Why can't OU Foundation invest in an arena?

Andy Rieger provides some interesting history about OU basketball facilities.

"Here’s a friendly suggestion: Keep building competitive athletic programs that use the arena. That will engage fans, and then build something to accommodate the crowds. Nothing would be more embarrassing to OU than to have the SEC visitors travel here to a new arena and realize they outnumber the Sooner fans. " https://www.normantranscript.com/opinion/local-column-keep-building-championship-programs-then-talk-about-a-new-arena/article_b5fc8352-f9bf-11ee-b559-83889d4ac6a8.html?fbclid=IwZXh0bgNhZW0CMTEAAR1kFr9oZikalt28v3ebK8RnFbbVBFxEJS505Lw6gv3mhutCJRzX-uN1Mi0_aem_AZcWAkOg6Zu8acZL3W_uNqP-aQzqDruaJMUsobOZJulNsJSLQOBmUhFaB5H5AYDP_MYamIu9h5jwx64eqn-GbFw5

I would add another friendly suggestion to OU Foundation- invest in your own arena/concert venue. Sell naming rights and club memberships. Pay a private company to own/operate it (like UT). Secure a long-term lease with OU. Pay for it with revenues from concerts and events.

The city could use TIF for the basic supporting infrastructure needs... estimated to be around $40 million (?). This would not kill the city, county or school budgets.

Financially support the cost of transportation for the students who don't have transportation to the UNP. Maybe run OU shuttles on game/competition days.

City of Norman can't afford to give up sources of sales tax growth

 

The proposed 2024-25 Budget stresses the importance of sales tax revenues for funding city goods and services. https://www.normanok.gov/sites/default/files/documents/2024-04/fye_25_budget_book_-_prelim_for_web.pdf

The growth in the City's sales tax revenue base is di cussed and illu trated above. Sales tax is not only the major source of revenue for the City's major operational fund, the General Fund, sales taxi the major (or only) source of revenue related to expand d public safety initiative approved by our voters in 2008 and 2014 • major quality oflife improvement ("Norman Forward") approved in 2015; public transportation (approved in 2019) and for earmarked capital programs originally approved in 1976. The City is dependent on sales tax revenue to fund over half of its general purpose (non-utility Jee base,/) operational and capital programs and is becoming more dependent. (page iii)

The city finance director has painted a pretty bleak general fund trend suggesting at the current rate the city will be bankrupted in 7 years.

At the same time some members of council (particularly Mayor Heikkila) seem more than willing to give up sales tax revenues collected in the UNP north area, which is an area that WILL definitely, 100% grow without a tax diversion.

Common sense suggests that if your expenses are growing at 4% annually and your general fund revenues (sales taxes) are growing only at 2%, then you can't afford to give up any sales tax revenues.

Given the city's reliance on sales taxes to fund the general fund, then the only way to balance things is to reduce general fund expenditures. Most of the general fund goes to personnel - police, fire, public utilities. So if we give up sales tax revenues there is no way possible to fund extra lines in these departments.

You can't grow sales tax base by giving away sales taxes for the next 25 years. The math does not work that way.

Case Study of Missouri's move from Big 12 to SEC

The SEC has not had tangible effect on Columbia's tourism economy

• BY BENNETT DURANDO
 
• Mar 20, 2019
 

https://www.columbiamissourian.com/sports/mizzou_football/the-sec-has-not-had-tangible-effect-on-columbias-tourism-economy/article_4a54386e-49cc-11e9-af93-bbc4672ab49d.html?fbclid=IwZXh0bgNhZW0CMTAAAR3nTqTx8dOY0F1LKF6FRiDIaCyOPEcT55gY7qEyI_44EoVC9aQoN9eae8E_aem_AZeHGdnGFtRvR_Czh6rFN2uulDua6GZ3s99gzd9sf1fd5Kx7nUILuCPd5lBzWtgBJpqC9VXUnZv1Rem-bHE-9q13

 

GUEST COLUMN: Threat to move OU sports out of Norman is toothless

Cynthia Rogers | OU Economics Professor

Norman Transcript April 17, 2024

In recent interview, OU President Harroz suggested that if the City of Norman does not pay for a new arena in the University North Park district, then OU would consider moving OU sports to other cities. This statement is unfortunate. It does not set the tone for a collaborative partnership between the City and OU and the threat itself is disingenuous.

