News: CJ Exclusives

Tax-Funded Arenas Fall Short with Fans

Pro hockey, NC State basketball teams fail to fill seats at ESA

The old adage goes, “If you build it they will come.” While most famously used as a premise in Field of Dreams, numerous local governments have used the maxim to justify the building of sports and entertainment arenas.

Recent developments in Raleigh, Cumberland County, and Greensboro suggest that the proverbial “they” are not coming in great enough quantities to fully support all these buildings. As a result, all three communities are engaged in unusual efforts to address the situation.

The arena business model

The business model for indoor arenas is similar regardless of location. Virtually all rely on hosting a wide range of events, with the hope that sufficient events of the right sort will attract enough attendance to all the arenas to at least cover their costs. While specific events will vary, they can be broken down into three general categories: sports, touring companies, and special (one-time) events.

Sports teams. The core business — indeed the only reason for the construction or modernization of many arenas — is to host one or more sports teams. Most typically, these would be a professional basketball or hockey franchise at either the major or minor league level. In some circumstances, college basketball can also be a significant factor.

The appeal of a sports team is the sheer number of dates they use a facility. Even an 11 home-game college or National Basketball Development league schedule involves many more dates than any other possible event.

National touring events. The circus, the Harlem Globetrotters, Sesame Street Live, Disney on Ice, and the like are popular touring attractions that come through regularly. Sports-related versions, such as Arenacross and the rodeo, exist as well.

Special (one-time) events. While the Carolina Hurricanes will be playing 41 regular-season games in Raleigh next season, and the circus will again come through town, the unpredictable factor in arena booking are special events. These dates, such as major concert tours, and the NCAA and ACC basketball tournaments, are either onetime events or annual events that are often in different places each year. These tend to generate a lot of income for arenas, but competition to obtain these events can be fierce.

Raleigh

The $158 million RBC Center opened in 1999 with the National Hockey League’s Carolina Hurricanes and the N.C. State Wolfpack men’s basketball as its primary tenants. The arena seats about 19,000 spectators. The building and surrounding land is owned by the Centennial Authority, a governmental entity specially created for the purpose. The Hurricanes’ Gale Force Sports & Entertainment subsidiary operates the building on a day-to-day basis.

Through the NHL All-Star break in early February (29 games), the Hurricanes were drawing an average of 11,782 fans per home game — or 63 percent of capacity. Both figures were the lowest among the league’s 30 teams. Low attendance is especially problematic for a NHL team. The hockey league has the smallest television contract of the four major professional sports, making its franchises more dependent on gate receipts that clubs in other sports.
Attendance at N.C. State games averages about 13,800.

The RBC Center has also had trouble attracting concert tours in warm-weather months. The arena competes with an amphitheater for these dates, with most of the shows going to the outdoor venue.

Gale Force said it is losing about $2.5 million a year operating the building. The company, not taxpayers, is responsible for covering the losses.

In December, the Centennial Authority voted to create a special task force to figure out how to increase attendance at the venue. The authority noted that the new group must be aggressive in seeking out new major events for the facility, such as the NHL All-star game or NCAA men’s basketball tournament games. An equally important objective for the group would be to figure out how to improve attendance at Hurricanes and Wolfpack games.

“It bothers me greatly to come to N.C. State basketball and the Carolina Hurricanes and see all those empty seats,” said Centennial Authority Chairman Steve Stroud. “We’ve got to figure out a way to get the public involved.”

Greensboro

As in Raleigh, turnout at hockey games is a problem in Greensboro. A notable difference, however, exists in the caliber of play and who runs them. The Greensboro Generals play in the minor league East Coast Hockey League.

To keep the team from folding, the city of Greensboro has taken over the Generals’ day-to-day operations this season. The team’s coach, for example, is a city employee. The coliseum authority is also responsible for the team’s advertising, marketing, and ticket sales. Through late January, the city had lost about $300,000 operating the team.

The Generals rank 22nd of 31 teams in the ECHL in average attendance. The gate at the typical game in Greensboro is just under 3,000. The league average attendance, by comparison, is just over 3,700.

Cumberland County

Cumberland County’s Crown Coliseum is attempting to overcome an unsuccessful agreement to market the 8,000 seat arena. In 2000, Cumberland County signed a deal with Arena Ventures, a partnership between Clear Channel Entertainment and the National Basketball Development League. Under the pact, a NBDL team, the Fayetteville Patriots, would play at Crown Coliseum and Clear Channel would bring events additional events to the arena.

The NBDL, however, has failed to catch on and its future after the current season is uncertain. Average attendance at last season’s Patriots’ games was only 1,626.

Clear Channel, meanwhile, failed to live up to its contractual agreements by bringing only about half as many events as promised to town. It has had to pay penalties to the county as a result.

The Fayetteville Observer reported that through August 2003, the county spent $748,471 on management and licensing under the agreement but received $201,209 in revenues from events brought to town by Arena Ventures. Part of the problem was the inability of Clear Channel to sell naming rights to the Crown.

There is some good news for Crown though: The Cape Fear FireAntz of the South East Hockey League are drawing about 2,750 fans a night in their first season.

Lowrey is a Charlotte-based associate editor for Carolina Journal.