Temple’s 15-year rental agreement with the Eagles is coming to an end in 2018, forcing the university to possibly face a “take it or leave it” situation regarding a place for home football games.
The rent for Lincoln Financial Field is currently $1 million per year, and will increase to $3 million if Temple renews another contract. Temple does not currently receive any revenue from parking or suite revenues, but does receive 10 percent from concessions.
Michael Leeds, a professor of economics, said many stadium rental agreements have “back-ended rent increases or revenue streams,” which means that rent often increases at the end of an agreement.
“Frequently, however, these never get implemented [because] the team threatens to leave,” he said in an email. “That is precisely what happened with the Eagles at Veterans Stadium.”
Veterans Stadium, which closed in 2003, hosted both the Eagles and the Phillies, fell into disrepair and was demolished in 2004.
University CFO and Treasurer Ken Kaiser presented financial details on Temple’s proposal to the Faculty Senate last week, which included projected average attendance, game day expenses and a funding plan.
In figuring out these costs, the university took a “bottom-up” approach.
“We didn’t say, ‘What would make this stadium financially viable?’” Kaiser said. “We figured out what we need the stadium to look like and then whether what we need it to look like is financially viable.”
Football games are “the only game in town for Temple,” he added, as it is the only sport that the university hosts at a professional sports venue. “[The Eagles] don’t have to give [the Linc] to us.”
Kaiser said the Eagles are a for-profit business, and currently receive revenue from parking and from the majority of concessions at Temple games.
“The Eagles aren’t in business to win Super Bowls, they’re in business to make money,” Kaiser said. “A for-profit charges what the market will pay.”
When a leasing contract was first established with Temple in 2003, the agreement was a partnership between the Eagles, the university and the city. Since then, it has since become more of a power dynamic, Kaiser said.
A spokesman from the Eagles said last week that the Eagles usually do not comment publicly about financial matters.
Kaiser said Temple does not have many options for football venues outside of the Linc, and while on-campus stadium discussions were announced in October 2015, talks with the Eagles began years before the termination of the current lease.
“In a large lease like this … you’re negotiating for that and talking about it years in advance,” Kaiser said. He added that the closer it comes to the “strike date … you get more realistic.”
Temple’s success last fall makes the idea of an on-campus stadium “more palatable,” but is not the motivator for the discussions, he said.
An on-campus stadium would not require consistently sold-out games to make a profit, he added. The two sold-out games from the past season against Penn State and Notre Dame were taken out of the equation and instead used normalized attendance during the past few years to extrapolate reasonable attendance.
The Temple News previously reported that Temple’s 2015 season drew an average crowd of 31,623 without the Penn State and Notre Dame games. From 2011-14, Temple’s average game day attendance peaked at 28,060 in 2011 and was at its low in 2013 at 22,473.
“Whenever you’re going to need someone else to make a business successful, you want a long-term lease,” Kaiser said. “For the Eagles, to offer a five-year lease … rent would continue to increase.”
According to Forbes Magazine, the Eagles are worth $2.4 billion, a 37 percent increase since last year.
“This is based on revenue of $370 million and operating income of $88.7 million,” Leeds said. “Suffice it to say the Lurie Family will not go hungry even without a rent increase.”
Lian Parsons can be reached at email@example.com or on Twitter @Lian_Parsons.