In business and financing, the term skin in the game is used to refer to owners or principals having a significant stake in an investment in a company or project, in which outside investors are solicited to invest. The word “skin” in the phrase is a figure of speech for the person or money as part of the deal, and “game” is the metaphor for actions and commitments made in a transaction. “Skin in the game” is important to investors because it shows those soliciting investments from outsiders share a stake in the success or failures of a project.
https://www.investopedia.com/terms/s/skininthegame.asp
BOND FUNDING FOR A NEW STADIUM WITH $9.5 MILLION ALREADY EARMARKED
On the November 2 ballot will be a bond initiative for voter approval if the city should issue up to $50 million in bonds to build a multiuse soccer stadium estimated to cost $65 million-$70 million. The bond package will generate the necessary financing to build the project and the city will pay back the debt with gross receipts tax revenues. The city will owe an estimated $3 million annually for a term of 25 years. The city’s goal is to use funding freed up by paying off old debt so the stadium bond will not raise taxes.
During the 2020 and 2021 legislative sessions, the New Mexico legislature earmarked $9 million for the project including $4 million from Governor Michelle Lujan Grisham during the 2021 legislative session. The cost of the $400,000 analysis was paid for by state money allocated in the 2020 session. Technically, such bonds do not require voter approval but Mayor Tim Keller has said he would not pursue the stadium if the bond fails. Between the bond issue, if approved, the state funding already committed, there should be enough to construct the stadium.
PROMOTER IN CHIEF
Mayor Tim Keller has been a major promoter of the soccer stadium so much so that on Saturday evening, July 24, Keller took part in pregame tailgate parties for a New Mexico United Soccer Team game and then took to the field of Isotopes Park during halftime. In a campaign style speech before a crowd of tailgate party goers, Keller stood with New Mexico United owner Peter Trevisani to deliver the news of the results of a feasibility analysis for the stadium. To the crowd of 10,000 fans, Keller said he was sending a resolution to City Council to place the proposal on the November 2 ballot for a new, publicly funded soccer stadium with New Mexico United, a privately owned team, as the primary tenant.
Keller boldly proclaimed:
“Tonight is a historic night for our city . … You might have seen we’ve been doing some homework on that question you’ve been asking me for the last two years – when are we getting a stadium? We are sending a resolution to the council on Monday to put a bond for a new stadium on the ballot this November.
You all have earned a stadium. … So, New Mexicans and Burqueños, this can be our choice in November. And I know with the [team booster’s] Curse’s help, and with City Council’s help, we’re going to build a new home for the United right here in the Duke City. … So we’re going to win tonight. And then that initiative is going to win in November. And then we’re going to keep on winning for New Mexico!”
The City Council voted to place the bond issue on the November 2 ballot.
“LETTER OF INTENT” ANALYZED
On September 23, a press conference was held by United New Mexico owner Peter Trevisani and the city Chief Operations Officer (COO) Lawrence Rael. The press conference was held at Isotopes Park, a city owned facility, that United New Mexico currently shares with the baseball team that leases the ball park. Rael and Trevisani announced that the City and United New Mexico negotiated and signed a 3 page “Letter of Intent to Lease”.
The “Letter of Intent” is not a formal lease agreement but it does provide an understanding of key terms and conditions that will be negotiated. The Letter of Intent represents the binding intention of the City and United New Mexico to “participate in the development, construction and management of a multi-purpose facility … subject to the delivery of the Lease and Development Agreement evidencing these terms to be delivered to the City Council for its approval.”
According to the 3 page “Letter of Intent to Lease”, the City and United New Mexico have reached an understanding on the following major terms and conditions:
1. Subject to approval by voters of the bond issue, the City and United New Mexico Soccer Team agree to develop a new “first class, multi-purpose facility”, which shall be primarily configured as a soccer stadium.
EDITOR’S ANALYSIS : The term “fist class” is reminiscent of former Mayor Richard Berry calling his ART Bus project a “world class project” when ART is a cheesy 9-mile bus route that has destroyed historic Route 66 central. The term “first class” should be deleted and replaced with the word “functional”. What one person considers first class is usually considered piece of junk as is the ART bus project.
2. The United New Mexico Soccer Team will make a $10,000,000 capital contribution to the construction of the new soccer stadium and the contribution will be made prior to awarding the construction contract by the City of Albuquerque.
