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World's first envirofriendly underground arena?

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Firm's arena would be mostly underground

Saturday, April 24, 2004

By Mark Belko, Pittsburgh Post-Gazette

The president of a Los Angeles company proposing to finance a new arena in Pittsburgh privately wants to take the facility's design to another level -- below ground.

During a meeting yesterday, Michael Shapiro, head of Sports Finance and Management Group, unveiled a plan to build nearly all of the facility underground, with the exception of a roof, parking and a giant video screen.

Shapiro said the plan not only would save money on heating and cooling costs and be environmentally friendly, but would create a "buzz" that would attract interest worldwide. His plan envisions a shallow pool of water resting on top of the roof for aesthetics and to help cool the building.

"We think it's a great statement for a great community," he said.

The underground 18,150-seat arena, which apparently would be the first of its kind anywhere, is the newest wrinkle in SFMG's sketchy plan to finance a new multipurpose facility for the Penguins to replace the aging Mellon Arena.

During his visit, Shapiro offered little in the way of new details on his plan other than the unique design. He reiterated his belief that the arena could be built for about $150 million with private funding, excluding site acquisition and infrastructure costs, far below a $270 million proposal from the city-Allegheny County Sports & Exhibition Authority.

Shapiro was at the Ramada Plaza Suites and Conference Center Downtown to meet with several state legislators and to brief reporters on his plans for a privately funded arena.

Afterward, state Rep. Frank Dermody, chairman of the county's Democratic legislative delegation, said he would try to secure $80,000 in state funding to do a study, to be supervised by SFMG, to fix the arena's costs, its potential revenue sources, its size, and whether the project is feasible.

"An $80,000 investment to save $100 million makes a lot of sense to me," Dermody said.

Shapiro offered no detailed breakdown of his cost estimate, but pointed to new arenas in Columbus, Ohio, St. Paul, Minn., and Glendale, Ariz., near Phoenix, as proof that such facilities could be built for that price.

The privately financed Nationwide Arena in Columbus, which opened nearly four years ago, cost $156 million to build, excluding site acquisition costs. The Xcel Energy Center in St. Paul, which opened the same year, cost more than $170 million. The Glendale Arena totaled $220 million, including site acquisition and infrastructure costs.

However, one of the newest arenas under consideration, an 18,000-seat facility in Newark, has an estimated price tag of $310 million.

The Penguins and the Sports & Exhibition Authority have expressed skepticism over Shapiro's estimate. Two years ago, the SEA presented its plan for a $270 million arena to be built on the site of the former St. Francis Central Hospital across from Mellon Arena. Building costs totaled $209 million, slightly less than a separate Penguins' $215 million estimate.

Penguins officials were not invited to yesterday's presentation, although Shapiro said they would be brought into the discussions once his proposal moves beyond the "embryonic" stage. Penguins President Ken Sawyer said he is still waiting to see details.

"It's time for this group to produce the data behind their claims and, if that can be shown to be reliable, I think it's terrific that it can be done privately and for less money," Sawyer said.

The idea of an underground arena, he added, "is something I never heard of." He suggested such a proposal could end up increasing the arena's costs because it's so far out of the mainstream for such facilities.

Penguins officials have been reluctant to criticize a proposal that involves no public funding in a city where people are still smarting over the construction of PNC Park and Heinz Field, built largely with tax dollars. But they also have questioned whether a privately funded arena would give them the revenues they need to stay competitive, given the debt service on the building.

As for the $80,000 study, "It's not for me to pass judgment. I think the legislators should determine whether Mark Singel's group is credible and whether this money is well spent," Sawyer said, referring to the former lieutenant governor who is a liaison to SFMG.

Shapiro, who previously acknowledged the Pittsburgh building would be the first his firm has built from start to finish, said the site for the facility could be near the existing arena or could be elsewhere in the city. He had no estimate on site acquisition costs but said it would be far less than $23 million proposed by the SEA.

Shapiro projected that there would be no more than $5 million to $7 million in public funding involved in his project, although the goal would be "to make that zero." He said one of the primary goals in building the facility would be to keep the Penguins in Pittsburgh.

"We don't want them to just stay here. We want them to be competitive," he said.

Even with a portion of the overall revenues going to pay debt service, Shapiro maintained, the Penguins could increase their take through improved attendance and enhanced revenue streams.

"If it's done properly, they will make more money," he said.

Shapiro said it probably would take 24 to 30 months to build the arena once the green light is given. Once it is built, SFMG more than likely would manage it or hire someone to do so. SFMG would make its money either by taking a percentage of the revenue or a fixed fee but would not receive anything until the building has proven to be successful, Shapiro said.

