The Carolina Hurricanes and its subsidiary, Gale Force Holdings, are trying to re-negotiate their lease with the RBC Center with the local group that operates the building, the Centennial Authority.
Presently the lease is valid until the year 2019, but the Canes are asking that the rent be lowered from $3 million to $2 million per year in exchange for adding 5 years on the lease. I’m not an expert on lease negotiations or what the market value is on an arena that can seat 18,600 people—but it doesn’t seem logical to me that the rent could be lowered that significantly.
The Canes are claiming that their expenses are up and they need the relief because they are losing money. Wouldn’t the Centennial Authority’s expenses be up as well? Everyone’s expenses are up for a variety of reasons. Would the Hurricanes be willing to pay an increase in rent if they start making money?
It’s hard for me to lend much sympathy to the Hurricanes when they make their claims of poverty. They already have a sweet lease deal on the arena which allows them to keep the lion’s share of all parking and concession revenue. Many NHL teams don’t have that benefit.
The franchise also refuses to open their books to the public, even though some public funds are involved in all of this. If the rent is lowered, I am assuming that public funds will be reallocated to cover the difference. Do the Canes just expect everyone to take their word for it that they are losing “X” amount of dollars every year, when millions of dollars are at stake?
Owner Peter Karmanos reportedly paid about $47.5 million for the franchise when he purchased it from Howard Baldwin back in 1994. This recent article by Forbes magazine lists the franchise as currently being worth about $156 million.
Are we really supposed to feel sorry for Mr. Karmanos? One can’t help but think that this public exchange is just a premise for future price increases on tickets, concessions, and parking.
Perhaps the Centennial Authority can promise to make the previously agreed upon system upgrades (sound system, jumbotron, etc.) in a more timely fashion? Maybe it would be worth a reduction in rent if they do tack a few extra years on the lease, but also increase the early termination penalty if the Canes decide to leave before the final date?
Hopefully, these millionaires and billionaires can reach some sort of agreement soon—one where the little guy doesn’t end up footing the bill.