LOSS: Lincoln’s new arena has attracted a string of big name entertainers in its first few months of operation, but posted a loss of nearly $172,000 in its first five months.
By Deena Winter | Nebraska Watchdog
LINCOLN, Neb. – Lincoln’s new $186 million Pinnacle Bank Arena has drawn a host of big name concerts and sold-out Husker basketball games since opening in August, but still posted a loss of nearly $172,000 in its first five months of operations.
More than 100,000 people attended 10 major concerts in the arena’s first 80 days, generating $8 million in gross ticket sales. However, the arena’s $2.35 million in adjusted gross income was overshadowed by $2.5 million in indirect expenses, according to an arena income statement provided by Lincoln’s finance director, Steve Hubka, to a Lincoln watchdog group.
Hubka said in an email to the group that “With PBA being in its first few months of operations, things are being learned about the facility and how it functions.”
For example, electricity costs are coming in higher than expected, as arena manager Tom Lorenz of SMG told Nebraska Watchdog earlier this year. Hubka said the pedestrian bridge’s delayed opening — after two girders slipped during its construction — during some football games and concerts hurt parking revenues because it was the only bridge to a surface parking lot.
In addition, half of the arena’s first five months have largely been devoted to University of Nebraska-Lincoln basketball games, which aren’t as profitable as concerts because UNL pays virtually nothing to rent the arena.
Hubka said the mayor’s office and SMG are meeting monthly to review operating results, events, revenue opportunities and “possible adjustments on the cost side of the arena operation to arrive at a fiscal year end operating result that is positive.”
“Now that basketball season is almost over, the event schedule will look much different over the next few months than the last few months,” Hubka wrote in an email that was shared with Nebraska Watchdog.
The arena largely makes money on ancillary income such as parking, concessions and ticket fees. Lorenz made it clear the arena wasn’t swimming in money in a January interview with Nebraska Watchdog. SMG is paid $200,000 per year to operate the arena, although it can double that if it reaches certain goals.
The city structured financing of the West Haymarket redevelopment so that revenue from advertising, naming rights, suite sales, club seats and loge seating goes toward paying off the $378 million in construction debt, rather than operating the arena, as in other facilities.
“The amount of revenue that isn’t available to us is unusual,” Lorenz said at the time.
City officials are surely paying close attention to the arena’s bottom line because one of the reasons supporters advocated for a new arena was the old one was being subsidized by the city at a cost of about $500,000 per year. They implied that a new arena wouldn’t require a subsidy, but that’s not a sure bet. Lorenz said earlier this year he expects the arena will make a profit this year, given the string of smash opening concerts, but future years will be tight.
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