News Article: Hurricanes Extend Lease at PNC Arena for Five Years

[MinJaBen]

Click to read more...

 

[Unsustainable]

Probably sets up for a downtown arena in that time frame.

 

[HisIceness]

Excellent news. If they decide to do a Downtown Arena in 10 years, go for it.

Now, extend w/ the Checkers please.

 

[DaveG]

but I was told by a cable guy that Dundon was going to opt out and move the team to all 3 of Houston, Atlanta, and Quebec City simultaneously

 

[Svechhammer]

But I thought Dundon was too poor and would opt out

 

[HisIceness]

They are relocating to Charlotte. You guys are getting the Hornets.

 

[Unsustainable]

but I was told by a cable guy that Dundon was going to opt out and move the team to all 3 of Houston, Atlanta, and Quebec City simultaneously

this only requires him to play 1/2 of the home games in Raleigh, he can have the rest played anywhere he wants

 

[Lempo]

this only requires him to play 1/2 of the home games in Raleigh, he can have the rest played anywhere he wants

Raleigh-Houston Hurricanes. The Southern Winds.

 

[tarheelhockey]

This isn’t the dramatic announcement it would have been a couple of years ago, which says a lot about how far the franchise has come under Dundon. A stable lease situation is a big, big deal and is basically Relocation Repellant.

Mentioned in the article, it appears likely that they’ll announce a delay in renovations which were supposed to start soon. Under normal circumstances that would be disappointing, but right now it feels like lucky timing. Should give the architects a chance to re-evaluate the needs going forward.

 

[emptyNedder]

Mentioned in the article, it appears likely that they’ll announce a delay in renovations which were supposed to start soon. Under normal circumstances that would be disappointing, but right now it feels like lucky timing. Should give the architects a chance to re-evaluate the needs going forward.

The Hurricanes and new owner Tom Dundon have been seeking an increased operational subsidy from the arena authority as a condition of any lease extension.

The authority has discussed extensive renovations to the 21-year-old building and was promised $9 million per year in hotel and restaurant tax revenue through 2034 to fund them.

Later in April, the authority’s building and construction committee met by phone and cut its capital project budget for the next fiscal year by $2.6 million because of the lack of events in the building and expected decrease in tax funding.

Read more here: https://www.newsobserver.com/sports/article242839556.html#storylink=cpy

If part of the offer includes the $9M, it would appear that the extension is not a done deal.

 

[Svechhammer]

The Hurricanes and new owner Tom Dundon have been seeking an increased operational subsidy from the arena authority as a condition of any lease extension.

The authority has discussed extensive renovations to the 21-year-old building and was promised $9 million per year in hotel and restaurant tax revenue through 2034 to fund them.

Later in April, the authority’s building and construction committee met by phone and cut its capital project budget for the next fiscal year by $2.6 million because of the lack of events in the building and expected decrease in tax funding.

Read more here: https://www.newsobserver.com/sports/article242839556.html#storylink=cpy

If part of the offer includes the $9M, it would appear that the extension is not a done deal.

That's probably a formality at this point. Unlikely this would be formally announced to the public if it wasn't all but done.

 

[emptyNedder]

That's probably a formality at this point. Unlikely this would be formally announced to the public if it wasn't all but done.

“We’ve been discussing a term sheet but the board has not approved a term sheet at this point,” authority chairman Thomas McCormick said. “Obviously with COVID-19, and not being able to have any person-to-person meetings, it has been difficult. I can’t really comment on anything that might be in the term sheet since the board has not approved it yet.”

But because the authority’s primary source of funding is Wake County’s hotel and restaurant tax, uncertainty over future finances could delay the process or even reopen negotiations.

Read more here: https://www.newsobserver.com/sports/article242839556.html#storylink=cpy

It appears the formal announcement to the public was from one side—that usually is a negotiating tactic.

 

[tarheelhockey]

The Hurricanes and new owner Tom Dundon have been seeking an increased operational subsidy from the arena authority as a condition of any lease extension.

The authority has discussed extensive renovations to the 21-year-old building and was promised $9 million per year in hotel and restaurant tax revenue through 2034 to fund them.

Later in April, the authority’s building and construction committee met by phone and cut its capital project budget for the next fiscal year by $2.6 million because of the lack of events in the building and expected decrease in tax funding.

Read more here: https://www.newsobserver.com/sports/article242839556.html#storylink=cpy

If part of the offer includes the $9M, it would appear that the extension is not a done deal.

“We’ve been discussing a term sheet but the board has not approved a term sheet at this point,” authority chairman Thomas McCormick said. “Obviously with COVID-19, and not being able to have any person-to-person meetings, it has been difficult. I can’t really comment on anything that might be in the term sheet since the board has not approved it yet.”

