Last year, NHL commissioner Gary Bettman visited Raleigh to talk to local leaders about upgrading PNC Arena, home to the Carolina Hurricanes. According to Bettman, the upgrades “were officially overdue from the league’s perspective”. The upgrades being asked for include a renovation to the arena, a new lease and allowing for the NHL team to build and develop land around the arena.
This got me thinking about the city of Raleigh and all the issues that they have had to deal with when battling the NHL, the team/owner or Centennial Authority (This is the group started by the state government who run the arena). I feel like it has become a yearly issue of when the Hurricanes will ask the city for additional taxpayer money.
To start with, let’s go to 1998, which is 1 year before they would start playing in Raleigh. Yes, both the city and team began fighting BEFORE THEY EVEN PLAYED A SINGLE GAME in Raleigh. The arena is being built when costs of the construction increases. Since North Carolina State intended to play in this new arena, they contributed an extra $5 million. The Hurricanes, however, did not want to give any more money.
Since the Hurricanes were paying just $20 million out of their own wallet (for a $150 million dollar arena), they felt the city could throw in a few more dollars.
“The Centennial Authority has to understand that we’re not going to throw away a small fortune every time they run into problems with the arena” – Peter Karmanos, Carolina Hurricanes Owner, Greensboro.com, 08/19/98
Remember this line as we move forward. Eventually, the team got so much bad publicity that they gave the entire $20 million out of their own wallet to stop this story from continuing.
In 2002, North Carolina State and the Arena began fighting over parking issues and profit-sharing questions from Wolfpack games. After three years of fighting, it was agreed that during North Carolina State games, the college could collect “60% of future parking revenue related to … events held at the arena” while the team got the other 40%.
In 2003, the Raleigh News & Observer went crazy over continued secrecy over the Arena’s budget considering it was built with substantial taxpayer money.
“Members of the Centennial Authority … have a fondness for secrecy and thus a disregard for the people they are supposed to represent. … As the deal has been discussed in the authority’s finance and bylaws committees, members have allowed negotiations to be covered with a blanket of secrecy. That’s nothing short of outrageous, considering that $130M in public funds made the building possible in the first place” – News & Observer, 09/10/03)
In 2007, the city offered the team $50 million dollars for arena improvements over the next 15 years. They weren’t even going to make the team sign any lease extension either. But the team complained that they would not sign any extension until their $2.45 million payment annually was eliminated.
Thankfully, the arena and team shared how happy they were when the city offered them this money without any lease extension:
“I don’t know that I would call it a concession. It really doesn’t have anything to do with the capital improvements. We felt like we needed to have those improvements done, regardless of the lease extension” – Centennial Authority Chairman Bill Mullins, Triangle Business Journal, 12/10/07
The team would sign a lease extension the following year.
In 2019, the Hurricanes began to whine about their current lease. You see, they have to pay $2.45 million in annual rent. These poor guys can’t afford that when their “profits have not been what was hoped for when (the previous) agreement was … struck”. The team would go on to claim that this arena was “at the bottom of the league” and that when it comes to the lease agreement, the “economics of the deal have to change in our favor”. Do they?
In 2021, the Hurricanes signed a five-year lease extension to remain at the arena through the 2028-29 season. Included in this agreement is a clause allowing the Hurricanes to not pay rent anymore. This means the city will not get the $2.45 million check every year. Also put in this agreement was language allowing the team to end the lease earlier than in previous agreements.
That was because the new owner of the Hurricanes wanted a new arena with development all around it. But BizJournal noted how that line of thinking didn’t help the current arena site:
“One of the challenges for the PNC Arena is that development never really took off in the area after it opened in 1999” – Triangle Business Journal, 07/08/21
In 2022, the city paid $25 million for a new roof on PNC Arena along with 17 other “enhancement projects”. Be happy with that number because the developers were pushing for a $200 million project, but the city couldn’t afford that.
Why exactly is the city of Raleigh even entertaining the team if they want more money in the near future? The team pays $0 per year in rent yet collects 100% of revenue from “concessions, gameday advertising, television rights, parking and luxury and club suites”. Moreover, keep in mind that the team already gets $4.335 million per year to “offset arena operating expenses”. Doesn’t the city do that anyway?
This year, the team signed a new two-year extension to keep the team in Raleigh until 2029. No finances were discussed but the News & Observer have reported that the team would now get 100% of revenues from a newly sponsored part of the arena. Makes sense. Why share any of it?
Even with all of these agreements and all this money put in by the city, the team is yet again wanting to discuss a major lease extension that includes hundreds of millions in taxpayer dollars. Sadly, residents of Raleigh should prepare themselves. Usually, a city that is negotiating with a team will deny that the public will pay for anything, even if they do later on. Yet, Raleigh’s response is that public funding for any new upgrades continues to be “an open question”. That doesn’t sound good.