New Sixers arena would ‘split the market,’ Comcast Spectacor consultant says

Comcast Spectacor, concerned about the Sixers’ plan to leave the Wells Fargo Center and build a new arena downtown, hired a national real estate adviser to study the implications of having two big, competing venues in Philadelphia.

The consultant concluded that the rivalry would split the market, starving both places of attendance and revenue.

There aren’t enough additional games, concerts, and shows to financially support two major Philadelphia arenas of roughly the same capacity, said the report by Chicago-based Hunden Partners. It predicted taxpayers would eventually be asked to provide millions of dollars for renovations that neither arena could afford on its own.

The Sixers turned down repeated requests for comment made over a week. They said the report contained errors but declined to address its central conclusions.

During the team’s two-year campaign for city-government approval, the Sixers have trumpeted the value and import of a new venue, saying it would bring more shows and entertainment to an underserved Philadelphia market. The Sixers have said there’s room for additional acts and have criticized the Wells Fargo Center as outdated, especially compared with the $1.55 billion showplace they intend to build four blocks from City Hall.

Comcast Spectacor, which owns the Flyers and the Wells Fargo Center, has publicly and privately fought the Sixers’ efforts, believing that keeping the hockey and basketball teams in a single arena makes the most sense for Philadelphia. The company would lose a major tenant and gain a serious competitor if the Sixers departed their South Philadelphia home of nearly three decades.

“We felt it was important to have a neutral, third-party firm assess the market capacity and outcomes of a second arena,” said Comcast Spectacor chairman and CEO Daniel Hilferty. “I wanted to ensure that we conducted a thorough diligence process before making any determination regarding the viability of two arenas.”

Since the Sixers announced their plans in July 2022, the size of the Philadelphia sports-and-entertainment market, its ability to attract more acts, and the potential distribution of events between two arenas has been a central point of debate.

The 174-page Hunden Partners study said:

Hunden said it relied on publicly available information to assess the Sixers’ proposal, as well as on research and data compiled by the firm and on third-party reports. It said it also considered data on the local marketplace and on wider economic conditions.

Comcast Spectacor, a subsidiary of telecommunications giant Comcast, sorely wants the Sixers to stay at the South Philadelphia sports complex, home of the four major pro teams. The Sixers have rejected all Comcast Spectacor overtures, insisting that they will move to a new home at 10th and Market Streets when their lease expires in 2031.

Meanwhile, Comcast Spectacor has joined the Phillies in a 10-year, $2.5 billion plan to transform the stadium complex with fan-friendly restaurants, stores, hotels and apartments. A replacement for the 28-year-old Wells Fargo Center, which recently completed a $400 million top-to-bottom renovation, would eventually be built there.

“We firmly believe that the best outcome for our fans and the community is the 76ers and Comcast Spectacor, united and based in South Philadelphia,” Hilferty said. “We’re open to building a new arena together at the right time. … We sincerely hope together we can create a vision for what’s best for Philadelphia.”

As part of that sports-and-entertainment zone, Comcast Spectacor intends to build a 5,500- to 6,000-seat music venue on the site of the old Spectrum. Other cities are creating smaller venues as a means to attract more and different types of acts, from comedians to Christian rock, in a segmented music-and-entertainment business.

Many of the bands that have reliably filled big, indoor arenas for much of the last half-century, including giants such as the Eagles, Fleetwood Mac, Billy Joel, Tom Petty, Aerosmith, the Rolling Stones, and Bruce Springsteen, are aging or dead.

“It’s not totally unprecedented [for a city to have two arenas],” said Dave Brooks, senior director of live music and touring at Billboard, the music-and-entertainment magazine, “but there’s only so many arena touring shows each year. Definitely Philly is a must-play city, but there’s not really any evidence that another arena is going to attract more concerts to a market. They’re probably going to be going after a lot of the same stuff.”

The Hunden study comes amid a months-long wait for pending city-sponsored analyses on the community- and economic-impact of putting an arena next to Chinatown. Those studies were due in December. They’re being overseen by the Philadelphia Industrial Development Corp. and paid for by the Sixers, which arena opponents call a conflict of interest.