EDITOR’S ANALYSIS: As currently proposed, the new stadium will have the largest public subsidy for a United Soccer League stadium in the country. The Keller Administration, city councilors supporting it and the team argue it will serve as a catalyst toward other events, projects and developments well beyond soccer. The Greater Albuquerque Chamber of Commerce and the Hispano Chamber of Commerce have endorsed the bond measure for a new stadium. Both chambers have said their belief is that a new stadium in the Downtown area would serve as an economic booster shot. This term should be clarified that the $10 million capital contribution is a non-refundable for any reason, such as the case with “earnest money” down payments on real estate. Another option and as further evidence of their long-term commitment is for United New Mexico to increase the $10 Million construction contribution.
3. The City will own the soccer stadium and the United New Mexico Soccer Team will be the primary tenant and operator for the multipurpose facility.
EDITOR’S ANALYSIS: Absolutely under no circumstance should this term every be changed to allow that the stadium be owned by United New Mexico.
4. The term of the lease between the City and the United New Mexico Soccer team will be 25 years or the length of the bond, whichever is longer.
EDITOR’S ANALYSIS: An option to renew between the parties after the 25 years should be added.
5. A final lease agreement between the city and United New Mexico will be subject to approval of the Albuquerque City Council.
EDITOR’S ANALYSIS: This term is mandatory by city ordinance for any contracts over $50,000.
6. The soccer stadium will be the home venue for the United New Mexico Soccer Team.
7. A portion of the financing, expansion, or construction of the facility at a location to “be a mutually determined site” will be paid from various revenues of the lease “between the City and the tenant United New Mexico Soccer team structured such that lease payments produce “$800,000 per year as the base rent, including any applicable taxes.”
8. United New Mexico Soccer Team agrees to provide funds and services as required by a community benefits agreement between the City, the Team, and the locally impacted neighborhoods.
9. The United New Mexico Soccer team will subject to the terms and conditions of a negotiated “Development Agreement”, market, control, “and be entitled to receive and retain all revenues, net of taxes, relating to the operations of the United New Mexico Soccer Team, the Facility and the site. This will include, but not be limited to, revenues generated from naming rights, sponsorship, advertising, including both in-stadium and exterior signage, premium seating, merchandise, team events, other events, and ancillary revenues, including parking, except for certain City events.
EDITOR’S ANALYSIS: Giving the team naming rights to the facility is a major concession made by the city. Such naming rights could generate millions in revenue over the years. A good example that naming rights can generate significant income is when the UNM Pit was named “The Dream Style Arena” when a 10-year, $10 million naming rights agreement with Albuquerque’s Dreamstyle Remodeling was negotiated for both the University of New Mexico’s “The Pit” basketball arena and the football stadium across the street. After 3 years, the deal was terminated for none payment. At a minimum, the city should demand the right to final approval of the naming rights or a percentage share of the revenue.
10. The “Lease and Development Agreement” will guarantee a minimum annual payment of $100,000 to the city.
11. The United New Mexico Soccer Team agrees to provide funds and services through a community benefits agreement between the City, the United New Mexico Soccer Team, and the locally impacted neighborhood(s).
12. The United New Mexico Soccer Team shall endeavor to utilize local and /or New Mexico food and beverage vendors for stadium concessions.
EDITOR’S ANALYSIS: Utilization of local food and vendor for the stadium concessions should be mandatory and not an “endeavor”.
13. The United New Mexico Soccer Team shall provide all necessary liability insurance for the facility upon the United New Mexico Soccer Team occupancy.
EDITOR’S ANALYSIS: This term is highly critical to city taxpayers in that the city is a “self-insured” entity and any judgments against the city for damages would be paid out of the city general fund. This term essentially will provide the city with a degree of protection from negligence and injuries that may occur at the facility. The liability insurance needs to be high enough to deal with any major lawsuit amounts and mandate subrogation for any damages in the event that the city is a named party to a lawsuit.
14. The United New Mexico Soccer Team will obtain business interruption insurance to support the team’s annual obligation to make the Base Rent payments to the City.
EDITORS ANALYSIS: This term is likely related to what happened during the pandemic with the suspension and cancellation of events at publicly owned facilities.
15. The United New Mexico Soccer Team shall indemnify the City with regard to the day-to-day operations of the facility in the eventual Lease and Development Agreement.
