How much does The Denty contribute to it’s mortgage payment? Very Little.

Did you know that the mortgage payment on The Denty is around $10 million a year? Did you also know we pay that debt service out of one of our 3 pennies our city takes in for revenue? We pay debt service on all of our bonds out of the 2nd penny, money originally set aside a long time ago by city commissioner Loila Hunking for ROADS and other infrastructure.

Of course, if The Denty is contributing to that 2nd penny, it does with help with the mortgage payment – we will get to that contribution shortly.

We heard it just about a month ago, Garth Brooks sucked $7 million in ticket sales out of our town straight into his pocket. The news today, the Foo Fighters (which I contributed to) had record ticket sales, guess where? At The Denty where they sucked a record $1,018,273 out of town, FROM ONE CONCERT! That is an average $93 per person. Guess how much we garnered for the 2nd penny on the Foo Fighters show from ticket sales? $10,182. Woot! Woot!

While I have been asking for numbers from the city for awhile about how much money we are making from The Denty (that could contribute to the mortgage payment) I haven’t gotten very far, but I did get a small breakthrough today.

According to the City’s Finance Director The Denty collected $1,824,710.19 in tax revenue for 2016. If you break out the 3 pennies we get (The state gets 4.5 pennies) we took in $729,884 and if you break it down to single pennies, since the 2nd penny is the only one we use to pay debt, it comes to $243,295, hardly a ‘dent’ (excuse the pun) in the mortgage payment.

Yes it is true besides the taxes that The Denty collects, their is an economic impact. My guess is at the highest it would probably be about 3x what The Denty brings in. You have to figure that half already live in Sioux Falls and the other half probably spends a majority of their money at The Denty since we built the facility along the interstate and not in the center of an entertainment district, visitors drive straight there, spend there money there, then drive straight home.

But the almighty Finance Director also fills us in on some other interesting information. Doesn’t the city get a share of the profits SMG makes off of the The Denty?

Ah, not really. Here is how he explained it in a recent email to council;

Revenues generated for SMG as a private sector company are limited to the fees paid to SMG as set out in their contract with the City: a base fee and, if earned, an incentive fee.  These fees are how SMG makes its money as a business.

Revenues generated from the operation of the City’s facilities (DSPC, Convention Center, Arena, Orpheum Theater) are revenues to the Operating Account managed on the City’s behalf by SMG.  Revenues to the Operating Account include rental fees, charges for additional services provided to guests that rent the facilities, ancillary revenues (food & beverage commissions, novelty sales, parking charges, suite cleaning, facility fees, etc.) and marketing & sponsorships (advertising, naming rights, suite leases, loge box leases, club seat fees).  All revenues generated from these sources are deposited into the Operating Account and are used to pay the costs of running the facilities (payroll, utilities, cleaning & maintaining the facilities, SMG’s management fees, internet/telephone, office supplies, insurance, etc.)

In small man’s word’s, any money The Denty makes that isn’t collected tax revenue goes straight back into a fund to support the building. In other words, while SMG and it’s management make money and are able to pay the light and garbage bill, they are contributing NOTHING to the mortgage payment. Zilch. SMG is essentially making a profit and paying rent.

I’ve said all along, The Denty wasn’t built for you and me, it was built to make a bunch of bond investors and construction company owners a lot of money. You have to realize out of the $180 million dollar payoff $65 million is interest payments. That’s $65 million that won’t be spent on our roads and handed directly over to private bond investors.

I still think we could have built The Denty with a combination of private investors and money from the state’s investment funds (that we would pay back in no interest or very low interest payments). Instead we decided to go it alone, built it in the wrong location, an don’t require the profits from the facility to pay off the debt.

The f’cked up siding is one thing, but the finances of this place are a total disaster. And the mayor calls himself a ‘banker’. LMFAO!