But because the authority’s primary source of funding is Wake County’s hotel and restaurant tax, uncertainty over future finances could delay the process or even reopen negotiations.

Read more here: https://www.newsobserver.com/sports/article242839556.html#storylink=cpy

It appears the formal announcement to the public was from one side—that usually is a negotiating tactic.

Hard to say quite what's happening here, but it's very hard to imagine negotiations going off the rails over less than $3M/year. Under these circumstances, everyone understands that the revenue simply isn't there, and it may be a matter of reducing the scale of renovation.

Interesting, though. I suspect you're right that this is a negotiating tactic to put pressure on the CA.

 

[tarheelhockey]

A little more detail from the N&O about the renovation negotiations:

https://www.newsobserver.com/sports/article242839556.html

The authority asked architects Ratio and HOK to prepare a menu of possible renovation options and expects those documents soon, but plans to “pump the brakes” on moving forward with any until it has a better sense of the economy, authority executive director Jeff Merritt said Tuesday.
...
Last year, the Centennial Authority hired a consultant from CAA Icon, Dan Barrett, to represent it in negotiations. Barrett asked for, and received, access to the Hurricanes’ finances for assessment.
...
“I think it’s a fair deal,” Dundon said. “This gives us the flexibility to focus on Raleigh. We want to stay. This puts us in a position to stay here long term. It gives us all the time we need to focus on a long-term solution.”
...
“Our principal source of revenue is from the room and meal taxes,” McCormick said. “Those industries are hurting as badly as anybody else in the whole country, not just here. We have to be really careful about what we end up approving, if we do approve something, because we have to live within our means.”

 

[MinJaBen]

A little more detail from the N&O about the renovation negotiations:

https://www.newsobserver.com/sports/article242839556.html

The authority asked architects Ratio and HOK to prepare a menu of possible renovation options and expects those documents soon, but plans to “pump the brakes” on moving forward with any until it has a better sense of the economy, authority executive director Jeff Merritt said Tuesday.
...
Last year, the Centennial Authority hired a consultant from CAA Icon, Dan Barrett, to represent it in negotiations. Barrett asked for, and received, access to the Hurricanes’ finances for assessment.
...
“I think it’s a fair deal,” Dundon said. “This gives us the flexibility to focus on Raleigh. We want to stay. This puts us in a position to stay here long term. It gives us all the time we need to focus on a long-term solution.”
...
“Our principal source of revenue is from the room and meal taxes,” McCormick said. “Those industries are hurting as badly as anybody else in the whole country, not just here. We have to be really careful about what we end up approving, if we do approve something, because we have to live within our means.”

The "read between the lines" portion of the bolded statement screams "One that may or may not include the PNC arena."

 

[tarheelhockey]

The "read between the lines" portion of the bolded statement screams "One that may or may not include the PNC arena."

I think the 5-year timeframe is significant. That's right around the amount of time it takes to fund, design, and build a new arena if they decided to go in that direction.

On the other hand, it's kind of hard to see the choice to renovate and develop PNC/Carter-Finley into an entertainment district as anything other than a choice not to proceed with a new arena.

If Dundon's goal is to re-open negotiations with a new building as the focus, this is a strange way to do it.

 

[MinJaBen]

I think the 5-year timeframe is significant. That's right around the amount of time it takes to fund, design, and build a new arena if they decided to go in that direction.

On the other hand, it's kind of hard to see the choice to renovate and develop PNC/Carter-Finley into an entertainment district as anything other than a choice not to proceed with a new arena.

If Dundon's goal is to re-open negotiations with a new building as the focus, this is a strange way to do it.

I wonder if Dundon has approached Malik and said "About that soccer complex you you were planning..."

Seriously, though, I bet NCFC's plans for the sports and entertainment complex just off 40 south of Raleigh might get revamped with the MLS prospects seeming to be diminished a bit by Charlotte's MLS ascension. Maybe rolling a Hockey arena into the plans would benefit both sides.

 

[emptyNedder]

Hard to say quite what's happening here, but it's very hard to imagine negotiations going off the rails over less than $3M/year.

My math suggest $6.4M this coming year. Also, $3M/year is likely less than the amount involved with the Checkers.

What seems troubling about this whole announcement is that the authority states they haven't done substantial work since COVID. What has changed is that the B&C committee has stated their budget is $2.6M not $9M.

This could have been announced any time in the past 6 months or so. Is it a coincidence that one side goes public when the other side suddenly can't meet the details outlined in the offer sheet?

