NCAA reduces seating requirements; Spokane PFD’s Arena expansion no longer required
January 28, 2013 5 Comments
The intent of this web site has been to collect local economic data and historical trends. Some times we stumble on non-economic data we would rather not see and wish we had nothing to do with it. I wish the following finding is not true as this looks really bad. I am not a reporter – and hopefully the linked sources are all wrong. But it would be great if a real reporter would look into this.
- Last year, the PFD said the Arena needed to be expanded to meet a new NCAA requirement of 12,000 “sellable” seats. The Arena already had 12,000 seats but many hundreds of seats are used by media, bands, cheer teams, official and others such that the Arena had less than 12,000 “sellable” seats.
- But in June 2012, the NCAA lowered the minimum seat requirements to 10,000.
- When the Spokane Arena previously held the NCAA Division 1 Men’s Basketball rounds one and two, they failed to fill all available seats (this is before the expansion).
- The Arena expansion is no longer needed and the PFD is covering this up.
Lots more after the break …
Last year, the Spokane Public Facilities District or PFD said new NCAA seating requirements meant taxpayers had to fund an Arena expansion. The NCAA was going to require arenas to have at least 12,000 “sellable” seats starting in 2011 for men’s basketball and a seat expansion was put to a vote in April of 2012. Back in 2010, the Arena said it did not have to expand – it could just add temporary seats. But by 2012, the PFD wanted a different solution.
As best we can tell, the NCAA first round weekend is the only event that would have filled those seats. They said in 1995, “Spokane has a lot of rivals for a very few [large] events“. In fact, the arena was originally built for 14,000 seats but they were not put in because there was no event that would use all the seating. Larger arenas were no guarantee of getting an NCAA game either – as Seattle and Sacramento have discovered.
Indeed, when the Spokane Arena held the Division I Men’s Basketball first and second round games in 2010, the event failed to fill the available seats even then:
- First round attendance was 10,899.
- Second round attendance was 11,036.
The NCAA set the 12,000 seat minimum in 1993 and this was covered by the newspaper in 1995. Spokane held NCAA March Madness games since then but the NCAA announced that starting in 2011 it wanted 12,000 “sellable” seats.
THEN... on December 18, the Spokane PFD Board was quietly informed that the
“minimum number of seats has been reduced by the NCAA” .
As of June 2012, the NCAA reduced the seating requirement to 10,000 seats (see page 4, section 2a of the NCAA tournament rules) through at least 2015. And likely longer as many areas of the country lack 12,000+ seat arenas, funding is not available for expansion of entertainment facilities, and empty seats at poorly occupied NCAA games look bad on TV. This seating change was likely announced in a teleconference on June 25th and distributed in the NCAA facility requirements document, dated June 27th.
The PFD meeting minutes obscure this by not mentioning the new number but hints at the PFD’s problem:
“It was agreed that if the path changes, then there needs to be significant public education“.
The PFD continues to keep this hidden from the public. On January 8th, 2013 the PFD issued a press release implying the NCAA 12,000 seat need. Here’s a January 9, 2013 news story that was sourced from the PFD’s press release, saying the NCAA requires 12,000 seats.
(Thanks to a tip from a city council member the following update has been added)
Here is a statement from PFD CEO Kevin Twohig on January 8, 2013, in their own press release:
“This is really a win, win for everyone,” says District CEO Kevin Twohig. “Instead of spending more than $3 million and disrupting the Arena for several months to ensure that we’d still have the opportunity to host the NCAA men’s tournament, now we’ll be able to replace every seat in the house, improve guest comfort, and still meet the seating guidelines while spending almost a-half-a-million dollars less than originally planned.”
While the savings is good, as of January 8th, they are still implying the NCAA seating requirements (the basis for the bond election) well after the December 18th meeting. (Twohig’s statement has been PR wordsmith’ed to imply the 12,000 seat fiction while hiding the 10,000 seat requirement. After educating the public last year about the 12,000 seat requirement, now they refer to “seating guidelines” to avoid revealing the NCAA change. The PFD is misleading or lying. And it looks really bad.) (This paragraph was shortened, removed the earlier “lying” reference and replaced with “misleading or lying” since we don’t know which – you can decide.)
The PFD withheld information from voters, is covering up the NCAA reduced seating requirements, continues the fiction in their January 8th press release and is continuing an expansion that is no longer required.
Again, it would be great if a real reporter would look into all this. I do data, not reporting.
Here’s more information that the PFD did not share with us:
- Attendance is in a long term decline (see chart below).
- Trade show industry studies find convention attendance nationally is in long term decline; the era of the mega convention is thought to be ending.
- The PFD’s facilities were supposed to increase visitors to Spokane but air travelers to Spokane are less than 1996 and continue downward.
- The NCAA set the 12,000 seat requirement in 1993 and in 2012 reduced the seating requirement to 10,000 seats; the NCAA no longer requires the Arena to be expanded.
