THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Sunday, November 3, 1996 TAG: 9611030030
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: BY HARRY MINIUM, STAFF WRITER
LENGTH: 166 lines
The clock is ticking.
If Wayne Gretzky, Jaromir Jagr and Mario Lemieux are to ever face off against a Hampton Roads NHL team, the region's cities must cooperate as they have never before, and in record time.
George Shinn put a $100,000 certified check in the hands of NHL commissioner Gary Bettman on Friday, along with an application for an expansion franchise that would play in a new Hampton Roads arena.
That was the easy part. Now Hampton Roads' often antagonistic cities must agree on an arena site, a funding plan for the facility and at least the basic outlines of a lease with Shinn, owner of the NBA's Charlotte Hornets.
All in less than two weeks.
The deal must be worked out by Nov. 14, when Shinn and local officials are to make their formal pitch for a franchise to NHL representatives in New York.
Can it be done? Yes, area leaders say. But it won't be easy.
There must be unprecedented cooperation in a region better known for its spats. Cities have been arguing since last January about how to hire a consultant to perform a study on a pro-sports arena. And for years municipalities have squabbled about a range of areawide issues, from water to light rail to the names of interstate highways.
Plus, there are lingering questions about the level of public and corporate support for an NHL team and arena.
``I'm certainly not going to say something can't be done in two weeks,'' said Virginia Beach Vice Mayor William D. Sessoms, an arena proponent. ``But it's a tremendous challenge to accomplish something of this magnitude in two weeks.''
Just how big the challenge will be depends largely on how much money each city would have to cough up to pay for an arena.
Norfolk Mayor Paul D. Fraim said Shinn's staff with the Hornets and officials at NationsBank, with whom Shinn is allied, are determining how much would be required.
Fraim estimates it would cost from $120 million to $140 million to build an 18,000-seat facility, the size necessary for an NHL team. If the cost is $140 million, the team and the region would have to pay $12 million per year for 20 years to pay off the total arena debt, including interest, Fraim figures.
Here are possible ways to generate $12 million annually, Fraim and other area leaders say:
Shinn would lease the arena. He would run the building, book events and collect all naming rights, luxury box revenues and concessions sales. He also would sell the luxury suites. Similar arena lease arrangements have yielded $3 million to $5 million per year. Terms have yet to be negotiated with Shinn.
The General Assembly and Gov. George F. Allen Jr. agreed last July, when they passed legislation to create the Hampton Roads Sports Facilities Authority, that any tax revenues generated directly by the arena - sales taxes on concessions and novelties sales, amusement taxes and state income taxes, including taxes on player salaries - would be applied toward the arena debt. NationsBank officials are to come up with an estimate this week based on proceeds at other NHL venues, Fraim said. The take could be up to $4 million per year.
Allen has said he wouldn't sign a bill that would increase sales taxes to pay for an arena. ``Families should not have to pay more to buy groceries to pay for an arena,'' he said. But Allen hasn't ruled out economic development aid for the arena.
Fraim, who coached Allen as a graduate assistant on the University of Virginia football team two decades ago, said he discussed state aid with Allen's staff last week. ``Gov. Allen wants this to happen,'' Fraim said.
The bottom line for Hampton Roads: After factoring in these revenue sources, the area would need to contribute $3 million to $6 million per year for 20 years. The bottom line for each of the region's seven major cities, if the cost is shared evenly: as much as $500,000 to $1 million annually.
If the price tag is too steep for Norfolk's neighbors, state Del. Jerrauld Jones of Norfolk says, his city might shoulder the burden itself. ``The city of Norfolk could do it, if necessary,'' he said.
But that assumes the city would be the arena site. Shinn said last week that's not necessarily the case. He said he's leaning toward a downtown Norfolk site - probably between Scope and MacArthur Center, but he's also considering other sites, including land near CBN in Virginia Beach and adjacent to Harbor Park in Norfolk.
Shinn is a close friend of CBN founder Pat Robertson, but he might not choose the CBN location because beer sales wouldn't be allowed. Proceeds from beer sales are considered a necessity for the success of any arena.
Fraim says an areawide mandate is necessary for success.
``Whoever is chosen as the host city for the arena,'' he said, ``I am sure we can count on regional support.''
