Stadiums and Arenas

  • Overview
  • Attorneys

Kutak Rock’s national public finance lawyers have participated in numerous tax-exempt and taxable financings for stadiums and arenas across the nation, including facilities for teams in the NFL, Major League Baseball and its minor league affiliates, the NBA, a U.S. Olympic team, the NCAA and a raceway on the NASCAR circuit. We have served in all of the various legal capacities as bond counsel, issuer’s counsel, underwriter’s counsel, insurer’s counsel and special tax counsel. In circumstances where legislation was required in order to obtain the authorization to issue the bonds and effect the financing, we participated in the legislative process.

One issue common to most stadiums and arenas is the sale of naming rights. Prior to 2002 the tax law was unclear as to whether and to what extent naming rights for a tax-exempt bond-financed facility could be sold to a private party. On behalf of the issuer of the bonds, our national tax lawyers worked with the chief counsel’s office of the Internal Revenue Service to obtain letter ruling 200323006, the seminal ruling permitting the sale of naming rights subject to certain constraints. Ruling 200323006 continues to be the governing authority for the sale of stadium and arena naming rights.

Also common to the tax-exempt financing of stadiums and arenas is the question of permitted private business use by vendors, building managers and the teams as the intended users of the facility. As counsel to the bond issuers as owners of the facilities, our national public finance attorneys have drafted and reviewed the necessary contracts to ensure that federal tax law requirements are satisfied. When opinions have been required regarding such contracts, Kutak Rock has delivered approving opinions satisfactory to the bond trustees.

Many stadium and arena financings are structured as public-private partnerships in fact, if not in law. A key issue is the equity contribution of the team and how such amounts may be allocated for tax purposes, and the official actions which the bond issuer must undertake in order to pass tax muster. Our firm has assisted clients in these matters and has the expertise and experience to ensure that all such requirements are met.

Throughout the life of the facility, the owner likely will incur significant operating and maintenance expenses. The Internal Revenue Code and Treasury Regulations place limitations on the exclusions that may be permitted with respect to such expenses. We can provide the guidance needed to satisfy these sometimes arcane and esoteric rules.

In many types of tax-exempt financing, bond counsel renders an opinion at closing and then may never be heard from again. In our experience, a good bond counsel for a stadium or arena financing becomes an important participant for the life of the deal. We have worked with many of our clients to provide significant post-issuance assistance to make sure construction and operation of the facility continues to comply with all applicable local, state and federal law.