PNC Arena upgrades taxpayers’ funding secured

Article posted by Coliseum, August 22^nd, 2023

Image: NHL

The Wake County and Raleigh will be sending more than an estimated $450 million in public funds between now and 2045 to upgrade the PNC Arena in Raleigh, North Carolina (US).

‘THE MOUNTAINEER’ stated that it is part of a new 29-year construction agreement on the arena, whose primary tenants are the National Hockey League (NHL’s) Carolina Hurricanes and the Atlantic Coast Conference’s (ACC’s) North Carolina State University men’s basketball team. Coupled with a recent proposal in Charlotte in North Carolina for the NFL team, more than $1 billion in taxpayer dollars is expected to help franchises owned by billionaires.

The PNC Arena is an indoor arena located in Raleigh, North Carolina (US). The arena seats 18,680 for ice hockey and 19,500 for basketball, which includes 61 suites, 13 luxury boxes and 2,000 club seats. The building has three concourses and a 300-seat restaurant.

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The Carolina Hurricanes are a professional ice hockey team based in Raleigh, North Carolina (US). They compete in the National Hockey League (NHL) as a member of the Metropolitan Division in the Eastern Conference, and play their home games at the PNC Arena.

The NC State Wolfpack men’s basketball team represents the North Carolina State University in the NCAA Division I men’s basketball competition. The N.C. State is one of the seven founding members of the Atlantic Coast Conference (ACC).

The Atlantic Coast Conference (ACC) is a collegiate athletic Conference located in the Eastern United States. Headquartered in Greensboro, North Carolina (US), the ACC’s 15-member universities compete in the National Collegiate Athletic Association (NCAA)’s Division I.

The North Carolina State University is a public land-grant research university in Raleigh, North Carolina, United States. Founded in 1887 and part of the University of North Carolina system, it is the largest university in the Carolinas.

Indiana (US)-based the National Collegiate Athletic Association (NCAA) is a nonprofit organization that regulates student-athletics among about 1,100 schools in the United States, Canada and Puerto Rico. It also organizes the athletic programs of colleges and helps over 500,000 college student-athletes who compete annually in college sports.

The NCAA Division I (D-I) is the highest level of intercollegiate athletics sanctioned by the National Collegiate Athletic Association (NCAA) in the United States, which accepts players globally. The D-I schools include the major collegiate athletic powers, with large budgets, more elaborate facilities and more athletic scholarships than Divisions II and III as well as many smaller schools committed to the highest level of intercollegiate competition.

‘THE MOUNTAINEER’ further stated that the above agreement will send $21.3 million annually starting in 2029 from the tax fund to the PNC Arena following ramped up payments in the four years of construction before the upgrades are completed in addition to $9 million in annual taxes through 2029 through the publicly-created Centennial Authority.

The Centennial Authority was created by the North Carolina General Assembly in 1995 to study, design and provide a first-class, multipurpose facility for the region. This became the PNC Arena, home to tenants such as the North Carolina State Wolfpack’s men’s basketball, the Carolina Hurricanes hockey franchise and many others.

The funds are part of a new agreement, announced recently, that will extend the Hurricanes’ lease on the building 20 years through the 2043-2044 seasons. American businessman Tom Dundon, now 51 with 2022 estimated net worth of $1.02 billion, bought the franchise for $420 million in 2018. Circulating relocation rumors were put to rest with this deal.

The package includes a promise from an entity owned by the Hurricanes’ owner to build an entertainment district and public gathering space outside the arena that has been the franchise’s home since 1999. The NHL subsequently gave promises for the All-Star Game and the outdoor Stadium Series after the upgrades.

New York City (US)-based the National Hockey League (NHL) is a professional ice hockey league in North America comprising 32 teams – 25 in the United States and 7 in Canada.

The National Hockey League All-Star Game is an exhibition ice hockey tournament that is traditionally held during the regular season of the National Hockey League, with many of the league’s star players playing against each other.

The NHL Stadium Series is one of the series of regular season outdoor games played in the National Hockey League. This event is distinct from the NHL’s other two series of outdoor games, the NHL Winter Classic played on New Year’s Day in a different NHL City every year and the NHL Heritage Classic.

The tax dollars will come from the Wake County Hospitality Tax Fund, which includes a six percent hotel occupancy tax and a one percent prepared food restaurant tax. The tax was put in place with a restriction that the funds can only be used for art, cultural, sports or convention spending.

The fund currently brings in $66.6 million annually, which is expected to rise to $80.4 million in fiscal 2023 before reaching $160.6 million annually in 2045.

The Wake Assistant County Manager Denise Foreman told the Board of Commissioners recently, “It’s important to acknowledge that $9 million commitment through FY29 and the flexibility that gives the Centennial Authority to continue to meet their obligations, meet the maintenance requirements that need to be taken care of and then also continue their enhancement planning while also working through the financing plan for the long-term debt.”

The deal comes as the Charlotte and Mecklenburg County is looking to publicly fund $600 million of a $1.2 billion renovation plan at the National Football League (NFL) Carolina Panthers’ 74,867-capacity Bank of America Stadium in Charlotte, North Carolina, with a county restaurant tax to benefit billionaire Panthers owner Dave Tepper.

Part of the new PNC Arena deal is a ground lease for the Gale Force Sports and Entertainment, an operations company owned by Dundon, to develop the area around the PNC Arena with a promised $200 million for Phase 1 over five years, $400 million for Phase 2 within 10 years and $800 million spent within 20 years.

Phase 1 is defined by at least 100,000 square feet of retail/dining space, 150,000 square feet of office space, 200 multi-family residential units; a 150-room hotel; and a 3,000-to-5,000-capacity indoor music venue.

Raleigh (US)-based the Gale Force Sports and Entertainment, LLC was founded in 1998. The company’s line of business includes providing management services on a contract or fee basis.

Dundon said in a statement, “This is an exciting day for the Triangle. This development will transform the PNC Arena into a year-round destination for residents, while also improving the event day experience for the Hurricanes fans, N.C. State fans and concertgoers alike. North Carolina is the home of the Hurricanes, and I am proud to say that the Hurricanes will continue to call PNC Arena home.”

The plan came with promises of economic benefit for the county, City and area taxpayers. But economists who have extensively studied arenas and the surrounding entertainment districts have repeatedly shown that the publicly-funded sports venues do not produce the promised benefits.

“Ideally, State and local Governments should not subsidize professional sports venues, because they generate limited economic benefits and largely transfer taxpayer dollars to the wealthy owners of private businesses,” said a paper on the public policy of publicly- funded sports stadiums written by Kennesaw State’s J.C. Bradbury, Maryland-Baltimore County’s Dennis Coates and West Virginia’s Brad Humphreys.

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