16. The team’s first rent payment of Eight Hundred Thousand Dollars $800,000 shall become due upon occupying of the completed Facility. Every rent payment thereafter shall be due annually on January.
EDITOR’S ANALYSIS: Ultimately, the agreement is to pay $22.5 million in rent over 25 years after the stadium is built. Ostensibly this term will be clarified as to rent being paid up front for the following one-year use or after occupancy use. One option would be “quarterly” upfront payments as opposed to a “single lump sum payment of $800,000.
17. The City shall be allowed 15 days annually of exclusive use of the facility for appropriate City and/or Community events.
EDITOR’S ANALYSIS: At first blush, 15 days of exclusive use by the city is probably too little. The 15 days should be the minimum number of days and maximum available days be open ended with the parties required to work in good faith as to the days available to allow the city the maximum amount of time for the facilities use for public events.
18. The parties shall agree to a stand-alone non-relocation agreement that shall guarantee that the United New Mexico Soccer shall play its home games at the facility and prohibit the team from initiating a permanent relocation of the team during the term of the Lease and Development Agreement. The remedies to enforce this term will include “specific performance, injunctive relieve and liquidated damages.”
EDITOR’S ANALYSIS: From a legal standpoint, this term is particularly important in that the lease will be for 25 year’s. If the team has “buyer’s remorse” within a few years, and wants to relocate to another community, the team should pay the city liquidated damages in the form of the remaining years of rent and include attorneys’ fees and costs.
19. The City and United New Mexico Soccer Team will endeavor to minimize the impact on neighboring communities during construction of the Project.
EDITOR’S ANALYSIS: This is clearly one of the most critical terms of any final agreement. Emphasis should include preserving the historical significance of the neighborhood area within the final design, especially if the soccer stadium is located in the Barela’s neighborhood area.
20. The soccer will use its best efforts to bring a women’s soccer team to Albuquerque within 3 years of completion of the Project to play in the Facility.
EDITOR’S ANALYSIS: The best-efforts United New Mexico Soccer Team should be outlined as to what specific efforts will be made to attract a women’s soccer team and include the city assisting in the recruitment. The final selection of a woman’s soccer team should require the city’s approval and clarification of sublease agreement and payment of rent for the woman’s team use of the stadium.
21. Standards, requirements, and timing related to financing, design, development, and construction of the Facility will be established in the Lease and Development Agree.
22. Each party will be responsible for payment of the fees and expenses of their own counsel and other consultants.
23. All terms and conditions of the agreements, inclusive of guaranty and non-relocation terms, shall be binding on any successor to the Team.
24. The parties may terminate this “Letter of Intent To Lease” and Development Agreement, if applicable by notice to the other party after any of the following:
A. Failure of the voters to approve the City’s bond issue.
B. Failure to reach agreement on the design and funding of the costs of the Project.
C. Failure to reach agreement on the Lease and Development Agreement.
25. The United New Mexico Soccer Team shall be responsible for any and all costs incurred by the City for municipal services , including police, fire, etc. provided for all Facility events.
The city link to the Letter of Intent to Lease is here:
https://www.cabq.gov/mayor/documents/letter-of-intent.pdf
Links to other source materials quoted are here:
https://www.abqjournal.com/2434757/city-nm-united-chart-anomalous-partnership.html
BREACH OF CONTRACT TERMS
During the press conference, Rael said the final negotiated 25-year lease agreement will have terms and conditions, which will likely include penalties, as to what happens if there is a breach of contract. Rael added that he is confident the city will be protected in part because the ownership is local and said:
“I know where these guys live. You all know. They are New Mexicans, and I think that’s really super important. … We have New Mexicans investing in New Mexico.”
The soccer stadium lease agreement will likely be very similar to the terms and conditions of the lease agreement the City has with Istopes Baseball Park which the city owns and which has been very successful for decades.
During the press conference, COO Lawrence Rael had this to say:
“Our goal here is to make this a good deal for the voters, a good deal for the city of Albuquerque. … This information [on terms and conditions] that we’re presenting today really … in my opinion begins to put some structure and some commitment into the project.”
