RBC Center Rent Woes

If the Carolina Hurricanes are going to stay an extra five years at the 20,000-capacity RBC Center, they want something in exchange to show for it – $1 million reduction of their annual rent, effective immediately.

The Centennial Authority, the owners of the Raleigh, N.C., venue, aren’t going for the deal just yet though and negotiations continue.

Lowering the rent from $3 million to $2 million would really help out Gale Force Holdings, which serves as the management team for the Hurricanes and the operators of arena. Excluding when they won the Stanley Cup, the company has lost money every year since 1997.

Last year the hockey team lost between $4 million to $5 million and an additional $1.8 million was lost on arena operations, according to WRAL-TV.

Dave Olsen, the VP and GM at the RBC Center, told Pollstar that the deficit for 2007 is expected to be $1.8 million.

The agreement between the team and Centennial Authority specifies that Hurricanes owner Paul Karmanos Junior is stuck picking up the bill for the annual operating losses.

In explaining the deficit, fingers can be pointed at higher insurance costs since 9/11 and annual utility bills that have increased from $1 million to $2.7 million.

Centennial Authority has been negotiating with the Carolina Hurricanes for two years to extend their lease from 2019 to 2024. At first the authority tried to throw an agreement for arena improvements into the mix but when that didn’t fly with Gale Force they chose to continue to try to extend the lease separately from the venue upgrades, according to WRAL.

The Centennial Authority recently pledged to use its own revenue, hotel and meal taxes from Raleigh and Wake County and funds from North Carolina State University, which pays rent to host basketball games, for $47 million in improvements at the venue.

Authority member Reef Ivey commented that you can’t always have your cake and eat it too.

"Anything you take away from the rent is obviously taking away from improvements that we can do to the building," Ivey said, according to WRAL.

The improvements include a new sound system and vending machines that accept credit cards.

Olsen said that if the Centennial Authority doesn’t agree to reduce the rent he doesn’t know what action, if any, Gale Force would take but that the two sides are continuing to negotiate.

"I can’t speak to that because I really don’t know the answer to that. We’re hoping this comes to some type of conclusion that works for everybody that’s a win-win. We’ll just have to see what happens," Olson said.

Olson also said that he has "no comment" on whether there would be a possibility of breaking the lease before 2019, which would of course mean a huge penalty for the management team.