Fraim began to line up that support Thursday night, just hours after Shinn called to tell him he wanted to put an NHL team in Hampton Roads. Fraim's first calls were to Barry DuVal, president of the Hampton Roads Partnership, and Hampton Mayor James Eason, who is co-chairman of the Partnership's sports committee with Fraim.
Early Friday, Fraim began working the phone with dozens of other regional leaders. His first call that morning was to Virginia Beach Mayor Meyera E. Oberndorf.
By noon Friday, more than a dozen local business and political leaders had gathered at the Piedmont Aviation Center at Norfolk International Airport to discuss Shinn's offer. The consensus about 45 minutes later, as the group waited for Shinn to arrive, was that the task was close to impossible.
Enter Shinn, in his chartered purple-and-blue jet with the Hornets' logo on the tail.
The North Carolina businessman energized the group with a presentation on how he had landed an NBA team for Charlotte when the odds were against him, and how he would get a professional hockey team for Hampton Roads.
``There wasn't anyone in that room who wasn't impressed with Mr. Shinn and everything he had to say,'' said Rick Kiefner of the Hampton Roads Chamber of Commerce. ``He created a lot of enthusiasm.''
On Saturday, Shinn flew some of the local business and community leaders in his private jet to Charlotte for the Hornets' home opener.
But one NBA game in a luxury suite won't erase the scars of recent turf wars over water and a proposed light rail system between Norfolk and Virginia Beach.
As recently as this summer, Norfolk and Virginia Beach officials were barely on speaking terms because of Norfolk's decision to release a water report that the resort city considered to be damaging to its efforts to tap into Lake Gaston.
And in recent months, Norfolk and Virginia Beach have bickered with Suffolk about water.
Asked what the suburban cities, especially Virginia Beach and Chesapeake, would want in return for supporting an arena, one local official said: ``One commodity, and you mix it with bourbon.''
Which means concessions on water.
For now, leaders in Virginia Beach, considered the key to getting a regional arena agreement, are sounding conciliatory. Oberndorf said that if it's a good deal for the region, then the region should do business with Shinn.
Beach City Councilman William S. Harrison Jr. said he would support an NHL franchise no matter where in Hampton Roads the team would play.
``My car goes to Norfolk,'' he said. ``I worked in Norfolk for 18 years. I think Norfolk is a great spot for it. If all the consultant studies have shown that it needs to be in an urban setting, I hope that Virginia Beach will work hand-in-hand with Norfolk to do whatever's necessary to lobby the NHL to grant the application for this region and not somewhere else.''
Even Beach City Councilman John A. Baum, who acknowledges he's not eager to cooperate with Norfolk because of the release of the water report and who says he's not a sports fan, said he probably would support an arena if a majority of his council peers liked the idea.
``The climate is so poor because of Norfolk's report that affected Lake Gaston,'' he said. ``That's going to be a factor, I feel like.
``I reckon I'd just go with the consensus. Whatever everybody else thinks would suit me. I'm not going to raise the devil. I'll raise it on something else.''
While the region's leaders must agree with each other on an arena funding formula, they also must negotiate the outlines of a lease with Shinn, who is generally acknowledged to be a shrewd, hard-nosed negotiator.
The region is more likely to land a franchise if the agreements on funding and a lease are detailed, Fraim said. A signed lease and a done deal on arena funding would be a big boost in the region's pitch to the NHL, he said.
So, Shinn said, would be encouraging results on ticket and luxury-suite sales, which are set to begin this week, perhaps as early as Tuesday.
No one knows how the region will respond. Hampton Roads has just one Fortune 500 company - Norfolk Southern Corp. - and a low median income. The region's leaders agreed last January to fund a study on corporate support for an arena's luxury suites, priced between $50,000 and $100,000 apiece. But the study was never completed.
``I'm confident the business community will step forward,'' Fraim said. ``The region is primed for something like this.''
Season tickets likely would cost at least $800 for one seat. With an average price of about $34 per ticket, an NHL season ticket costs about $1,500 (for 42 regular-season and two exhibition home games).
Will the price-sensitive fans of Hampton Roads, who complained when minor-league hockey's Hampton Roads Admirals raised ticket prices to $8 last season, cough up four times that much for NHL tickets?
``Time will tell,'' Shinn said. ``I hope they do.'' MEMO: Staff writer Karen Weintraub contributed to this report.
KEYWORDS: HOCKEY by CNB