United owner Peter Trevisani for his part had this to say:
“This is an aspirational project that really can change so many things. … We believe that our city is better when it’s united, and coming together in this facility is a major step in ensuring that New Mexico United and so many other things yet to come are going to be here in the future. … This is a commitment that we’re here for the long haul. And, and I think most importantly, it’s a commitment that we believe in New Mexico. We believe deeply in our state, we believe deeply in our city, we’re willing to put not just our capital, but all of our resources behind it.”
The link to quoted source material is here:
https://www.abqjournal.com/2432115/united-outlines-planned-stadium-investment.html
FOUR PROPOSED LOCATIONS IDENTIFIED
The biggest question surrounding the project is the location. City officials have already said that location will be decided if the bond passes.
On Friday, July 24, the long-awaited report from the consultant hired to evaluate the feasibility and economic impact of a multipurpose facility that can be used for sporting events, including the New Mexico United professional soccer team, was finally released by the City. The study was originally supposed to be released in June.
The link to the entire 356-page feasibility study is here:
The New Mexico United soccer team currently shares the city-owned Isotopes Park with the stadium’s primary tenant, the Triple-A Albuquerque Isotopes baseball team. New Mexico United has become highly successful often attracting 10,000 to 15,000 fans to it games. One major caveat is that the team is in need of a permanent location to continue in the league and it cannot own the stadium.
Denver-based CAA ICON, the company that performed the study, recommended a 10,000 to 12,000 seat venue, estimating the project would cost about $65 million to $70 million based on the preferred sites. Two of the preferred sites currently incorporate some privately owned land, and the consultant’s estimates did not include property acquisition costs. The projected price tag also did not include parking beyond spaces needed for staff. The firm looked specifically at four sites that would accommodate a 10,000 to 12,000 seat multipurpose facility:
1. The area near 12th Street and Interstate 40
2. The Coal and Broadway Street area
3. The Second Street and Iron Street area
4. The Railyards
Editor’s Note: It is likely that the Railyards’ Master Development Plan prevents the Railyards from having a soccer stadium located on the site.
TWO PREFERRED SITES
CAA ICON identified the Coal and Broadway Street area and the Second Street and Iron Street area as the two top “preferred sites”. The estimated cost would between $65 million and $70 million just for construction and not land acquisition.
The financial evaluation and feasibility study considered several factors including land size availability, zoning, ownership and parking. The city owns parts of each preferred site but the acreage needed at each location is mostly privately owned.
According to the report that includes a projected financial earning analysis, the stadium could generate new net direct spending of $10.3 million a year. The financial projection does not include indirect spending or economic activity related to construction.
CAA ICON reported that New Mexico United would be the venue’s primary tenant with a 24-event annual game calendar dominated by the soccer club, including 16 regular-season and two preseason games. CAA ICON interviewed potential stadium users, which included local event promoters, and reported that top acts usually bypass Albuquerque or have a better alternative.
Other likely events include high school sporting events and concerts with estimated attendance of 5,500. The study noted that the stadium would probably not be a popular destination for musical performers. The CAA ICON financial analysis makes no recommendation as to how the city can pay for the stadium. The city does have $7.5 million New Mexico legislative appropriations for the project.
In releasing the study, city officials cautioned that decision has been made as to final location and a larger public dialogue must now occur.
Albuquerque Chief Operating Officer Lawrence Rael had this to say:
“This study is a key part of our due diligence as we explore the possibility of a multi-use facility. … We’re glad to have the results of the study so we can discuss the findings with the community, make proper considerations, and initiate next steps.”
NO OWNERSHIP INTEREST ALLOWED
Peter Trevisani, New Mexico United’s president and owner, addressed the issue of who will own the stadium and the 4 proposed locations. He called the two preferred locations “phenomenal sites” as the club has always desired a Downtown home. Trevisani had this to say:
“The issue [with ownership] … is we’re not allowed to own any of the stadium – we’re just a tenant. The stadium would need to be owned by the city and since we can’t own the stadium, we’re not really in a position to buy a percentage of it like you might buy a percentage of a company. … The city is hurting, and this is the kind of project along with things like rail trail and ‘First Friday’ art walks … that add up to a major change.”
“I think it is phenomenal. … Having it be a pillar of the revitalization of downtown Albuquerque, showing the vitality of New Mexico is exactly what we should be doing, and [downtown] feels like a great spot to me . … This is a great step. It is an important step. There is a lot of work to do.”