Certainly, we can understand why OU would want to dip into city, county, and school tax revenues to pay for a publicly owned arena. It is a sensible business strategy to use an arena to attract investors for a restaurant and bar cluster, especially if OU can shift the costs to taxpayers. An arena hosting OU basketball and women’s gymnastics would generate foot traffic for nearby restaurants and bars raising the development value of the land in the area.

The point of locating a new arena in the UNP is to raise the development value of the land owned by OU Foundation. If OU chose to locate basketball and gymnastics competitions in Moore or OKC, it would still need an anchor for its 90 acres of land in the UNP area. Will Moore give OU Foundation 90 acres to develop plus build a new arena for OU to lease? Not likely.

It is unclear why OU choose to threaten to move OU sports from Norman. This strategy was used to convince OKC voters to approve a sales tax to fund a new arena of the NBA Thunder team. The situation in Norman, however, is different. A new arena won’t make Norman a “big league” city. The proposed new arena won’t be the nicest or biggest in the SEC! OU is already a member of the SEC with or without a new arena.

This ultimatum strategy could undermine future collaborative community building opportunities in Norman. Instead of being a generous development partner, OU/OU Foundation looks like a greedy land developer which puts its own financial interests ahead of community wellbeing.

The threat of losing OU sports is not credible. The arena is meant to serve as an anchor for 90 acres of land five miles from campus. If it was just about a new arena, OU could build one right next to Lloyd Noble in its sports complex.

Clearly locating a new arena in the UNP is the best way to leverage OU Foundation’s land holdings.

Norman leaders should bargain from a position of strength. If OU Athletics and OU Foundation could get a better offer, wouldn’t they have made this public? Let OU bring an actual competing offer to the table. Maybe Moore would give them 90 acres and build a new arena? Maybe OKC would give them a sweetheart deal on leasing the new Thunder area?

City council should focus on a plan that addresses Norman’s priorities and not be distracted by empty threats. TIF schemes are powerful tools because they secure public funds for a targeted project plan without requiring a public vote. City council has not asked voters if they want to tie up $220 million in tax revenues for the next 25 years for a new arena and another bar and restaurant strip.

Comprehensive economic and fiscal impact analyses are crucial to inform the decision. The arena TIF plan may “work” to pay off the project costs and debt, but this does not indicate the impact on city, county, or school budgets. Afterall, the UNP land will not sit vacant for 25 years without a new arena, and TIF is not needed to meet market demand for housing.

It is time to weed through the threats, focus on market fundamentals, and do what is best for Norman.

 

GUEST COLUMN: Can you believe the UNP Arena Entertainment District hype?

Cynthia Rogers, Ph.D. | Guest Columnist
Norman Transcript October 6, 2023

There is a lot of excitement about the proposed new arena and entertainment north of the University North Park (UNP) shopping district. Much of the promotion, however, is more hype than substance, including labelling those in opposition as “naysayers.” As an economist who specializes in local economic development and tax policy, I can point to the economics reasons to reject this proposal.

To begin, we need to ask the right question. The question is not CAN we use public funds to promote an arena-anchored entertainment district in the UNP area, but rather is there a compelling reason to do so? Common sense economics, which is backed by peer-reviewed empirical analysis, provides ample justification why spending $200 million in public funds to build an arena is a poor investment for the community.

The net impact of relocating OU basketball and gymnastics competitions from Lloyd Noble to roughly 6 miles away from OU campus is likely to be small. OU athletics would serve as the anchor tenants for the new arena. These sports competitions are already occurring in Norman. These competitions would not be new activity, but simply shift where competition-related spending would take place.....
[read whole article here... https://www.normantranscript.com/opinion/guest-column-can-you-believe-the-unp-arena-entertainment-district-hype/article_f86fce5e-639e-11ee-bd95-37ab819eab87.html]
If we are willing to spend $200 million of taxpayer funds, what is the best opportunity to enhance Norman? The choice is not a new arena or nothing.