Published: Sat, 11/25/23
San Antonio Express-News
By Greg Jefferson, Staff writer
Updated
The Alamodome recently did something out of character: it made money.
It wasn’t a lot — $329,000 on estimated revenue of $20.2 million — but its profit for the fiscal year that ended Sept. 30 broke a long chain of annual losses. And all it took was Elton John, Guns N’ Roses, Pink, the WWE Royal Rumble and the Spurs’ throwback game in January to celebrate their 50th anniversary in San Antonio, which shattered the NBA’s regular-season attendance record.
The annual Valero Alamo Bowl and home games of the University of Texas at San Antonio’s Roadrunners football did their part, too.
As Alamodome staff moved from one major event to the next, city leaders determined that they’ll need to spend many millions on a historic program of improvements to keep the 30-year-old facility competitive for marquee concerts and games in the years to come.
They’ve already figured out how to pay for it — by snagging the state’s share of hotel taxes collected in the center city over the next 30 years.
But it’s not a given that the $183 million Alamodome, which opened in 1993, would consistently operate in the black even after being brought into the modern age.
The 64,000-seat arena has mostly posted annual deficits since 2002, the last year it was the Spurs’ home court before the NBA franchise moved to Bexar County’s East Side arena, now called the Frost Bank Center.
In nine of the past 10 years, the dome racked up losses totaling $26.2 million, a hole that was deepened by the pandemic.
COVID-induced shutdowns and travel restrictions pulverized its balance sheet, just as it did to San Antonio’s entire hospitality and leisure industry. In 2020, the first and worst year of the pandemic, the facility lost $6.3 million, followed by $5.2 million the next year and $2.5 million in 2022.
Last year’s profit is a clear sign the live-events business has recovered — but that doesn’t mean the Alamodome is embarking on a new era of money-making. This year, officials are shooting for more event days than last year — 138, up from 124 — and more attendees, but they’re expecting less revenue — $17.3 million, down nearly $3 million from fiscal year 2023.
So nobody will be surprised if the facility returns to the red.
If the dome were investor-owned instead of taxpayer-owned, it would have been shuttered long ago. But it’s more than a commercial enterprise with a fate determined by profits and losses. It’s a community asset, as any San Antonio family who’s attended a high school graduation ceremony there knows.
“The other component to the Alamodome is that it’s an economic development tool for San Antonio — it brings people here,” said Assistant City Manager Alex Lopez, who oversees the city’s sports and convention facilities.
In other words, when visitors come to the Alamodome for big events, such as the high school marching band competition earlier this month, they stay at area hotels and shower money on the city’s shops, restaurants and bars.
But the Alamodome is old, at least by the standards of the sports and entertainment industry, and needs improvements to stay in the game.
“The business model has changed pretty dramatically since that facility was built,” said Bryan Trubey, a sports-venue architect and senior principal at the San Antonio-based Overland Partners architecture and urban design firm. “The biggest changes have been in the fan-facing environments.”
The dome lacks many of the up-to-date amenities concert-goers and sports fans expect in large venues, such as state-of-the-art technology, more and better luxury suites and other VIP perks, sleek, comfortable common areas and quality concessions, particularly meals and snack options.
The facility’s shortcomings came into focus when the NCAA denied the city the chance to host the 2031 Final Four men’s college basketball tournament even though the facility has fielded the series before and will again in 2025. It’s also hosting the women’s Final Four in 2029.
The Alamodome wasn’t up to snuff.
The NCAA has yet to announce the host city for the 2031 Final Four.
The city will spend $13.2 million on Alamodome improvements, structural repairs and maintenance this fiscal year. That includes fixes city officials promised the NCAA they would make ahead of the 2025 Final Four, such as adding luxury suites (up from 52), upgrading the dome’s fifth level and improving ADA accessibility.
Over the next six years, capital improvements and repairs are budgeted at $22 million. The structural fixes will include work on the dome’s four corner masts — the cavernous facility’s most distinctive exterior feature — exterior and interior structural steel trusses and masonry walls at the floor level.
The city is also spending more than $1 million to remove mold, mostly over corner stairwells on the facility’s fifth-level concourse. Sealant in the dome’s exterior walls failed, causing water damage to 3,160 square feet of ceiling.
