Sep 28, 2010
Pasadena officials unveil Rose Bowl finance plan
By Brenda Gazzar, Staff Writer
Sept. 28, 2010
PASADENA - City and stadium officials Tuesday unveiled details of a $152 million plan to renovate the historic Rose Bowl and turn it into a profit-making venture. The three-year plan, which could create 1,000 jobs, hinges on the agreement of stadium tenants UCLA and the Tournament of Roses to sign 30-year leases in the coming days. UCLA current lease is due to expire in 2023, the TofR's in 2019.
The renovation plan would expand the press box to increase the number of “premium seats” - including those in luxury boxes - from about 500 to 2,500. It also would widen 12 access tunnels, double the number of concession stands and improve and expand restrooms.
Historically low interest rates and a competitive bidding climate make the time ripe for a deal, City Manager Michael Beck said.
“The project was not affordable two years ago and won't be affordable two years from now when the bidding environment gets less competitive and interest rates climb,” Beck said. “We will price ourselves out of an opportunity to renovate the stadium.”
Darryl Dunn, CEO and general manager of the Rose Bowl. poses in front of the historic stadium Tuesday, September 28, 2010. Dunn and Pasadena city officials released details of a proposed $150 million plan for renovating the Rose Bowl.
(SGVN/Staff Photo By Sarah Reingewirtz/SXCITY)
About $128 million of the $152 million plan would be financed through bonds, largely federal stimulus bonds that have to be issued by Dec. 31, Beck said. Beck hopes to issue the bonds by Nov. 30. Construction would begin on Jan. 11. The entire renovation is expected to be complete by January 2014, in time for the Rose Bowl's 100th game and quadrennial return of the Bowl Championship Series championship game. But because the project would be done in three phases, there would be no interruption of UCLA or Rose Bowl games.
The Build America Bonds provide a 35 percent interest rebate to government agencies, and make up between $10 million and $15 million in additional bond proceeds, Beck said. Another $15 million would be financed through cash contributions from the city, including $6 million in combined profits for the Tournament of Roses and the Rose Bowl Operating Company from the 2010 Bowl Championship Series title game, a rebate of about $2 million in city construction taxes and surplus RBOC funds, Beck said.
The remaining $9 million could be financed in a variety of ways, including favorable construction bids, revenue from the 2014 BCS title game and private donations from a newly established philanthropic organization called Rose Bowl Legacy, Beck said.
The combination of bonds, which will mature in 2043, would have a blended interest rate of 4.8 percent.
The money-making portion of the plan would only have to provide 72 percent of its projected income to pay off the new bond debts, said Rose Bowl CEO/General Manager Darryl Dunn.
“(The Rose Bowl) is as significant a sports facility as there is in the world,” said Dunn, who said the plan would ensure the long-term viability of the historic stadium.
Mayor Bill Bogaard and Councilman Victor Gordo each believe the City Council will approve the finance plan on Oct. 11.
“Once we had a financing strategy and a peer review of that financing strategy, that was a real turning point and people started becoming more comfortable,” said Gordo, who is the president of the Rose Bowl Operating Company.
The 72 percent break-even point also helped ease concerns, Gordo said.
A council workshop on the finance plan is scheduled for Monday evening. The RBOC is slated to consider the finance plan on Oct. 7.
The Rose Bowl usually loses between $1 million and $2 million a year due to capital improvements invested into the stadium over the years, Dunn said. Those losses, however, are made up by revenues generated by Brookside Golf Course, which is also operated by the RBOC, he said.
In 2009, for example, the Rose Bowl was $1.2 million in the red in terms of operating revenues, while the golf course made $1.6 million. Thus, the RBOC came out ahead by about $400,000.
But this past fiscal year, one of the stadium's more extraordinary years, the Rose Bowl came out about $1.1 million ahead while the golf course gained nearly $1.3 million. Thus, the RBOC gained a total of about $2.4 million, according to figures provided by Dunn.
The stadium first started losing money in 1996 when about $22 million in improvements were made, Dunn said.