NBA Team Wouldn’t Find the Pond a Lucrative Place

Disney’s lease with Ogden precludes Pond officials from offering a competitive deal to NBA teams that might be interested in moving to Anaheim. The Pond would rate comparatively poorly in arena revenue, a category that generally includes money from luxury suites and club seats, concessions and parking, advertising within the arena and naming rights to the building as well as rights to profit from other events held there.

Under the lease, an NBA team moving into the Pond would be forbidden to sell packages for luxury suites and club seats, all currently sold out. Disney, acting as a marketing agent, would ask holders of suites and seats whether they wished to pay a premium to keep those seats for NBA games.

If so, Disney would retain 10% of the premium as a commission. If not, the NBA team could sell them for individual games only, not for the NBA season. Disney would collect 33% of per-game revenue from luxury suites and club seats.

As an example, consider Phoenix, where the NHL Coyotes followed the NBA Suns into America West Arena, operated by the Suns. The arena contains 88 luxury suites, four more than the Pond.

The Suns charge $100,000 to $110,000 per year for one of the suites, with the Coyotes’ premium at $43,000 to $48,000 per year, according to Team Marketing Report. If the Suns were to add the 10% commission Disney would, and assuming the suites sold out, the Suns would make approximately $9.6 million from luxury suites, with the Coyotes limited to about $3.6 million.

The Disney restrictions do not apply for NBA playoff games. The restrictions do apply, however, to all other events at the Pond. Ogden might attract an NBA team in part by permitting rent-free use of the building for several concerts or programs. Disney would collect 33% of revenue from suites and seats at those events, too.

Disney would sell all advertising within the arena, even that defined by the lease as “basketball-related advertising,” and retain almost all the revenue. For courtside advertising, the only exception, Disney would keep a 10% commission. Disney need not share revenue from naming rights and sponsorship agreements.

As agreements for suites, seats and sponsorships expire, Disney is willing to renegotiate to accommodate an NBA team, said Tony Tavares, president of Disney’s Anaheim Sports division. Leases for luxury suites and club seats extend for three, five or seven years, and the Arrowhead sponsorship and naming rights agreement extends through 2006.