The Florida Panthers’ parent company reached out to Broward County last year, seeking some relief from its annual debt payments to cover the loan to build county-owned BankAtlantic Center. The idea, Sunrise Sports & Entertainment explained, was to reduce the team’s payments in the short term to free up much-needed cash for the struggling hockey team, and then increase the payments down the road.
SSE’s Arena Operating Co., which operates the home of the Panthers, sought to cut its annual payments by $2.5 million annually through 2016, and then raise them by about $1 million a year starting in 2017. The restructuring was expected to cost $23 million more over the life of the loan, which would also be extended a year. SSE insisted it, not the county, would cover the additional payments.
The proposal, according to Broward County Finance Director Dinah Lewis, potentially put the county at risk by boosting the costs and extending the life of the loan. If SSE were not able to make its payments, the county would have to step in and cover them.
So, today, rather than restructure the loan, county commissioners agreed in principle to provide a short-term “internal loan” of $7.5 million over the next three years ($4 million this year, $2.5 million next year and $1 million in 2012) to be repaid along with the county’s loss of interest between 2013 and 2015.
The loan would be covered by the over-collection in Tourist Development Tax (hotel bed tax) dollars that were raised 2 percent to help pay for the arena. Those dollars are typically used for beach renourishment, but the county commission determines annually what to do with the money.
“This would provide the cash flow relief sought by the [Arena Operating Co.] without the expense and risk of a full restructuring,” Lewis wrote in her memo to commissioners.
The arena was financed through the 2 percent county hotel bed tax and a state sales tax rebate, which covers $10 million of the annual $14 million debt service payment. The team picks up the rest.
As a requirement of the loan, the Panthers agreed to reduce the profit level needed for the arena profit sharing arrangement to take effect, from $14 million to $12 million. That means that any dollars in profit more than $12 million, which is kept by the team, are split with the team receiving 80 percent to the county’s 20 percent. So far, the profit sharing agreement has kicked in just once – in the first year, when the county received $364,000.
Additionally, the team will need to provide annual consolidated operating budget and financial statements for the team and Arena Operating Co.
County staff is scheduled to bring a more detailed plan back to the board at its Aug. 10 meeting.