GlobeSt.com EXCLUSIVE: Hotelier Offers Buyout Plan for Magic

The only glitch to that plan so far is the team is not for sale.

Although DeVos and his family are on record as saying they would never sell the franchise, sports business brokers tell GlobeSt.com on condition of anonymity, "That's what every owner says--until the right number pops."

Rosen tends to agree. "The city and county could use the proceeds (of the team's sale) for education, health care and other urgent community needs," the former Walt Disney Co. executive tells GlobeSt.com.

Rosen is Central Florida's largest independent innkeeper and a strident voice for business owners on tourist-clogged International Drive where his own hotels are located.

"My idea is to have somebody give the Magic owner a check for what he paid for the team ($85 million in 1989) and also for any investments they have put into the team or losses they say they have suffered over the period they have owned the team," Rosen tells GlobeSt.com. "The idea is to make them whole."

Magic officials estimate their NBA franchise has a current market value of at least $200 million, or an appreciation of $115 million (135%) in the 11 years they have owned the team. But they say they are still losing money, especially in the last four years.

Over the 11 years he has owned the team, however, DeVos has netted a profit of $7 million, according to his own books which he has shown to city and county officials, as well as to representatives of the Central Florida Hotel and Motel Association.

In previously published accounts, Magic officials say they lost $2.2 million in 1996-97; $6.4 million in 1997-98; $13.98 million in 1998-99; and $15.13 million in 1999-2000. The team hasn't disclosed its balance sheet for the 2000-2001 season.

Rosen's buyout proposal would give Magic's DeVos a check for roughly $150 million, or only $15 million less than the $165 million recent appraisal of the team by the National Sports Law Institute at Marquette University in Milwaukee, WI. The most valuable NBA franchise, according to a separate analysis by Forbes magazine, is the New York Knicks at $395 million.

After paying off DeVos, Rosen suggests the private investment consortium could put a new look on the existing $110 million arena, possibly expanding the current seating of 17,200 to 18,500 and installing new and fancier skyboxes for corporate patrons.

The re-construction work would take an estimated 12 months. The team could play its 2002-2003 NBA season at either the four million-sf Orange County Convention Center, the University of Central Florida's new court or use the new fieldhouse at Rollins College.

"That way, the team's presence with the league and its relationship with its fans would not be interrupted," says Rosen.

Money to start the arena's retrofitting job would come from the state where $30 million is already allotted. "That fund is growing by about $2 million a year," says the hotelier.

While the new construction work is going on, rename the arena and offer to re-christen the structure for a $2 million annual fee on a 20-year contract. "That will give you $40 million," points out Rosen. "Take that contract to any bank or lender who will discount it at say, $20 million or $25 million."

With the $30 million-plus coming in from the state, the estimated $25 million from the arena re-naming fee brings the funding pot up to about $55 million. The remaining $10 million or $15 million needed will come from selling the team as a franchised asset.

"You don't have to tap into the tourist tax fund and you don't have to add a special tax to the ticket price," Rosen says. "Instead, you take 4% off the ticket price and the total revenue from ticket sales will still be at least $15 million, enough to do the job."

Rosen's numbers are based on Magic owner DeVos' own calculations. The Amway Corp. co-founder's previously publicized proposal to raise ticket prices by 4% would bring in $40 million in revenue, DeVos estimated. That $40 million and $10 million in cash would be DeVos' total contribution to the construction of a new $250 million arena.

After the arena was retrofitted, the team's new owner could cut a deal with the city to pay a stipulated rent, Rosen suggests. But the owner, and not the city, would receive all of the revenue from arena concessions, parking, skyboxes and ticket sales. "Nobody but the owner would share in that revenue," Rosen emphasizes.

City officials note that number could be $8 million a year or $160 million over 20 years.

The Magic currently pays the city $7,500 per-game rent on a 10-year lease that ends after the 2004 season. On a 41-home game schedule, the rent totals $307,500 per year.The team and the city each take in about $1 million annually from concessions.

But the annual cost of operating the arena is $7.2 million while the building brings in $7.7 million, according to previously published figures supplied by Mayor Glenda Hood.

Hood is on record as saying the city would never give up its share of concession revenue. Rosen, however, feels that is how the deal is going to be done, if done at all.