment-in-lieu-of-taxes ($2.5 million per year); car rental sales tax; seat-use fees; and an NBA-related sales tax. The two sources directly related to the Memphis Grizzlies' home schedule are the seat-use fee and the NBA sales tax.
The $13 million "senior surplus fund" could be used to cover any shortfall resulting from the lockout, and the city and county are not required to pay back funds drawn out of that fund, the newspaper said. The Sports Authority has another $23 million in a debt service reserve fund. However, the city and county would be responsible for replenishing any funds drawn out of the debt service reserve fund.
If the NBA does have a season, even a shortened one, the potential loss of $4.5 million could be reduced, McGaughey said. Even if the entire season is lost, the "senior surplus fund" could be used to cover the shortfall with no cost to taxpayers.