Feb

13

New Magic Arena A Go

Posted by Stephen Rhodes under Main 

????? An artist?s rendering of the proposed new downtown Orlando Magic arena?

At long last, the Orlando Magic will get their new basketball venue; according to the Orlando Sentinel, team executives Tuesday signed an agreement designed to keep the Magic in Orlando before its new arena is built.? This in essence clears the way for the city of Orlando to sell approximately $270 million in bonds to finance the project - as early as next week.

Negotiators for the project admit that there is the possibility - a remote one, but a possibility, nonetheless - that Orlando could be left with a half-built arena and no team should the Magic decide?to go elsewhere within the next 2 years.? Magic executives had assumed that the deal was done about 7 months ago when city and county commissioners approved the $1.1 billion plan?for a new events center (Orlando Magic’s new arena), performing arts center and upgraded Florida Citrus Bowl; the first bonds were to have been sold to investors in November 2007.

But apparently county officials decided that a “relocation agreement”, designed to prevent the Magic from departing Orlando for another city before its 25-year lease expired was insufficient; as the deal was originally written, a harsh financial penalty would be assessed on the Magic in the event that the team left early by forcing the Magic to repay the arena’s debt.? If the Magic were sold to an out-of-town entity within the next 2 years, the team could leave before the $480 million project (the new arena) was completed and before the repayment period began.

Here’s where it gets interesting and leaves the Magic with no incentive to leave: if the team leaves any time within the next 27?years, it has to repay the outstanding debt, forfeit the $50 million they pledged towards construction costs and another $12 million in lease payments, plus pay back? the $23 million in costs from selling the bonds.? Magic chief operating officer Alex Martins said the deal requires more of the team?than expected?when the original agreement was?approved 7 months ago, but according to Martins, it is a moot point as he told the Sentinel on Tuesday, “It’s really inconsequential, because we have no intention of going anywhere.? We clearly have committed to stay.”

The agreement also?ensured that county tourist taxes - which will?repay most if not all of the arena bonds - are protected in the unlikely event of the?Magic leaving; but if the Magic left before the building was completed, the city would be on the hook for cost of the land and the utility infrastructure for the site.? It would also be left with an unfinished building, no team and the hard?decision?of whether to complete construction or just cut its losses.

But one would assume that if these difficulties arose (and the directionals point to it not happening), then some political pressure would solve any and all problems related to the project, as a whole.? City Attorney Mayanne Downs has said that the chances of the Magic leaving are so remote that city officials arn’t concerned at all.? As it is, the city has done all that it can to make leaving Orlando as legally and financially painful as possible for the Magic.?



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