Four
partners—two public, two private—have made the Family Arena
in St. Charles happen.
By Kevin Kipp
Strange. So many names change; so many faces stay the same.
Oh sure, Saint Charles County Public Arena Authority, created
by St. Charles County government, owns the Family Arena. Has
from the beginning. And Family Arena Management Enterprise LLC,
or FAME, manages the arena. Likewise, has from the beginning.
But when the public-private deal to finance, build and operate
the arena was struck, Tom Engle was St. Charles County’s director
of administration; Joe Kernell directed county finance.
Tony Raymon
was general manager at Station Casino St. Charles, the nearby
gaming outfit that donated 57 acres of ground in unincorporated
St. Charles County, to make the arena possible.
Now Ameristar owns the St. Charles casino, but has promised
to sign Raymon (and three other high-level Stations Midwest
executives, Legal Communication Corporation’s St. Charles County
Business Record reported on October 20) to a long-term contract.
Kernell is St. Charles County’s director of administration now.
His former boss, Engle is GM at the Family Arena.
OK, faces do change some. Engle is the third GM in the 10,000-seat
arena’s young existence. With his before-and-after, there-now-here
perspective, he has an intimate grasp of the structure of the
how the Family Arena came to be.
A low-key guy, he uses dry wit for salt, not supper. From his
office at the arena, a mile-and-a-half south of Interstate 70,
he summarizes some of the background.
“Eight years ago,” he begins, “Frank Trulakse felt that St.
Louis area needed a mid-size arena, and that the area was missing
out on a lot of events, not just amateur sports. The Fox was
too small, and the Kiel was too big.”
Experts and financiers told Trulaske that he could build a mid-size
arena privately, only he’d go broke.
After exploring a couple of public avenues, Trulaske and St.
Charles County began talking in 1997.
Engle said county officials liked the idea of a venue for affordable,
family entertainment. They got what they wanted: The most expensive
seat in the house at a Missouri River Otters hockey game is
$24. The least expensive ticket is $7, the price of a beer at
some venues.
Besides the Otters, who skate a distinctly unselfish brand of
team hockey, sports franchises calling the Family Arena home
are the St. Louis Swarm basketball team, a reincarnated St.
Louis Steamers indoor soccer team, and the new River City Renegades
of the Indoor Professional Football League.
Other entertainment has included illusionists, circuses, rodeo,
and headline musicians.
Back to Civics 101 with Professor Engle: “The county wanted
to help, but in a public-private effort, there’s a fine line
between helping a private group without putting public funds
in their pockets.”
An additional economic feasibility study indicated that a 10,000-seat
arena could be financed for $2.8 million a year. It would generate
$300,000 to $400,000 in annual tax revenue for the county. And
a private developer, after paying $2 million annual rent, could
make or lose $300,000 to $500,000.
“The county agreed to issue bonds to build the arena,” he says,
“and then lease it to Frank and his organization for its operation
over something like 20 years.”
“Station Casinos contribution brought the cost down by about
15 percent and had a lot to do with making the project feasible,”
Engle adds.
St.
Louis Swarm |
Moreover, Trulaske agreed to lease the arena for $2.2 million.
The county agreed to commit $300,000. And for the last $300,000,
the partners looked to the city of St. Charles.
“If they annexed the property,” Engle explains, “they would
get approximately $300,000 in sales tax revenue, too. After
some discussion over the wording, the city came on board, agreeing
to commit to support the debt service with $300,000 per year.”
It was an innovative deal, Engle says, “even to the point where
the bond people working with a number of communities are telling
them to use the ‘St. Charles Method.’”
At Stifel Nicolaus & Co., the bond underwriter, Jim Lahay, first
vice president, says part of the St. Charles Method’s charm
is that the private party pays the bulk of the debt. Meanwhile,
the county bears ultimate responsibility for the debt service.
Lahay applauds.
“All the money flows through the county to the authority, which
actually owns the arena,” he says. “But what happens if the
developer is unable to provide the $2.2 million? That’s a risk
born by the county.”
It’s a leasehold revenue bond, not a general obligation bond,
he says, “but to protect their credit rating, the county would
feel some motivation to make up any shortfall.
“If the county hadn’t accepted that responsibility,” Lahay says,
“the bonds would have been unrated,” which could have meant
there might have been no bond at all to finance the arena.
If the unrated bond weren’t scuttled entirely, he continues,
then the interest would have been as high as 9 or 10 percent,
as opposed to the taxable 7.1 percent it is.
In addition to saving everyone extra bond payments—how many
millions is 290 basis points on $35 million over 25 years?—St.
Charles County helped itself in the process.
Kernell, now director of administration recalls, “At the time
we requested Standard & Poor’s to rate the arena issue, we also
requested that they review the county’s rating. It was an issuer
rating…not tied to a specific bond issue, but rather an overall
assessment of the county’s financial health.
“Our fund balances had improved by millions, our revenue streams
had improved in amount and diversity, and they deemed the management
Joe [Ortwerth] had brought in as professional,” he says. “They
moved us from A to AA.”
Pretty good
method, considering that in 1993, Moody’s deemed St. Charles
County financially distressed.
Names and faces have stayed pretty much the same at FAME LLC.
Frank Trulaske, managing partner, founded TRUE Fitness Technology
in 1981. The company is regarded as the premier manufacturer
of workout treadmills.
Bruce Olson, president and co-owner of Group One Capital, a
private investment company that acquires and manages businesses
from retail to remodeling.
Brian Mathews, CEO at CDM Inc., recently recognized in the St.
Louis Regional FAST 50 Technology Awards as the 13th fastest
growing technology company in the U.S. It is a leader in the
fantasy sports game industry, and at one time owned Internet
service provider Primary Network.
Fox Association, by way of MetroTix, supporting more than 40
venues in Missouri and Illinois.
Kevin Kipp runs Bubble Communications, a creative services
and community relations firm in St. Charles.