“Right now [we are] just making sure we are in touch with those [four] communities [where the stadium is proposed to be built] because it will impact people’s lives. I think in a positive, but for some maybe not so much if you have a house right there. … So we have to talk to everybody and do the best we can to not do any harm.”
Links to quoted source material are here:
https://www.abqjournal.com/2412566/consultant-identifies-preferred-sites-for-abq-soccer-stadium.html
MEASURED FINANCE COMMITTEE FORMED
On September 14, the measured finance committee (MFC) “New Mexico United For All” filed its MFC Registration with the Albuquerque City Clerk. The purpose of the MFC is to “support bond issue” to raise donations to promote the $50 Million bond issue for the multipurpose sports stadium with the New Mexico United Professional Soccer team to be the primary tenant of the city owned facility.
On September 30, New Mexico United contributed $10,000 and on August 31 contributed $25,000 to the “New Mexico United For All” measured finance committee. On September 6, United New Mexico also made a $6,000 “inkind” contribution for “communication, accounting, media and outreach services” to the “New Mexico United For All” measured finance committee.
The link to the 6th Financial Statement filed on September 13 is here:
https://campaignfinance.cabq.gov/PublicSite/Reports/FetchReportToPDF.aspx
AD BLITZ PROMOTING STADIUM
To date, no financial disclosure statements have been filed. However, the MFC has produced, paid for and is airing a TV commercial encouraging the public to vote for the bond issue. The link to the TV commercial is here:
https://www.youtube.com/watch?v=mPCzidKcKFc
The TV ads began on airing on September 29. In the ads, the new soccer stadium is being promoted as the “people’s stadium.” The ads promoting promise to create upwards of 700 construction jobs, while inviting other tenants in the city-owned stadium, subsidized with what would be a $30 million contribution from the soccer club for rent paid.
When asked where he thinks people stand on the vote, New Mexico United Owner Peter Trevisani he had this to say: .
“We’re the underdog. … We’re always going to be the underdog, but it’s the right thing to do and if enough people come out and say, ‘yes,’ it’s going to pass. … The stadium doesn’t raise taxes, it creates 780 jobs, and it’s owned 100% by the city. It’s not a stadium for the United, it’s a stadium for the people.”
The link to the quoted source material is here:
https://www.krqe.com/news/politics-government/ad-blitz-promotes-bond-for-new-mexico-united-stadium/
https://www.koat.com/article/new-commercial-out-urging-voters-to-say-yes-to-new-stadium/37795243
COMMENTARY AND ANALYSIS
By all accounts, the New Mexico United has “skin in the game” when it comes to the City of Albuquerque investing $50 million in building an outdoor sports complex. The $10 million contribution by United New Mexico and the lease is enough for the public to seriously consider it. The public should support it and vote for the bonds.
Now the hard part begins which is getting public support for a worthwhile project that will be a major step in revitalizing downtown, if that is where it goes. For the last 50 years, City Hall and virtually all Albuquerque Mayors have been fascinated and enamored with trying to revitalize the Downtown Central area. All Mayors wanted to bring back Downtown Central of its heyday of the 1950’s and 1960’s where it was the center of commercial, business and retail and entertainment activity.
https://www.petedinelli.com/2018/09/04/downtown-revitalization-deja-vu-all-over-again/
SHORTSIGHTED OPPOSTION EMERGES
Opposition is emerging to the stadium with people arguing that the millions to pay off the bond could instead be used to combat homelessness or crime and that the city has so many other pressing issues that come before a stadium. For decades, such arguments have been made to stop major quality of life facilities and projects. The best example is when voters said no to a performing art center in the late 1980’s.
The city is already spending as much as $25 to $30 million a year to help the homeless with services, voucher programs, and grants to service providers to the homeless. The city has purchased the old Loveless Hospital on Gibson for $15 Million for the new Gateway homeless shelter. Then there is the $5 Million “Tiny Homes Project” that provides transitional living space for the homeless. Further, the county enacted the behavioral health tax that raises $20 Million a year for mental health care facilities and programs that also help the homeless.
As far as crime and police are concerned, the Albuquerque Police Department is the largest city budget having a $227 Million dollar a year budget. APD’s budget continues to increase year after year. Its not an issue of not having the resources to fight crime, but an issue of a poorly managed police department with at least 150 vacancies in sworn police.