- The NCAA discussed raising the minimum to 15,000 back in 2009. But the NCAA backed off because attendance at NCAA games was dropping, falling to 81.6% seat occupancy in 2009. Rather than have TV viewers see empty seats, the NCAA decided it is better to run games in smaller arenas that are full.
- Did you know the Arena was originally designed as a 14,000 seat arena? The seats were not added because there had not been an event in Spokane that would have used that many seats.
- PFD facility occupancy usage – for the limited data the PFD makes publicly available – was only 41% in 2007. See occupancy figures here.
- The PFD’s economic impact studies picked two unusual years to present an economic impact that is not normal – but presented this as typical yearly impacts in Spokane, when they are not. The “cherry picking” is apparent in the attendance trends chart (see below).
- Main point of the above: The data does not agree with the PFD’s bond campaign last year. They can do a lot better in that regard.
- The PFD did not make the full study (we paid for) easily available, and the full EWU study explained the authors’ concerns about the selection of dates for the economic impact study.
- The PFD says they need to expand the Convention Center again in the future. Even though long term attendance is flat to down.
- Ethical and competent management would respond to these fundamental changes, involve all stakeholders (like the voters and taxpayers) and make new plans. Management should have specific plans in place to increase occupancy and usage of the facilities.
- Most of the original reasons given for the expansion programs are no longer true.
- The purpose for the PFD remodeling is to spend money and they seem to be good at that.
- The PFD has a history of questionable business practices, misleading voters, cooked financial plans, complex financing deals, agreements that no one understands, hundreds of millions of dollars in tax money, and a chummy relationship with a large downtown property owner.
- In December 2011, the Spokane PFD’s bond rating was cut by Moody’s.
New York, December 13, 2011 — Moody’s Rating
Moody’s has downgraded the rating on the Spokane Public Facilities District Hotel/Motel Tax and Sales/Use Tax Refunding Bonds Series 2003 and Series 2011 to A2 from A1; a negative outlook has also been assigned. The Series 2011 bonds are secured by a gross pledge of the hotel/motel and sales/use taxes, on parity with the Series 2003 bonds. In addition, the Series 2003 are secured by a state credit sales/use tax. Funds from the current issue will be used to refund all outstanding maturities of the district’s Series 2001 bonds.
- The Inlander has a report on the downgrade (on Series 2003 and 2011 bonds), how the PFD thought it might get a city/county guarantee on the bonds for the Arena and CC expansion but instead had to ask the city and county to raise hotel taxes.
- Update: I am told the city council became aware of the NCAA’s seating reduction at least two months ago. There has been no press coverage of this material change in the PFD’s expansion program.
The expansion campaign was funded by the Spokane Regional Convention & Visitors Bureau, Avista Corp., Cowles Company, Downtown Spokane Partnership, Garco Construction, and others under the misleading name “Citizens for Jobs Now” – there are no citizens listed in the group – it was funded 100% by downtown businesses, hotels and construction companies.
The PFD’s credibility is zero.
The PFD hid the decline. We do not need “significant public education” – we need honesty.
The PFD needs to publicly post all relevant data and information about their operations on the web site. Everything. Attendance, occupancy, budgets, relevant studies (all of them, that we the taxpayers paid for), monthly attendance updates, detailed meeting minutes (not abbreviated summaries that seem intended to hide information). No more secret smoky backroom deals between hoteliers, downtown businesses and construction firms for the purpose of looting the peasants.
The local news media continues to cover for the PFD (because thankfully, you’re in Spokane! Hah hah!).
Coverage of the NCAA seating change in:
- San Diego Union Tribune-“Last spring the NCAA quietly lowered its minimum “sellable” capacity for the tournament’s opening weekend to 10,000″
- Sports Business Daily
- Spokane – uh, nothing.
- Why did the PFD pick economic impact years 2007 and 2010 which were not representative of typical years and mislead the voters by pretending these were normal annual impacts in Spokane?
- Why did the PFD include the full CH Johnson study on their web site but only the Executive Summary of the EWU study on their web site?
- Why did the PFD (with the help of local media) hide the attendance trend from voters?
- Why are we pouring more money in to facilities that have fewer attendees than 13 years ago? After 13 years, and large sums of money, the PFD has not been able to increase attendance. What specific plan does the PFD have to reverse this trend?
- Why has the PFD not informed the public that the reason they gave for expanding the Arena is no longer true?
- Why is the PFD going ahead with an Arena expansion that is no longer required?
The secret PFD annual attendance chart:
As pointed out on this blog’s previous report on the Convention Center expansion, airline service matters a lot in choosing a convention or event site and Spokane presently has limited airline service with about 50% fewer non stop destinations than a decade ago. Local officials acknowledged this problem in 1995.
Here’s what the NCAA requires
Airline Service and Equipment. Prospective host cities must have appropriate frequency and quality jet airline service. Consideration may be given to sites with the highest frequency of daily arrivals and departures.
Considering most Spokane flights are on propeller planes, one wonders if the zero credibility PFD told the NCAA the truth about that.