by Joe Sullivan
The Universe Knoxville feasibility study conducted for Knox County by Economic Consulting Services projected that the facility would generate $5 million in annual net income toward covering its $106.5 million cost.
The rub is that $6.5 million annually is assumed to be needed to service the public and private bonds that would be issued to finance the project. That leaves $1.5 million a year to be covered from some other sources , and the project's boosters have remained vague about what those sources might be.
A financial model submitted to County Commission by the Knoxville Area Chamber Partnership identifies them only as "annual community/institutional support." The Chamber's president, Tom Ingram, acknowledges that commitments from such supporters have yet to be obtained. While Ingram insists it's "doable" and stresses that the project won't go forward until it's done, it takes a leap of faith to believe that local philanthropy can beget this large a sum.
None of Knoxville's traditionally well-backed performing arts organizations have been able to raise as much as $1 million a year from contributors, and several of them are struggling to make ends meet right now. Local foundations could be a meaningful part of the solution, but Knoxville doesn't have nearly as much foundation money as Chattanooga, whose $37 million Tennessee Aquarium was funded largely by foundation grants.
However, local philanthropic or even corporate support is by no means the only source of the funds needed to make Universe Knoxville fly. A much larger potential would seem to lie with the ever increasing number of national or global companies who are paying ever increasing sums for naming rights to everything from stadiums to you name it.
To be sure, naming rights to a stellar space attraction and children's museum in Knoxville aren't going to fetch anything close to the $80 million that Gaylord is paying over 20 years to put its name on Nashville's new arena. But with several different venues to be named adjunctively, Universe Knoxville figures to command considerably more than the $1.3 million over 10 years that Sevier County is expecting to get imminently for the branding of Smokies Stadium.
Bob Hope (no, not the actor) is a specialist in events marketing, but naming rights are also within the purview of his Atlanta-based firm, Hope-Beckham. Hope also remains familiar with the Knoxville scene from his years spent here as one of Whittle Communications' most free-wheeling operatives.
"Under the best of circumstances, Universe Knoxville might be worth $2 million a year," Hope ventures. While he cautions that, "it would be a very difficult sell, especially under present circumstances," he foresees a bright and broadening future for naming-rights deals in any longer run.
A recent one he points to is the Discover Mills shopping mall that opened just last month in Atlanta's Gwinnett County suburbs. Discover Card paid $10 million for 10-year rights to place its name on the malla sum that would go a long way toward meeting Universe Knoxville's need. And what could be more fitting than Discover as a name for some if not all of its attractions?
Of course, there are those who question the fitness of any commercialization of the names of cultural facilities including museums. But Universe Knoxville, by whatever name, would have plenty of good company if it goes that route. The Smithsonian Institution is reliably reported to be on the verge of doing a $10 million deal with General Motors for a new General Motors Hall of Transportation. The Adler Planetarium in Chicago is reportedly seeking one for its new Star Rider Theater.
Ingram is cautionary about the timing of any naming-rights sales for a facility here that's still in a formative stage. "You can't sell them speculatively," he says. So he's not counting on any for purposes of garnering the $1.5 million in annual commitments needed to secure the $65 million in private bond financing and a $36.5 million commitment on the part of Knox County that are sought.
Under this three-legged stool approach, County Commission will be asked to authorize the $36.5 million at a meeting later this month contingent upon the private bond investors and annual contributors subsequently signing on the dotted line. (A $5 million contribution by the city of Knoxville is also being sought.) While proceeds from naming-rights sales don't figure into this equation, it should be a source of comfort to wavering commissioners that this additional source of funds is clearly a prospect if Universe Knoxville goes forward.
December 6, 2001 * Vol. 11, No. 49
© 2001 Metro Pulse