“QUALITY OF LIFE” TAX FACILITIES RECALLED
In 1987 the Albuquerque City Council engaged in a process of public hearings to determine and identify what type of facilities and projects were needed for a thriving city that would enhance our quality of life and make Albuquerque an attractive City to raise a family. By a unanimous, bipartisan vote, the Albuquerque City Council enacted the “Quality of Life” 10 year tax legislation that resulted in the construction of the Albuquerque Aquarium, the Albuquerque Children’s Science Museum, the Botanical Gardens and the Balloon Museum. The “Quality of Life” legislation also funded the acquisition of critical open space with open land acquisitions completing the final phase of what forms the backbone of our “urban parks”. City Councilor Pete Dinelli was the main sponsor of 2 of the 3 resolutions combined that became the “Quality Life Tax” that had a 10-year sunset clause and the facilities were built.
During the 2015 municipal election, Albuquerque voters wisely approved with an overwhelming majority the voter petition drive initiative to increase the gross receipts tax for the BioPark. The gross receipts tax initiative for the BioPark was needed because some $20 million dollars plus in repairs and maintenance to the facilities are needed and major repairs were ignored for eight years. There are $40 million dollars in upgrades and exhibits needed to the BioPark facilities and without making those repairs, the city risks losing many national certifications. The tax will raise $255 million dollars over 15 years for the BioPark.
BUILD MULTIPURPOSE ENCLOSED ARENA
Since the very beginning, New Mexico United has had plans for a new soccer stadium and have always looked at downtown. The team envisions a 10,000 to 15,000 seat stadium, costing between $50 million to $100 million. The fact that it is going to be a city owned facility Mayor Keller and the City Council need to concentrate on a development that will truly be in the best interest of not only United New Mexico fans but also the city as a whole.
When you examine the 4 facility renderings in all 4 locations, one major finding of the study is it will be an exclusive “outdoor soccer sports facility” . New Mexico United would be the venue’s primary tenant with a 24-event annual game calendar dominated by the soccer club, including 16 regular-season and two preseason games.
CAA ICON interviewed potential stadium users, which included local event promoters, and reported that top acts usually bypass Albuquerque or have a better alternative. The State owned Tingley Coliseum has long been viewed as a substandard aging facility suited for rodeos and “monster truck” events and no longer able to attract major entertainment events.
The fact Keller is seeking a second term and will be on the same ballot as the funding for the stadium cannot be overlooked. It’s very unfortunate that Mayor Tim Keller went out of his way to “grandstand” the way he did and tell the New Mexico United fans “You all have earned a stadium”.
The only ones that have “earned” anything and will wind up paying for a publicly financed stadium is the general voting public deserving of a “multipurpose venue” that many more can enjoy with far more events than just soccer games. Ever since the round domed Albuquerque Civic Auditorium was demolished in the 1970’s, Albuquerque has had to rely on UNM facilities, such as the PIT or even Popejoy Hall for live entertainment venues. Albuquerque is one of the very few citys its size, if not the only city, that does not have a municipal owned event center of 10,000 or more.
CONCLUSION
“Quality of Life” projects such as the Albuquerque Museum, the Balloon Museum, the Children’s Science Museum, The Botanic Gardens, The Aquarium and even Isotopes Park would never have been built if it was required they could not be built until after we solve our social issues. That will never happen.
Albuquerque cannot be just a cop on every corner, a fire truck on every street, a jail or homeless shelter in every city quadrant, a garbage dumpster at every turn, streets without potholes and buses like ART that no one uses. Any truly great city must include facilities that enhance the quality of life of its citizens, such as libraries, zoos, museums, aquariums, the ABQ Biopark and athletic facilities like Isotopes Park and yes a soccer stadium.
The new multipurpose stadium is one major project that has the most potential to finally change and encourage development of the downtown area. City and State elected officials have any number of ways to fund the project including capital improvement allocations, general obligation bonds, industrial revenue bonds. Mayor Keller, the City Council, Governor Michelle Lujan Grisham and New Mexico legislators need to do whatever they can to promote the project. A big mistake would be to try to do the project on the cheap to benefit only a select sports fan base when so much more could be accomplished.
VOTE YES NOVEMBER 2 FOR SOCCER STADIUM BOND ISSUE