But the current slate of upgrades and repair and maintenance projects won’t do much to move the dome beyond the status quo.
“We know that there are some significant improvements that we have to make at the Alamodome,” said Lopez, the assistant city manager.
The facility, which dominates the southeast side of downtown and is across U.S. 281 from Hemisfair, is well-positioned to up its game, Trubey noted.
“I would argue that the right improvements at the Alamodome could give it another whole life cycle,” he said. “The thing that the Alamodome has going for it is you have a modern structure. Dollar for dollar, improvements to a modern structure will get you more of a return on your investment.”
About a year ago, City Manager Erik Walsh and his lieutenants concluded the city needed to make major improvements to both the dome and the Henry B. Gonzalez Convention Center. Both are anchors for San Antonio’s hospitality industry.
Launching dramatic and costly expansions of existing entertainment or convention facilities, or building new ones, is apparently the thing to do in large cities these days.
Dallas and Austin are launching big expansions of their convention centers, and Nashville’s city council in April agreed to sign a financing deal with the Tennessee Titans to build a new multi-use stadium near the NFL team’s existing Nissan Stadium, with the aim of turning a down-at-the-heels stretch of the city’s riverfront into a busy entertainment and business district.
“How should we envision the fan experience for an indoor stadium?” Walsh said of the Alamodome. “From a planning perspective, what are we going to do for the next 20 years?”
Details of the renovation program, including the estimated cost, probably won’t emerge until mid-2024. But Mayor Ron Nirenberg is already down with the concept.
“Alamodome needs to be competitive for tier-one events,” Nirenberg said. “If we are just throwing money at the Alamodome to keep up and improve the concourses every now and then, and are seeing our competitiveness decline for things like the Final Four, that’s where I say, like my grandfather said, we shouldn’t be buying something more than once.”
“Top flight events also mean that if we’re going to have college football there, and I love the fact that it’s UTSA’s home field, but I envision us competing for college football playoff games,” he said. “Right now we can’t compete but if we’re going to pour a lot of money into the Alamodome, we should be able to compete for those kinds of events.”
While the cost is up in the air, city officials know how they’ll cover it: With funds won through Senate Bill 2220, which cleared the state Legislature in May.
The measure will allow the city to take the state’s cut of sales taxes generated by any hotel within 3 miles of the Convention Center, an area called the “project financing zone.” City Council is expected to approve the zone next year. The arrangement would last for 30 years. The taxes are collected on hotel rooms and retail and liquor sales.
The money could be spent on “qualified projects,” which the bill defines so as to make both the Convention Center and Alamodome eligible, along with any “arena, coliseum, stadium” or other facility used for professional or amateur sporting events.
Before Gov. Greg Abbott signed the bill into law, there was some speculation the city might tap the money to offset the cost of a new downtown arena for the Spurs or baseball stadium for the Missions minor-league ball club. But Walsh silenced the chatter, saying the funding would go to beefing up the Alamodome and Convention Center.
Legislative analysts put the city’s overall take at $222 million, but Walsh said his staff will develop their own estimate over the next few months. That’ll determine the scope of the Alamodome and Convention Center upgrades.
This isn’t a first for Texas cities.
The legislature in 2013 gave Fort Worth and Dallas the ability to snag state tax revenue from hotels near their convention centers.
Fort Worth used the funds to help pay for the Dickies Arena, a $540 million, 14,000-seat facility that opened in 2019. The venue hosts concerts, the Fort Worth Stock Show & Rodeo and other sporting events.
The Dallas City Council established its 30-year project financing zone in 2021. The city estimates it will generate $2.2 billion for a massive expansion of the Kay Bailey Hutchison Convention Center.
San Antonio city and tourism leaders are nervously watching Dallas' progress on the $3 billion project.
Had San Antonio officials been biding their time over the last decade, waiting for the right moment to grab the state’s cut of hotel taxes like Fort Worth and Dallas?
No.
“When we started talking about the Alamodome and Convention Center, we did not know about the Fort Worth bill,” Walsh said. “We kind of stumbled upon it.”