 

[Svechhammer]

I wonder if Dundon has approached Malik and said "About that soccer complex you you were planning..."

Seriously, though, I bet NCFC's plans for the sports and entertainment complex just off 40 south of Raleigh might get revamped with the MLS prospects seeming to be diminished a bit by Charlotte's MLS ascension. Maybe rolling a Hockey arena into the plans would benefit both sides.

Moving the arena to South Raleigh would be a huge mistake. The absolute furthest they should move it from where it is now is to downtown, but the current location is a pretty quick drive for a lot of the wealthier portion of the area (N.Raleigh, Cary, Morrisville, ITB, and not that bad for Chapel Hill and Durham). You move it to S. Raleigh, and you're talking about a drive that used to be 20 minutes for people in Raleigh suddenly upwards of an hour, which could significantly dent STM. I am a STM now, and I know there is no way I could make it work if the team played south of downtown.

 

[MinJaBen]

Moving the arena to South Raleigh would be a huge mistake. The absolute furthest they should move it from where it is now is to downtown, but the current location is a pretty quick drive for a lot of the wealthier portion of the area (N.Raleigh, Cary, Morrisville, ITB, and not that bad for Chapel Hill and Durham). You move it to S. Raleigh, and you're talking about a drive that used to be 20 minutes for people in Raleigh suddenly upwards of an hour, which could significantly dent STM. I am a STM now, and I know there is no way I could make it work if the team played south of downtown.

First, I agree with most of what you said. Second, my understanding was that the location for Malik's plans are only 2 miles from downtown. So while, South Raleigh is correct, it will be marketed as Downtown. The big kicker for a plan like this is the opportunity for Dundon to profit from any adjacent development around the facility. With the current location almost completely surrounded by State owned land, that is very limiting. A move to a location like Malik's is ripe for development.

I personally as a Durm resident would hate any location farther to east. It likely would be the end of any season tickets for me as the drive through RTP at rush hour is already bad enough. Add that little extra and I'll just enjoy John and Tripp on the TV.

 

[Svechhammer]

First, I agree with most of what you said. Second, my understanding was that the location for Malik's plans are only 2 miles from downtown. So while, South Raleigh is correct, it will be marketed as Downtown. The big kicker for a plan like this is the opportunity for Dundon to profit from any adjacent development around the facility. With the current location almost completely surrounded by State owned land, that is very limiting. A move to a location like Malik's is ripe for development.

I personally as a Durm resident would hate any location farther to east. It likely would be the end of any season tickets for me as the drive through RTP at rush hour is already bad enough. Add that little extra and I'll just enjoy John and Tripp on the TV.

2 miles during rush hour around downtown will significantly extend any drive to get there.

I think the easiest (and most likely) thing for them to do is to create a commercial district around the arena with bars and team stores in that space between PNC and Carter Finley. And I would model it after the Power and Light District in Kansas City...

And if you do it right, it could/would turn into the huge party spot for NC State students during the semesters when you're not using it for tailgates or Game Watching parties.

 

[Joe McGrath]

They aren’t going to be able to renovate anything until Summer 2021 anyway since the Canes will be in the cup final in August and back in training camp in October.

 

[tarheelhockey]

My math suggest $6.4M this coming year. Also, $3M/year is likely less than the amount involved with the Checkers.

What seems troubling about this whole announcement is that the authority states they haven't done substantial work since COVID. What has changed is that the B&C committee has stated their budget is $2.6M not $9M.

This could have been announced any time in the past 6 months or so. Is it a coincidence that one side goes public when the other side suddenly can't meet the details outlined in the offer sheet?

Unless I’ve misunderstood something, the issue is that CA was expecting $9M/yr of public money, and has slashed that by $2.6M due to COVID’s impact on hotels and entertainment.

If they were on the verge of signing the agreement, presumably both sides were OK with the $9M plan. The issue right now is CA not having that $2.6M to work with anymore. Presumably this story is in the news because Dundon is turning up the heat on them to get a deal done rather than kicking the can down the road again. This issue is of core-business-model importance to the Canes, so they are highly motivated to get it resolved before making other decisions.

 

[GIN ANTONIC]

God, talking about these drive times and seeing pics of the KC power and light district just hammer home how lame and terribly things are laid out in major cities in Canada. Come to Toronto and drive in rush hour and then try to find a non-shitty chain bar/restaurant to go to before or after a Jays/Leafs/Raptors game. It's depressing.

 

[emptyNedder]

Unless I’ve misunderstood something, the issue is that CA was expecting $9M/yr of public money, and has slashed that by $2.6M due to COVID’s impact on hotels and entertainment.

Correct. I read it wrong.