Fargo Arena Drowning In Debt

A city-owned arena in Fargo, N.D., is scrambling to cut a deal with creditors that might help keep the building afloat after years of losses.

The $25 million Scheels Arena, which opened in 2008, has apparently been sliding toward insolvency for some time.

Tax documents obtained by the local Forum newspaper show the arena has generated about $1.6 million in operating revenue each year, compared with its $3.6 million to $4 million in annual expenses.

Bruce Furness, treasurer of the Metro Sports Foundation that runs the building, told the paper officials were “overenthusiastic” in their estimates for ticket sales and ad revenue.

However, weak revenues haven’t been the arena’s only problem. Furness said the project faced financing troubles from the very beginning. The original backer pulled out early on and a group of local banks and individuals stepped in to fund the construction of the arena.

A majority of that money has yet to be repaid. The Forum noted the foundation’s most recent tax forms listed outstanding debt of $23 million on the building. The group is reportedly negotiating with lenders to restructure its payments to make them more manageable.

Furness said the arena’s creditors have been mostly supportive of the restructuring plan.

“They’re going to get something instead of nothing,” he said.

The venue has apparently paid off some debts in recent times and the foundation is seeking new revenue streams for the arena, Metro Foundation President Al Hintz told the Forum. Its major tenant is the Fargo Force junior league hockey team.

But this time around, the board won’t look to seat and ad revenue for help.

“We did that the first time,” Hintz said.