THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Saturday, January 11, 1997 TAG: 9701110276
SECTION: FRONT PAGE: A9 EDITION: FINAL
SERIES: NHL In Hampton Roads
SOURCE: BY HARRY MINIUM, STAFF WRITER
DATELINE: NORFOLK LENGTH: 91 lines
It was early on Christmas Day that George Shinn called Paul Fraim's Larchmont home. The Norfolk mayor figured Shinn wanted to wish him Merry Christmas, and took the call with a smile.
But his grin quickly disappeared.
Shinn got right to the point. Negotiations over an arena deal between the Hampton Roads Partnership and representatives for Shinn, who is bidding for a National Hockey League expansion team, were going nowhere.
It was time for the two leaders to talk one-to-one, Shinn said, if they wanted to keep alive Hampton Roads' first serious attempt to attract a major sports franchise.
Thus began a series of back-channel negotiations that finally broke the impasse Thursday, when the partnership announced a deal with Shinn to build a $143 million, 20,000-seat arena downtown.
It did not come without spilling blood.
Sources say negotiations were often intense, and that just hours before the deal was announced, Shinn and Fraim were exasperated with each other. At times, both considered closing down the negotiations.
``The negotiations were tough,'' Shinn said. ``No doubt about it.
``There were times that I felt negative. I know that there was a time when Tom Ward (who has led Shinn's hockey effort in Hampton Roads) was real discouraged and thought it wasn't going to work.''
Fraim's assessment is similar.
``It was a difficult process, a complex process,'' he said. ``There was a lot of give and take. But people never got up and walked away. Relationships never soured.
``I think everyone understands we wanted this to happen. There was just a question of if there was enough money on the table.''
Early on, there wasn't. Gov. George F. Allen insisted he would not allow a regional sales tax increase, even though sales-tax increases are often used by communities to pay for arenas.
Local governments outside of Norfolk insisted on limiting their contribution to $1.50 a resident per year, or about $2.3 million a year.
Shinn insisted he had to have control of the arena, and most arenas revenues, but said he was unable to pay much for it.
The combination of Shinn's stipulations and the region's resources made a deal impossible.
``The governor said no new taxes; the local governments said no new taxes,'' said Arthur L. Collins, executive director of the Hampton Roads Planning District Commission, who helped the partnership broker the agreement. ``That left the region with few options.''
For weeks the partnership made offers to Shinn's group, but said they rarely received counter offers.
A breakthrough came Dec. 18, when Shinn attended his first and only negotiation. Sources say shortly after that meeting, in which both sides put their financial cards on the table, Shinn agreed to be a tenant rather than run the building.
He would pay rent for his 43 dates but would allow the Hampton Roads Sports Facility Authority, which would own the building, to collect many of the revenues he wanted to claim, such as naming rights and rent from non-hockey events. That gave the partnership enough financial leeway to come up with a deal that would work.
``When Mr. Shinn's role reversed (to tenant), that was a major breakthrough,'' partnership president Barry E. DuVal said.
Shinn credits the partnership for coming up with a deal that made sense for all parties, and still won't raise taxes.
``I did not get exactly what I wanted,'' Shinn said. ``I wanted the building with the keys, with no money put in whatsoever.
``But a lot of creative people in this market did a lot of research, and came up with a way to make it work for everyone.''
It was on Wednesday that Fraim and Shinn felt most exasperated with each other. Partnership officials said Fraim and Shinn reached a verbal agreement on an arena deal Tuesday night. But when Shinn put the deal on paper and faxed a copy to the partnership, it was not the deal Fraim thought they had agreed to.
Partnership officials then drafted what they thought the deal to be, and sent it to Shinn. They made it clear it was their final offer.
For six tense hours Thursday, Shinn met with his financial advisers, including Wayne DeBlander, vice president of finance for the Hornets. Finally, at 3:15 p.m., Shinn faxed a signed copy of the deal to David Delpierre, a Norfolk attorney who represented the partnership in negotiations.
Then came a press conference 2 1/2 hours later in Norfolk, where Shinn and Fraim exchanged toasts of Freixenet Cordon Negro, a sparkling non-alcoholic beverage.
``This is a lease that will allow us to be competitive, to get the players we need to win and have a successful franchise,'' Shinn said.
``That's something the league considers critical. I think it's a very fair lease to everyone, a win-win situation.
``In time, as people learn more about it, everyone is going to be thrilled.''
KEYWORDS: NHL FRANCHISE ARENA