Stadium expects lots of empty seats for games
The owner of State Farm Stadium predicts that, with COVID-19 continuing to spread in Arizona, about four in every five seats in State Farm Stadium may be empty for social distancing when the Arizona Cardinals play their first game this fall.
The Arizona Sports and Tourism Authority is using that figure to decide how much money it spends in the coming year. It’s doing so without direction from the Cardinals, who, so far haven’t made any announcements about how many fans it will allow at games.
For footballs fans, this would mean an entirely new experience, at least for a season.
For the sports and tourism authority, a public entity, it would mean considerably less money to contribute to the causes that it funds, such as tourism promotion in Maricopa County, stadium renovations and the county’s sports leagues.
The authority recently approved a budget for this fiscal year that is about 36.6% less than last year, at about $36.9 million.
Jeff Overton, a member of the authority’s board and general manager of Camelback Ranch in Glendale, told the board that the estimates are conservative, and he hopes that the authority will see more revenue than it expects.
“It’s a very, very challenging year,” he said.
Tom Sadler, the authority’s executive director, said the authority may need to revise its budget down the line.
“Our world that we used to know changed dramatically,” Sadler said. “We are going to have to be nimble and flexible.”
How coronavirus is hitting the tourism authority’s budget
The sports and tourism authority makes its money through stadium revenue and the county’s hotel bed and rental car taxes.
With COVID-19 spread still rampant in the state, the authority is estimating that both will take a hit this fiscal year, which started July 1.
Overall, it estimates facility revenues will be down by about 41%.
That takes into account 17.5% attendance at football games and assumes that the stadium will not host two large events that had been proposed.
It’s also estimating that the tourism tax funding it receives will be down by about 34%.
The authority had a strong first half to last fiscal year. That extra money helped it stay afloat as the state started to shutdown because of the coronavirus.
“We had some record breaking events,” Melissa Wasson, who manages State Farm’s finances, told the authority’s board. That included a Rolling Stones concert and an international soccer game, she said. “We had a very good year.”
The stadium was closed to events starting March 16 and began to reopen June 1.
Tourism slowed and the authority’s revenues dropped off in May and June, according to the authority’s budget.
Ultimately, “the authority and its stadium partners feel confident that some level of event activity will return to the stadium, slowly being phased in as new guidelines are put into place,” according to its budget.
Along with reducing its operating budget, the authority put upgrades to the stadium on hold for six months, considering the uncertainty of the coronavirus.
The 17.5% figure for football game attendance was an estimate made purely for budget purposes, according to the authority’s board chair, Doug Yonko.
The final call on attendance at large events will come from event hosts, he said, such as the Cardinals, Fiesta Bowl, and Feld motor sports events.
“We have not received any specific instructions on capacity from the NFL or any other partner,” Yonko wrote in an emailed statement.
In late June, the Cardinals sent an email to season ticket holders saying that “the likelihood that (the team) will be able to play all of our games in front of a full-capacity crowd is very low.” The team noted that it is looking to guidelines from state and local authorities, as well as the NFL, in making any decisions.
“We are developing contingency
plans for the different scenarios and potential stadium seating configurations,” the email said. “When the overall situation comes into clearer focus and the details of the 2020 plan are solidified we will reach out with an update.”
The Cardinals did not comment on what any contingency plans may look like with the situation evolving. The team was not aware of where the 17.5% capacity estimate from the sports and tourism authority came from.
Capacity at State Farm Stadium is 63,400 for games, with an ability to expand for events. Capping that at 17.5% would drop that to 11,095 fans per game.
The Cardinals note a sellout streak of 144 games dating back to the stadium’s opening in 2006; though this differs from ticketed attendance. In 2019, the team saw an average attendance of 61,323 people per home game.
The stadium authority declined to provide details on social distancing measures it would take for large events, saying that will be announced when events resume.
The authority and its building manager will work with stadium partners to allow for “social distancing, enhanced cleaning and sanitizing of building spaces, and to evaluate screening processes,” according to its budget.
What the lost revenue means for tourism marketing
The money that comes in through the hotel and rental car taxes is split among tourism groups in the county to use for tourism marketing.
The organizations use the money for expenses such as websites, digital marketing, print campaigns and social media.
The money is distributed by the Arizona Office of Tourism and typically must be used within the fiscal year.
But with many marketing organizations in the state suspending their campaigns as Gov. Doug Ducey encouraged people to stay at home, the state office is allowing them to roll the money into this fiscal year, said Debbie Johnson, the office’s executive director.
It’s estimating the Office of Tourism won’t be giving the organizations any funding for the first six months of this fiscal year, Johnson said.
The state’s tourism office had a “rediscover Arizona,” campaign ready to go this year but put it on hold, Johnson said.
Johnson said that, despite the spread of coronavirus, she thinks Arizona tourism will eventually come back strong.
“We have seen in past times of challenge that Arizona is a strong destination,” she said. “I feel strongly we will come back.”
Less money for Cactus League ballparks, other obligations
The sports and tourism authority distributes its money based on set priorities, with debt payments first and then other obligations, such as paying cities money for spring training ballparks they built and funding youth sports leagues.
The authority is estimating it will have less money for all of that this year.
It owes Glendale, Goodyear, Peoria, Mesa and Phoenix a combined $122.9 million, which it has to pay only when it has the money to do so.
Last fiscal year, it was able to pay a total of $6.6 million.
It so far estimates it will be able to pay $5.6 million this year.
Seeing the authority’s projections for this fiscal year, Fitch, the bond rating system, updated its outlook on the authority’s bonds to “negative.”
The authority has about $166.4 million in debt to pay off related to building of State Farm Stadium, according to Fitch.
The rating agency said that it would improve its rating if Phoenix’s economy improves and the stadium can resume events. If the economy doesn’t improve by the end of 2020, though, the rating might be downgraded.