Ralston’s arena is on a path to better times, city leaders say, but recent numbers indicate that it did not make much headway last fiscal year.
The city’s annual auditor’s report shows that the arena bled red ink during fiscal 2015, which ended Sept. 30, losing $2.5 million on combined operations and debt service.
That was up from $2.2 million lost the previous year.
The numbers underline the financial woes that prompted the city last fall to scramble for funds to cover the arena’s losses. The city raised property taxes, instituted a restaurant tax and made spending cuts across all departments. Then, in the most recent session of the Nebraska Legislature this spring, lawmakers offered Ralston a way to collect more tax revenue for the arena.
City leaders acknowledge that the 3½-year-old arena continued to see losses in the last fiscal year. But they say those numbers don’t tell the full picture and say they have made progress in righting the ship.
Going forward, Ralston officials aim to improve the arena’s finances by cutting operational deficits and by boosting the amount of turnback tax revenue from the state, which helps pay off the arena construction bonds.
Ralston Mayor Don Groesser said he’s particularly focused on the arena’s operating deficit. Arena operations in fiscal 2015 posted a deficit of $622,130 — slightly better than the $652,013 lost the previous year, according to the auditor’s report.
And last year’s operating deficit would have been half as much if not for a $319,000 bill left over from the arena’s construction.
Still, “that is a loss, and I’ve got to figure out how to stop that year after year after year,” Groesser said.
Even so, he said, last fall’s tax increases and budget cuts have put the city on solid footing, and the city has no problem paying its bills.
The city raised its property tax rate by 4.3 percent, instituted a 2.5 cent restaurant tax and diverted lottery funds to meet the arena’s bond payments. City departments each were asked to cut spending 7 percent. Numbers showing the effect of those changes won’t be available for another year.
The arena’s operations are in the black so far this fiscal year, said its general manager, Stan Benis, although he cautioned that the coming summer months tend to be a “tough season.”
“I really feel we’re going to be in good shape,” he said.
Groesser said he hoped to break even on both arena operations and bond payments by the end of this fiscal year in September.
That didn’t happen last year: The arena had about $10.5 million in expenses for both operations and debt service. Meanwhile, it brought in about $5.5 million in revenue and $2.4 million from grants and other contributions, the report said. That produced a net deficit of $2.5 million.
That loss, Groesser said, is misleading because it includes $1.7 million in depreciation on the building, which is largely an accounting loss.
Ralston’s financial challenge last year arose partly because its annual bond payment jumped from $2.2 million to $3.3 million. It will remain at about that level for the next 15 years.
Groesser said the city is working to expand the turnback tax revenue, so that ultimately it covers the city’s entire annual bond payment.
The new arena-incentive law the Legislature passed allows Ralston Arena to benefit more from the turnback tax than before, giving the arena a portion of the sales tax revenue from retailers within a 600-yard radius.
Originally, the arena could claim that benefit only from businesses launched from two years before the arena opened to two years after.
Now the city will get turnback revenue from businesses that launch in the next four years, too.
Even before the new law, the turnback revenue showed growth: In 2014, Ralston got $2 million. In 2015, that improved to $2.4 million.
“It doesn’t take a lot of new businesses to generate quite a large portion of our sales tax,” Groesser said.
As for reducing the operating losses, Benis said he thinks a new hire for the arena could help generate more revenue.
During the past few years, sponsorship money has fallen short of goals by $250,000 to $300,000 a year, he said. The new employee will work on selling naming rights.
Ticket sale revenue and the number of events, banquets and weddings all grew in the arena’s third year.
The arena hosted 85 events in fiscal 2014, compared with 90 in 2015, Benis said.
Banquets and weddings grew from 54 to 76.
Attendance grew from 203,000 to 230,000.
“Everything just grew really well last year,” Groesser said.
The arena is home to the Omaha Lancers hockey team; Omaha Beef arena football team; Omaha Rollergirls, a roller derby team added in 2015; and the Omaha Heart, a lingerie women’s football team.
The arena lost the Victory Fighting Championship in November and is replacing it with Dynasty Combat Sports boxing. The arena also is adding the Omaha Chargers NBLA professional basketball team.
World-Herald staff writer Henry J. Cordes contributed to this report.
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