The Arena Business
Salvador Diaz-Verson Jr.-one of the 100 most influential Hispanics in the United States, and one of the 100 wealthiest, according to Hispanic Business Magazine-flew into town on his private plane last spring and holed up at the Ritz-Carlton, squeezing in back-to-back media interviews and a dizzying array of meetings with local business leaders. "I think I'm meeting with.Spargus?" he said uncertainly as he walked into Main Street's Mediterraneo for a lunchtime meeting with Sarasota's business group Argus.
There was a reason for the madcap schedule: Cuban-born Diaz-Verson, the former president and chief investment officer of AFLAC (where he managed more than $7 billion) and CEO of Diaz-Verson Capital Investments, was in town to promote his $46-million project in Lakewood Ranch-a multipurpose arena that could change the entertainment landscape of Sarasota and Manatee counties. The arena is on a fast track. After being announced last year, the Manatee County Commission approved it with very little opposition in March.
The timing is critical. Diaz-Verson, the owner of DVA Sports in his hometown of Columbus, Ga., and its minor league hockey team the Columbus Cottonmouths, wants to move the Cottonmouths-who will be renamed-to town; but to do that, he must have the arena built in time for the 2005 hockey season. At press time, bulldozers were poised to chew up the turf between Lorraine Road and Lakewood Ranch Boulevard.
The Cottonmouths-a money-losing team-currently play in a city-owned facility, and have no rights over their practice or game schedule. That's one of the reasons Diaz-Verson-who says that while he enjoys hockey, it's a business first and foremost-has been looking for a new home for the team. "If you have a sports team," Diaz-Verson says, "you've got to control all the revenues. You have to control your destiny and the dates you play." He also likes that our area is made up of Northern transplants who enjoy and understand hockey. Furthermore, Florida's tourist season falls right on top of hockey season.
His hockey team is only the anchor tenant, however. Diaz-Verson intends to make the new 7,400-seat facility the entertainment hub of Manatee and Sarasota counties. "If I just wanted to build a hockey arena, I could build one for half the money," he says. "This will be the most modern facility of its kind in North America."
The arena will be privately financed. Diaz-Verson wants to stay local as much as possible and is talking to area banks. He's also looking for three local investors, tops, each making a minimum $5-million investment, with Diaz-Verson maintaining at least 51-percent control.
Much like TECO Arena in Lee County, the Lakewood Ranch multipurpose arena will offer hockey, concerts, circus performances, sporting events, trade shows and more. After looking at other markets, including Birmingham and Montgomery, Ala., DVA execs agreed the Lakewood Ranch location is perfect, equidistant between TECO Arena and the St. Petersburg Times Forum. This area is a booming market, they say, already clamoring for entertainment that can play in their 220,000-square-foot building.
A feasibility study commissioned by DVA and conducted by SPI (Sports & Properties, Inc.) found that population growth and income trends combine to make the arena a financially successful project. Manatee-Sarasota has the highest income level in the 10-county area surrounding Tampa as well as good transportation, says Diaz-Verson. To make money, Diaz-Verson says, he will have to book 100 to 110 events a year, numbers that mirror TECO Arena and similar mid-market venues around the country. Forty of those events will be home games by the newly named hockey team.
"I think it's going to enhance the whole area because there's nothing this size for entertainment," says Diaz-Verson.
DVA Sports used TECO Arena as one of its models. Built seven years ago at a cost of $20 million, it is significantly smaller at 170,000 square feet, and is considered one of the most successful venues of its size in North America.
Craig Brush, president and general manager of the Florida Everblades, the minor league hockey team whose home is the TECO Arena, has an interest in the success of Diaz-Verson's project. Aside from cross-promotion benefits and savings in travel expenses, another nearby team will be good for the sport. The Everblades have led the ECHL (East Coast Hockey League) in attendance each of the past four seasons, averaging crowds of approximately 6,000. Brush envisions a natural rivalry, similar to the one enjoyed by the Tampa Bay Storm and Orlando Predators in the Arena Football League, in which fans travel to away games in support of their team.
