Cost for naming rights kept secret

The Iowa Freedom of Information Council frequently is called upon to comment on news developments around the state when questions arise about government secrecy.

The latest example was in Coralville, where city taxpayers are potentially on the hook for $50 million in loans to build a sports and entertainment arena in the Iowa City suburb.  

But city officials refuse to disclose how much Mediacom is paying for naming rights to the arena, which will be owned and operated by a nonprofit corporation the city created. Three Coralville city officials sit on the board of directors of the nonprofit corporation.

Here is a Cedar Rapids Gazette article that digs into the secrecy surrounding the cost of the naming rights.

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By Madison Arnold, Cedar Rapids Gazette, Feb. 11, 2019

Taxpayers are in the dark about what Mediacom paid for naming rights to Coralville’s new arena, despite millions being invested by local and state government entities.

Project leaders announced last month the 6,000-seat arena slated for completion in August 2020 would be called Xtream Arena powered by Mediacom. At a Jan. 24 news conference to announce the name, city officials directed questions about the cost of naming rights to Mediacom representatives, but Ed Pardini, senior vice president of Mediacom, declined to reveal the cost, saying he didn’t want competitors to know what his company paid for the name.

“We consider the exact amount to be proprietary and confidential,” Pardini said after the news conference. “This is a very competitive market, and I’m sure our competitors would love to know what we spent.”

The naming rights deal will last 10 years and provide Wi-Fi in the arena, in addition to marketing through Mediacom’s platforms.

The U.S. Cellular Center, a similarly sized arena in Cedar Rapids, announced its naming rights deal in 2012, agreeing to pay $3.8 million to have the city-owned venue bear its name.

Last week, Coralville staff denied a public records request from The Gazette asking for the agreement between Mediacom and ArenaCo, the nonprofit created by the city in 2018 to manage the arena.

“I am responding to tell you that the city does not have a copy of any agreement between Mediacom and ArenaCo, as that agreement was negotiated and executed by ArenaCo, and not the city, so the city cannot produce that agreement,” City Attorney Kevin Olson wrote in response to the public records request.

Years before the establishment of ArenaCo, the arena project was guaranteed millions in public funding, including receiving $12 million from the Iowa Economic Development Authority’s Reinvestment District program in 2016.

Other investments in the arena project include $200,000 from the Johnson County Board of Supervisors to help relocate the Johnson County Historical Society and an antique car museum to the new facility. The Coralville City Council voted in March 2018 to guarantee up to $50 million in loans for ArenaCo to construct the arena.

The lack of transparency about the naming rights should concern taxpayers, said Randy Evans, executive director of the Iowa Freedom of Information Council.

“The lack of transparency is worrisome and I think you’re seeing that with the inability to get any kind of conformation on how much Mediacom is providing in exchange for the naming rights,” Evans said.

ArenaCo’s articles of incorporation list the organization’s nonprofit mission as “to support and operate for the benefit of the city of Coralville, Iowa.” The nonprofit status could open up the project to grants and other funding not usually available to city governments, officials say.

“The people of Coralville are entitled to know first and foremost how much was paid for the naming rights,” Evans said. “This is the first sort of major financial decision that is going to shape the long-term financial health of the arena and determine whether the people of Coralville are going to have their taxes tapped to meet the bond payments.”

The establishment of ArenaCo to oversee the facility is a reversal from November 2016, when the city planned to retain ownership of the arena.

“This will alleviate much of the complexity involved with financing and management of the arena, and we are confident that this is the best decision for the future of the project,” the city said in a report to the Iowa Economic Development Authority Board in 2016.

Three of the five officers listed for the nonprofit are Coralville Mayor John Lundell, City Administrator Kelly Hayworth and Iowa City-Coralville Area Convention and Visitors Bureau President Josh Schamberger. They have been key project leaders who have been working for years to get the arena built.

The arena is Coralville’s last major anchor in the Iowa River Landing, a 180-acre mixed-use development intended to create a more appealing gateway into Coralville off Interstate 80. The other anchors are retailer Von Maur, grocery store Trader Joe’s and the Marriott Hotel and Conference Center.

The arena will be home to the University of Iowa volleyball team, and play host to concerts, youth and amateur sports tournaments, and potentially a hockey team. Also attached to the main arena is a field house, Staybridge Suites and two museums, all which will be managed under ArenaCo.

“I’m certain that one of the factors is the question of whether owning and operating a sports and entertainment arena is a legitimate purpose (for a city government),” Evans said. “From my vantage point, the issue is that if the taxpayers’ money is going to be on the line if the facility runs into financial problems, then the public has a right to know about the financial decisions that are being made.”