Even if the SFMG proposal doesn't pan out, Dermody and state Rep. Don Walko, a North Side Democrat who has called for the creation of a task force to analyze private funding options for an arena, said the study is worth having.

Walko called the SFMG proposal "refreshing," given the huge public investments involved in the two stadiums and the David L. Lawrence Convention Center.

"The reliance on opium has been very addictive," he said, referring to public funding.

As for the underground design, "It's different, that's for sure," Dermody said.


Underground arena a possibility

By Jim Ritchie


Saturday, April 24, 2004

A Los Angeles group wants to replace Mellon Arena with the first underground arena in the NHL.

Sports Finance & Management Group president Michael Shapiro said Friday a Wall Street investment group has committed to loaning $150 million to pay for the underground arena.

"We think it's a great statement for a great community," Shapiro said, during a Friday morning news conference at the Ramada Plaza Suites & Conference Center, Downtown.

Before the concept is put to paper and built, state politicians from Allegheny County want to analyze SFMG's proposal. They will request $80,000 from state government to cover its cost.

SFMG says it can build a new arena for $150 million-$160 million, far less than the $278 million proposal previously endorsed by the Penguins hockey team and the city-county Sports & Exhibition Authority.

SFMG says it will use private financing. It did not make public its source of money.

The previous plan called for the Penguins to pay $108 million toward the $278 million arena proposal, seeking public financing to pay the rest.

"We have been contending this can be done for substantially less," said Mark Singel, a SFMG representative and Harrisburg lobbyist. Singel is the former lieutenant governor.

The Penguins say the team is not opposed to SFMG's plan. Rather, it is curious about whether the idea would work.

"As we have said all along, the Penguins are all for an arena that can be built for the least amount of money possible, and ideally with no public funds," said Penguins President Ken Sawyer. "So now, we encourage this group to show they have information to support their claims."

The Penguins say the team needs a new arena to generate more revenue. If not, it might have to consider moving.

SFMG's proposal has caught the attention of some local politicians. Among them is state Rep. Frank Dermody, D-Oakmont, who is the head of the Allegheny County Democratic Delegation.

"To me, it sounded too good to be true but it's something we ought to look into," Dermody said. "An $80,000 investment to save $100 million makes a lot of sense to me."

Dermody attended the news conference along with state Rep.'s Don Walko, D-North Side, and Nicholas Kotik, D-Robinson.

SFMG's proposal calls for a 657,000 square foot arena, built underground, with more than 18,000 seats and 70 luxury suites.

SFMG has not selected a site for the arena. Dermody suggested SFMG consider looking for sites in the Strip District near the David L. Lawrence Convention Center.

Above ground, the arena would be covered with a shallow pool of water. A rendering of the facility also shows a restaurant and giant video screen built above the water.

No other NHL arena is built below ground.

SFMG intends to remain heavily involved in running the arena once it's built, largely due to requirements from investment firms. Essentially, if SFMG remains involved, there's more incentive for it to run a successful project, Shapiro said.

"If we pay for it, we'll make sure it's profitable," he said.

It's possible SFMG could ask for up to $7 million to help alter local roads and infrastructure to accommodate the new arena.

Shapiro estimates the study will take three months to complete, once started. After, SFMG could build the arena within two years.

The arena also would host other events, including rodeo, music concerts, ice shows and motorcross.


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It is great for the city to finally get PRIVATE financing for a sports venue, in the last 5 years the state, the regional planning board (a complex tax collection system over a 10 county (or so) area in SW Pa. and the city and county) forked over millions for a new football, baseball, college basketball venues and a convention center! Private financing will bring those "out of government conformity" ideas that is the hallmark of true innovation!

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Its definately unique and I hope to see it happen. I know its going to be sealed real well because remember there is a river in Pittsburgh ;) Its certainly a great idea for cities that are fully developed and have no land for large structures. Its basically going back to the reason subways were invented and built in New York. I wonder if this is a start for "under ground cities" Can you imagine "multi-level cities" with under ground street grids in the downtown areas? Think of the night life with underground entertainment venues. This would go far beyond Underground Atlanta. Imagine underground condos. Some areas could have very large skylites to allow the sun to come in. I know that idea is far out but you never know, maybe in a couple hundred years. That kind of stuff is science fiction today.

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crazy yeah, but every new innovation is crazy, I'm more worried about the health of the franchise and the sport, hockey has been getting declining ratings for years now. That's not good for the future.

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