The team intends to build atop Jefferson Station on the western third of the Fashion District mall, which it says will move the city toward a transit-oriented future and bring jobs and spending to the struggling Market Street East corridor.

The Hunden study notes that the Nielsen audience company ranks Philadelphia as the nation’s fourth-largest media market, yet Pollstar data show the city to be only the 13th-highest-grossing for entertainment.

Philadelphia trails not only New York, Los Angeles and Las Vegas, but also Boston, Washington, Dallas-Fort Worth, Seattle-Tacoma and Nashville.

“Philadelphia performs below its weight class,” Hunden said, attributing that at least partially to lower household incomes in what is one of the nation’s poorest big cities.

The Sixers have undertaken their own studies about important aspects of their proposal, which support a new arena.

A transportation study conducted for the team by Philadelphia-based Langan Engineering & Environmental Services Inc. estimated that, given ease of public transit to Jefferson Station, the percentage of fans traveling to games aboard SEPTA or PATCO would increase to 40%. No new parking would be necessary at the site, the study said, concluding that existing lots and garages were more than sufficient to handle game-day traffic.

Hunden Partners projected that only about 15% of fans would take public transit, roughly the same percentage as travel to events at the Wells Fargo Center now, and that traffic gridlock would grip Market Street East before and after events. To park the average number of cars that now go to Sixers games would require the use of every public parking space within 0.4 miles of 10th and Market, the study said.

Hunden estimated that parking would be needed for about 4,700 cars; the Sixers’ figure is lower, at 3,700, according to their traffic study.

The Sixers say they also commissioned a study by MuniCap Inc., a Maryland financial and real estate consultant, that showed the arena would generate about $1.5 billion in new tax money for the city, its school district, and the state of Pennsylvania. The team has declined to make that report public.

Sports economists are generally skeptical of claims of huge tax windfalls in studies produced by teams seeking government approvals or support.

The Hunden Partners study has been shared with the mayor’s office, PIDC, and some members of City Council. A copy was obtained by The Inquirer.

Much of the document focuses on the financial effect of having two arenas, one hosting the Flyers, the other the Sixers, each competing for additional events to fill their calendars. Splitting the revenues would dramatically limit the ability of both venues to pay for renovations and improvements, requiring an infusion of taxpayer funding every 15 to 20 years, the report said. Taxpayers in some places have declined to provide those subsidies.

On July 24, a new challenge emerged for Comcast Spectacor, when Wells Fargo global bank announced it would not renew its naming-rights sponsorship at the arena. The bank paid $1.4 million annually during its 15-year contract, which ends in August 2025, according to Sports Business Journal.

It’s unclear how the value of naming the arena could be impacted if it hosted only one team and half the shows.

The Wells Fargo Center, which seats 21,000, is the setting for all Flyers and Sixers home games, the Philadelphia Wings lacrosse team, and nearly every big concert that comes to Philadelphia.

It hosts about 220 events a year, including corporate gatherings, church services, and community events such as the Flyers Charities Carnival.

The Sixers say their arena would host about 150 events annually, or 110 beyond the team’s 41 home games. They say there exists an untapped market of artists who have been unable to play Philadelphia because of arena scheduling issues — which Comcast Spectacor disputes.

Sixers part-owner and lead arena developer David Adelman has said “a new arena can thrive here and bring even more incredible events to Philly.”

He’s cited support from famed music promoter Irving Azoff, founder of the Oak View Group, who has criticized the Wells Fargo Center as outdated and said the insight he’s gained across 50 years “tells me a city like Philadelphia can handle two arenas.”

Among the center’s 220 events, the Hunden report counts 187 as ticketed, that is, the Flyers, Sixers, Wings, concerts, wrestling, and more.

It projects the number of ticketed events at two arenas would grow slightly, to 197, adding an additional eight to 12 concerts due to the greater availability of dates and the allure of a new venue.

However, the study said, the venues would roughly divide the total number of ticketed events, with 105 going to the Wells Fargo Center and 92 to the Sixers arena.