Huskers won’t have to pay to play in Lincoln arena

By Deena Winter | Nebraska Watchdog

LINCOLN, Neb. — The University of Nebraska-Lincoln likely won’t have to pay a dime in rent after its first basketball season in the new Pinnacle Bank Arena — in fact, the city will probably owe the university money.

That’s according to an analysis of UNL documents provided to Nebraska Watchdog through an open records request. The arena has struggled to operate in the black despite an all-star lineup of big concerts in its first seven months of operation, during which the arena posted a $376,000 operating deficit. The arena is projected to end the year with a $400,000 budget gap, which the city will bridge with a $500,000 loan.

Part of the budget gap stems from lower-than-expected revenue from Husker basketball games — from which the arena reaps concession and parking revenue, for example — and now it appears the university won’t be making a rent payment, either.

“We project credits against rent will exceed the rental charges,” Chris Anderson, UNL’s director of athletic community relations, said in a prepared statement that accompanied the documents turned over to Nebraska Watchdog.

Anderson said UNL and city officials will meet “soon” to go through expenses and determine who owes whom what, but UNL’s raw data indicates the city will owe the university, according to the terms in the lease and operating agreement.

“We don’t expect we’ll have to pay anything,” she told Nebraska Watchdog on Thursday.

Rather than become tenants in the new arena, Anderson said, UNL could have renovated its Devaney Center. The fact UNL didn’t need the arena as much as the city needed UNL as its tenant helped the university negotiate a sweet deal, which city officials predicted would be a wash, that the credits UNL could earn would equal the rent they would owe.

As it turns out, UNL did even better than that. The men’s basketball team sold out season tickets six months before the season began and attracted about 5,000 more fans per game this season, while the women’s team ranked eighth in the nation in attendance. The two teams had a combined home record of 31 wins in 34 games.

According to UNL’s lease and operating agreement with the city, the Huskers pay $750,000 in rent annually, but they can get the following credits:

• $300,000 annually for lost concession revenue, since the university no longer reaps concession dollars as it did at the Devaney Center.

• All sales tax revenue the state turns back over to the city from the sale of basketball tickets. Under this state turnback tax incentive program, the state turns back 70 percent of the sales tax revenue from the arena and surrounding hotels to the city to help pay for entertainment venues. UNL documents indicate the game tickets generated $211,812 in turnback revenue — 70 percent of which goes to UNL.

• The first dollar of ticket surcharges the city charges on basketball tickets. A total of 330,763 basketball tickets were sold, for a credit of $330,763.

Do the math, and the university should get a credit of about $29,000. That’s better than they expected to do; UNL budgeted $225,000 for rent, according to its internal documents.

Perhaps sensing some blowback from Lincolnites who think the lease agreement was too generous to UNL, Anderson released a glowing statement about how the deal has worked out well for all involved.

“Nebraska Athletics, the city and SMG have enjoyed working together, and this first season proved to be very successful,” Anderson said in the statement.

To buttress the point and perhaps blunt the news that UNL won’t pay to play, UNL has commissioned an economic impact study by one of its economists, who has projected the estimated annual economic impact of Husker basketball games on the Lincoln area at $6.5 million.

Jane Kinsey, spokeswoman for Watchdogs of Lincoln Government, called it “a crock” that the city will have to pay UNL.

“All I can say is the university is running the whole show almost because they’re getting off to the good and the city is losing overall,” she said.

UNL does have other expenses related to its new home court. Its documents indicate it spent nearly $83,000 to staff the arena during games and more than $200,000 on meals during games — including nearly $17,000 for media members alone.

It also makes money off loge seating and suites — for which it expected to make about $131,000.

Contact Deena Winter at deena@nebraskawatchdog.org. Follow Deena on Twitter at @DeenaNEWatchdog

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