No plans to move for the Hurricanes. PNC Arena finalizes lease extension
The Carolina Hurricanes and the Centennial Authority on Thursday completed the new lease agreement for PNC Arena that extends through the 2028-29 NHL season.
The authority, an appointed group that is the arena landlord, and the Hurricanes announced in May 2020 that a term sheet on a five-year lease extension had been agreed on by both sides. It extends the Canes’ lease, which was to expire in 2024, through September 30, 2029.
The authority approved the deal at its special meeting Thursday morning at PNC Arena with only one dissenting vote.
Hurricanes president and general manager Don Waddell spoke at the meeting, saying the current arena’s site is where the team’s home should be.
“This is 100 percent, in our view, the best place for the building,” Waddell said. “That’s our view, from the Hurricanes and the top of the ownership side.”
In a statement released by the team after the meeting, Waddell said, “We are proud to call PNC Arena and the Triangle home.”
Board member Stephen Stroud, who cast the lone vote against the lease extension, responded by vowing to support the team in that venture, saying, “If you certainly mean that, then I will help you get where you need to go.”
Stroud spoke against the deal based on concerns about the team’s long-term future, saying the new lease “opens the door” for relocation if a new owner wanted to buy the team from Tom Dundon and move it.
The lease stipulates the team would owe $31 million termination fee if it relocates prior to the 2024-25 season. That fee drops each year from there until the end of the lease, falling to $20 million, then to $12 million, $6 million and finally $3 million for relocating prior to the 2028-29 season.
“I think Raleigh has proven they are a hockey market as much as any place in the country,” Stroud said. “The fans here have been very supportive and very loyal to the Hurricanes.”
But, Stroud said, the added deterrent protecting against relocation is not strong enough, given how valuable NHL teams have become.
“There’s more and more interest from people interested in pro sports, interested in buying hockey franchises,” Stroud said. “If the trend continues to value of the franchise should continue to grow. If Mr. Dundon decided he wanted to sell the franchise, there would be a considerable amount of profit at play there. So $31 million, as a percentage of what he could make off the franchise, does not amount to a huge amount of money in comparison.”
Board member Randy Ramsey agreed with Stroud’s concerns about the future, but nevertheless said it was imperative the board pass the new lease.
“My fear is a self-fulfilling prophecy here,” Ramsey said. “I can see us getting to about 2029 and the Hurricanes, or whomever our partners are at that point, saying the building is dilapidated. It’s out of date. You’ve got to build a new downtown arena. So while I’m going to support this because I believe its the right thing to do that this point in time, I believe we as a board will be ignoring our duties, our fiduciary responsibilities to this arena and the people who appointed us, if we don’t do everything in our power to find a ways to enhance it.”
To that point, a requirement in completing the term-sheet agreement in 2020 was that the authority gain approval from the City of Raleigh and Wake County that $9 million a year through 2029 be provided through the Tri-Party Agreement, in which money annually is appropriated from the hotel and prepared food and beverage tax revenue.
The Wake County board of commissioners and the Raleigh City Council both approved the Tri-Party amendment in early October 2020. The lease extension then was turned over to attorneys for the authority and the Hurricanes for final inspection and approval.
The annual stipend of $9 million will be used to assume part of the arena operating expenses detailed in the lease extension and for other purposes including enhancement of the arena, which opened in 1999 and hosts Canes games, N.C. State men’s basketball games and other major events and concerts.
As part of the lease agreement term sheet, the authority will pay 50% of the arena operating costs each year up to $3.885 million. The authority also agreed to a reduction of the rent for fiscal 2020 of $1.78 million and no rent to be paid in the following years.
Authority chairman Tom McCormick said in May 2020 that a goal of the negotiations was that the Hurricanes “be in an average lease situation” with the other NHL teams.
“They clearly have one of the worst leases in the league,” McCormick said in May 2020.
On Thursday, in addressing Stroud’s concerns, McCormick pointed to the NFL’s Raiders franchise as an example of how difficult it is to prevent a team from moving. The Raiders have called Los Angeles, Oakland and Las Vegas home over the last 30 years.
But McCormick believes this new lease does all it can to keep the Hurricanes in a financial position to remain successful in Raleigh.
“There is a stipulation where the Hurricanes cannot even talk to anyone else about relocation for another year or so,” McCormick said. “There are penalties involved if they do. It makes no sense for them to do it. They have a big investment here...(Dundon) has not skimped on putting money into the team. We’ve done everything we can on our side of it to make them successful.”
This story was originally published July 8, 2021 at 10:59 AM.