Spurs Invest $1B+ in New Arena and Entertainment Hub

The San Antonio Spurs' Bold Proposal for a New Downtown Arena

The San Antonio Spurs are proposing a massive investment in the city’s future, including a $500 million contribution toward the construction of a new downtown arena. In addition, they plan to invest another $500 million in nearby development projects and allocate $60 million for childcare initiatives, discounted tickets, and other community-focused offerings. This comprehensive plan aims to secure public funding from San Antonio and Bexar County leaders and voters.

Peter J. Holt, chairman and managing partner of Spurs Sports & Entertainment, outlined the team's proposal in a letter to City Manager Erik Walsh. He emphasized that the arena and the surrounding entertainment district would position San Antonio among other major American cities. Holt also acknowledged that the team has been cautious about discussing their plans publicly, despite ongoing coverage by local media.

"We recognize there is still work to do and we welcome it," said Holt, whose family holds the largest share of the team. "In particular, in making the case to our community about the need for this project and its benefits to our local economy. We are more than prepared to do that."

While the exact cost of the arena at the former Institute of Texan Cultures site at Hemisfair was not specified, Holt stated that SS&E will cover any cost overruns. City officials have estimated the construction cost between $1.2 billion and $1.5 billion.

Community Benefits and Financial Commitments

The Spurs are proposing two options for a "community benefits agreement" with the city: renovating and converting 10 closed public schools into childcare and early learning centers that would serve up to 1,000 students, or setting up a "seed fund" to match San Antonio employers' childcare contributions by as much as $3,000 per employee.

Additionally, SS&E would offer 500 tickets priced at $25 or less for each Spurs home game, underwrite VIA Metropolitan Transit's Park & Ride service for up to 2,000 single-game ticket buyers, and allocate 30% of the construction contract for the arena and adjacent development to local companies.

The overall value of these benefits is estimated at $60 million over a 20-year period. City officials have proposed that the city contribute $500 million to the arena's construction, which would come from property taxes generated through a tax increment reinvestment zone and visitor taxes. A new funding mechanism allows the city to collect the state's portion of hotel tax revenue within three miles of the Convention Center for 30 years.

SS&E is also seeking financial support from Bexar County, which would come from tourist-related revenues. Holt mentioned that the team does not plan to remain at the county-owned Frost Bank Center when its 30-year lease expires in 2032.

Funding Challenges and Negotiations

County officials have set an August 18 deadline for commissioners to call for a November election. That same date is also the deadline for Mayor Gina Ortiz Jones and council members to call a bond election, which Walsh proposed earlier this year, to raise up to $250 million for infrastructure upgrades around the arena.

During negotiations, the Spurs have been reluctant to provide detailed financial information. Walsh noted that the team has not shared specific profit figures, despite requests from the city. Forbes valued the team at $3.85 billion last October, but Spurs executives told the city that the magazine's figure "overstates their profitability." They reported generating $27.7 million in profit during the 2023-24 season after revenue-sharing payments from the league of $27.8 million.

In a recent memo to council members, Jones highlighted that the city has requested a profit and loss statement, the franchise owners' willingness and ability to cover a greater portion of the arena cost, and details on ticket, merchandise, concession, and parking sales, along with revenue from naming and broadcast rights and advertising. She noted that several critical answers remain outstanding, hindering effective negotiations.

Childcare Initiatives and Public Support

Holt disputed Jones’ assertion, stating that SS&E has provided information about the team's financial performance, ticket sales, parking, merchandise, and advertising revenue, operational expenses, and player costs. The childcare component of SS&E's proposal aligns with an idea raised by Jones during her campaign to expand Pre-K 4 SA, a city initiative funded by a sales tax that provides full-day pre-K to thousands of San Antonio children.

Jones has criticized the county's previous agreement with the Spurs for the Frost Bank Center, which left the county covering most of the bill without translating into revenue-sharing benefits for taxpayers.

"I know we all remain committed to ensuring our community gets a deal with real and substantial benefits for this generational investment, while fighting hard to ensure we keep our Spurs in San Antonio," Jones said in the memo.

The Vision for a New Downtown District

City officials approached the Spurs about returning downtown, Holt said in his letter. The Spurs first played at the city's Hemisfair Arena before moving to the Alamodome and later the Frost Bank Center. The arena would be the linchpin of the city's planned multibillion-dollar downtown sports and entertainment district, code-named Project Marvel.

The district would include an expanded Convention Center, a renovated Alamodome, a second Convention Center hotel, a reconfigured John H. Wood Jr. Federal Courthouse surrounded by apartments, restaurants, stores, and parks.