Why the Cowboys Deal is good for Frisco Bobby Flay says what makes a good dish great is layers of flavor, when the dish is more than one note. I’d say the same thing applies to business deals. A good deal is made stronger when there are multiple levels where the deal is good for both sides. Such is the case with the deal the Frisco City Council approved tonight with the Dallas Cowboys. Despite their recent record, the Cowboys remain the world’s 5th most valuable franchise worth over $2.1B. So why does this deal make sense? First and foremost the economics makes sense for the City. The Cowboys facility which includes the teams headquarters, indoor stadium, and practice facilities will reside on 91 acres of Frisco Station at Warren and the Tollway. The remainder of the 317 acres will be developed by Hines, which will have over 4 million square feet of office space with retail buildings, apartments, hotels, and restaurants. There is little doubt that the Cowboys facility will accelerate the development of Frisco Station. It is estimated that over the 20 years of the deal the economic impact to the City will be over $23B with $1.26B in tax revenues, and 4,500 jobs created as part of the 91 acre development. This does not include any benefit earned outside of the 91 acres or in the remainder of Frisco Station. The ISD is contributing $30M in financing to the project. This will allow the ISD to have access to the practice facility indoor stadium for football games reducing the need to build a stadium in the near future. This was being planned just south of Independence and Main. This stadium will be the first indoor high school football stadium in the state, certainly allowing Frisco to compete for high school playoff games. The Cowboys will be responsible for all of the operational expense of the facility. The EDC and CDC portions of the financing ($30M and $25M respectively) will be provided by debt with the principal and interest of that debt being funded from the 0.5% of sales tax that each organization receives. This is an advantage that the City of Frisco has vs those cities that use the same sales tax to support DART. The City portion of the financing ($30M) will be provided by debt that is issued with the interest on the debt being funded by the sales tax revenue generated by the project itself. The city uses a tool called a TIRZ (Tax Incremental Financing District) for projects like this. A similar structure is in place for the mall and the area around the mall. Because of this structure it is not anticipated that the debt financing will impact property tax rates. The same TIRZ will also be used to finance the FISD portion of the debt. Some will have concerns about public money of any kind being used for a project like this. It’s important to note that the the City of Arlington was able to pay off the debt for the Ballpark in Arlington 10 years early and anticipates paying off the debt for Cowboys Stadium 5 – 10 years early. In both cases the sales tax revenues generated by the project (and other events held at the venue) venue significantly exceeded original estimates. The second reason the deal makes sense is the acceleration it will bring to Frisco Station. With 300 acres to be developed by world class developer Hines, the Cowboys represent the centerpiece of the development and will be a draw for destination hotel and restaurant, upscale multifamily, and office. The last reason is what is often said in business, that it is all about the branding. And with the Cowboys now calling Frisco home, the branding of Frisco will constantly be reinforced by the worlds 5th most valuable franchise. That’s great PR for our City and while this in of itself does not represent the sole reason to do the deal, in conjunction with the other elements being discussed a value does have to be assigned to this benefit. So to Mr. Jones and the rest of the Cowboys family – welcome to Frisco.
Posted on: Tue, 13 Aug 2013 01:46:52 +0000
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