Free rent, but no money from beer and brats — that's the gist of the Omaha Lancers' deal with the City of Ralston to play in the new Ralston sports and entertainment complex.
The Lancers junior hockey team won't have to pay rent to skate at the Ralston complex, which is under construction at 72nd and Q Streets. The city will receive 100 percent of food and beverage proceeds during games, including the fruits of barley pop sales to famously thirsty hockey fans.
The University of Nebraska at Omaha men's basketball team could also play rent-free, if the Mavericks attract a paid attendance of more than 2,500 a game.
That's a big if, at least early in the Mavericks' leap to NCAA Division I competition. They averaged 507 fans last season at UNO's Sapp Fieldhouse.
Ralston voters in May overwhelmingly approved a bond issue to build the $32 million, 3,500-seat arena and entertainment complex, which city officials hope will inspire additional development nearby. The arena will be on the former site of Lakeview Golf Course, near downtown Ralston. Construction is expected to be completed by October 2012.
The arena's success is important to Ralston taxpayers, partly because the city expects to owe about $2.5 million a year in debt payments on the bonds.
Ralston Mayor Don Groesser and Walt Peffer, a consultant to the city on the project, said they are confident that the arena will generate enough money to make those payments. They said the city is off to a good start with the arena's initial tenants.
The Lancers, who currently play at Omaha's Civic Auditorium, and UNO, for men's basketball, are the first two tenants to sign deals with the City of Ralston to use the arena. Both plan to begin play there in 2012.
A similar deal is in the works with the Omaha Beef indoor football team, which currently plays at the Civic. Ralston officials have had additional discussions with the Omaha Vipers indoor soccer team, which canceled its 2011-12 season after a falling-out with the Metropolitan Entertainment and Convention Authority, which manages the Civic Auditorium.
And Ralston is working on a lease with the Omaha Hockey Club for youth hockey ice time.
Ralston will own and manage the new arena itself. Leases must be approved by the City Council and are public record. Officials have approved a detailed lease agreement with the Lancers and signed a less-detailed letter of intent with UNO.
Free rent, or the possibility of it, is the first thing that jumps out in a review of the documents. But parties on all sides say rent from sports teams is only a small part of the equation for making the arena work financially — and far from the biggest factor that lured the teams to Ralston.
The Ralston arena's size, its newness and its location were much more important than the lease terms, Lancers and UNO officials said.
"That (a 3,500-seat arena) is incredibly attractive to us, because that's right at our average attendance," said Dan Fremuth, the Lancers' vice president of business operations. "It's a venue we think we can fill more often than not and create a great atmosphere for our fans that's filled with emotion, both on and off the ice."
He said it's also closer to more people as Omaha's population continues its westward growth.
UNO, meanwhile, had some unique needs for a men's basketball venue. The program is moving to Division I this year, and it has had what UNO Athletic Director Trev Alberts described as "good, consistent support, but not dramatic support."
"It's four miles south of our campus," Alberts said of the Ralston arena. "And it's the right size. . It's where we can put the men's basketball program and start building a fan base."
The Lancers moved to the Civic in 2009 from the Mid-America Center in Council Bluffs. Ralston's hockey arena dream surfaced in early 2010. That's when the Nebraska Legislature was asked to amend a "turnback financing" law, which had helped build the Qwest Center Omaha, in order to aid construction of the Ralston arena. "Our president and owner Ben Robert two years ago said that the move back to the Civic was step one of two steps," Fremuth said.
He called the 57-year-old Civic Auditorium, which seats 9,300 for sporting events, a "great arena," and a classic "old-fashioned hockey barn."
"It's just simply too big for us," he said. "It's hard to create demand for tickets ... when people come to our games and there's 4,000 empty seats above them."
The Lancers will be the Ralston arena's base tenant, and they have a proven, consistently strong fan base, city officials said.
Those factors are reflected in the Lancers' contract with the city. The lease is good for 10 years, beginning Oct. 1, 2012, and the Lancers have the option to extend it for two additional five-year periods on the same terms.
The Lancers' lease includes these provisions:
>> The Lancers will have priority over all other tenants for dates for home games, expected to be 45 regular season games and up to 12 playoff games.
>> The city will provide and set up the ice rink, complete with boards, Plexiglass, penalty boxes, team benches, etc., for games and practices.
>> The Lancers will pay for such game personnel as referees, a scorekeeper and a public address announcer.
>> The Lancers will receive almost all ticket proceeds.
>> The city will provide most other personnel and labor for games, such as event staff, security, emergency medical technicians, an electrician, a plumber and a heating and cooling expert, and setup and tear-down crews.
>> The Lancers will keep the revenue from sponsorships and advertising that the team sells on hockey rink boards, on the ice, on the scoreboard during hockey games and in certain other places.
>> The city will keep any revenue from arena naming rights and have sole control over them, and over certain other sponsors and advertising rights and revenues.
>> The city will retain the revenue from suite sales.
"Your main revenue (from games) is on the concessions," Peffer said.
City officials initially planned to charge the Lancers rent and share the concessions proceeds, Peffer said. But that would have caused problems with the arena's tax-exempt bond financing.
That's not a problem with UNO because, unlike the Lancers, UNO isn't a profit-making organization, city officials said. And the size, hunger and thirst of UNO basketball crowds are harder to predict, Peffer said.
That's the main reason the city structured its UNO deal with a sliding scale of rent based on attendance.
If the Mavericks draw between 2,000 and 2,500 paid attendees, for example, they will pay $500 rent per game. If they draw fewer than 1,000 paid fans, the rent will be $2,500 per game.
If UNO doesn't hit the attendance marks, the rent could be covered by such things as corporate sponsorships, ticket sales and game guarantee revenue, Alberts said.
Deals with other sports teams will probably have similar rent and attendance scales, Peffer said.
Ralston also will receive revenue from a seat tax and from local sales tax paid on purchases made inside the facility.
Thanks to the state turnback financing law, Ralston will also receive sales tax revenue from businesses within a 600-yard radius around the arena to help repay the bond debt.
Peffer projected that the turnback financing will generate about 10 percent of the arena's revenue.
Groesser said filling the arena with hockey and basketball fans should help lead to other revenue-generating events, such as concerts, youth hockey tournaments, curling and figure skating.
According to an editor at a trade industry publication, the practice of arena managers' offering deals with free or low-cost rent is not unusual, especially in the case of new buildings in competitive markets.
"The money for these buildings is not in minor league sports," said Dave Brooks, an editor at "Venues Today." "It's in concerts. That's where you can really make some money."
Groesser said he hoped to have something going on in the arena 80 nights a year, in addition to the main sports tenants' games.
"It's going to be very exciting," he said.
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