DVA execs believe the arena will attract concerts and events from nearby cities such as Tampa as well. Chuck Madden, a development partner with DVA, anticipates that promoters will jump at the chance to book the same show in two separate markets less than 100 miles apart along I-75.
"We're a half-sized St. Pete Times Forum," Madden says. "The market has been screaming for a high-end venue between 7,000 and 12,000 seats." The 1,736-seat Van Wezel Performing Arts Hall can't offer the kind of entertainment DVA envisions. "We're not going to compete with that," Madden says. "We want the things that pack their show in Tampa and want to head here."
Madden figures that a concert tour of, say, country singer Shania Twain, might find it financially appealing to add an extra date along Florida's Gulf Coast. Perhaps the Miami Heat and Orlando Magic would consider playing a National Basketball Association pre-season game here. Disney on Ice would easily fit inside the new facility. Ditto for Arena Football League games.
"It allows us to bring in the level of events that would have previously bypassed the area," says Rex Jensen, president of Schroeder-Manatee Ranch, Inc., the developer of Lakewood Ranch, and a strong proponent for the arena. Since 1995, 11,000 people have moved to Lakewood Ranch, and Jensen says growth will continue at about that pace for the next few years. "The venues are far enough away from each other that this is a separate market now," Jensen says. "People want something to do here."
But John Wilkes, executive director of the Van Wezel Performing Arts Hall, questions that logic. "Performing arts centers have become more aggressive about seeking exclusivity clauses" in their contracts with performers, he says. It's "absolutely" industry standard that performers' contracts exclude them from performing within a 60- or 70-mile radius of the venue, and limit their performance dates to two months before and one month after. He says that a Shania Twain would rather play the brand-new 20,000-seat Clear Channel-owned Ford Amphitheatre in Tampa twice to avoid the costly loading and unloading at a new venue.
And larger venues offer larger profits, he explains, because the artist gets a percentage of every ticket sold. Booking agents also look at concessions (T-shirts, keychains, cd's, beer and wine, etc.). In many cases, concert-goers spend as much on concessions as they do on the cost of the ticket. The only hope that a performer will double book is if he or she is an extremely popular artist-"and only if the venues are owned by the same company," Wilkes says..
John Valentino, executive vice president of West Palm Beach-based Fantasma Productions, which has booked thousands of major shows across the country, says niche-sized arenas such as TECO are a major part of the national market and usually are profitable as long as they have a strong anchor tenant. "The bigger question is whether the market will support a minor league hockey team when you have an NHL team in Tampa," he says.
But Diaz-Verson's track record and financial resources are solid. So far, he's overcome all obstacles in a short time, gaining the support of Manatee County Commissioners and most Lakewood Ranch residents, and getting the ECHL to suspend the Cottonmouths' games for a year while he builds the arena-a rare occurrence in the world of sports. Like every other business he's been in, the arena is a moneymaking proposition he approaches with steely realism. "I've been doing investments since I was 24," he says. "One rule I've always kept is don't fall in love with your investments."
Now that everything's been lined up and the bulldozers are revving, he takes a deep breath and adds, "Be careful what you wish for. Now I've got to build it."
TAMPA BAY-AREA CONCERT VENUES/SEATING CAPACITY *:
St. Pete Times Forum - 21,500 (360-degree configuration); 14,500 (180-degree configuration)
Ford Amphitheatre (Clear Channel Entertainment)/20,000 (10,000 under cover; 10,000 lawn seating) opening July 20
Sun Dome, on the University of South Florida Tampa campus - 11,000
Manatee Convention & Civic Center - 4,000
Tampa Bay Performing Arts Center - four theaters; the largest, Carol Morsani Hall, seats 2,552
Lakeland Center - 2,296
Ruth Eckerd Hall - 2,180
Mahaffey Theater - 1,996 seats
Van Wezel Performing Arts Hall - 1,736
Bayfront Center (Slated it for demolition in 2005 by the City of St. Petersburg)
* For multipurpose venues, seating capacity figures are based on concert configuration.