NBA Lockout May Affect Local Businesses

Posted on July 25, 2011. Filed under: Uncategorized | Tags: Advertising, Amway, Amway Arena, Amway Center, basketball, basketball team, Buddy Dyer, business, church street, city hall, contract, downtown, dwight howard, ECONOMY, employment, florida, lockout, magic, marketing, NBA, nba lockout, ORLANDO, Orlando Business Report, ORLANDO MAGIC, Orlando Sentinel, owners, ph, players, power, Power house, Powerhouse, Powerhouse USA, RESTAURANTS, shops, Small Biz, Small Biz Tips, Small Business, sports, stores, unemployment, venue |

The NBA lockout might threaten the Orlando Magic’s next season in Amway Center, but city officials say they’ll be able to pay the bills for their new building even if the Magic aren’t there. However, local businesses around the new venue may not be as lucky.

The Magic have played only a single season in the $480 million arena, which opened not even a year ago. With NBAplayers and owners still far from concluding contract negotiations, the lockout could last long enough to put the second season in jeopardy. Meaning lost jobs and a major decrease in revenue for the city and small businesses surrounding the arena.

The upside, as far as the city is concerned, is that when the new Amway Center was built a new contract was devised between City Hall and the Magic. That new deal provides an important safety net for the city. Under the new deal, the city is guaranteed a payment from the Magic — on top of the rent that the team pays — even in situations when the Magic don’t play or attendance plummets.

Next season, the team is on the hook to pay the city $2.8 million. Annual rent amounts to $1 million of that, and the rest comes from another contractual payment in lieu of the revenue earned from advertising, naming rights and luxury suites.

However, that does not mean there won’t be some financial pain for City Hall if the Magic fail to play. The city will lose out on a “facility fee” tacked on every ticket sold to an event at the Amway Center. At the same time, if a game is canceled, the city doesn’t have the expense of paying ushers, ticket-takers, security guards and others.

So while the city may be able to save some money, workers and businesses that have sprung up on Church Street to take advantage of Amway Center traffic will be losing out.

“We want to have an NBA season,” Mayor Buddy Dyer said. “Economically, I guess the venue would do better because we wouldn’t have to man the building, but it would so hurt the merchants around Church Street. The huge concern is not the impact on the city and its venues — it’s the income for everybody else who relies on events being held in the Amway Center.”

In the past year, many restaurants and shops have opened along Church Street due to the increased amount of business from the arena. And a lot of these businesses rely heavily on games and events to ensure customers.

With the Magic preseason scheduled to start in just 3 shorts months, local businesses and fans are hopeful that the NBA will reach an understanding and the lockout will not affect the city and our many local businesses.