By Deena Winter | Nebraska Watchdog
LINCOLN, Neb. – Lincoln’s new Pinnacle Bank Arena finished its first year in the black – just barely and with the help of half-million-dollar infusion of cash from its umbrella agency.
IN THE BLACK: Lincoln’s new Pinnacle Bank Arena struggled mightily to end its first year in the black, by cutting staff, changing operations and getting a shot of cash from its umbrella agency.
Mayor Chris Beutler announced the $186 million arena eked out a $32,714 profit its first year – during which it attracted big name entertainers including Jay Z, Cher, Elton John, Paul McCartney and the Eagles.
The mayor called the first year a “tremendous success,” but there was considerable angst behind the scenes to ensure the arena ended up in the black to avoid any property tax subsidy from the city. The most recent financial reports made available, through the end of June, had the arena posting a loss of nearly $193,000.
That budget gap was plugged when the West Haymarket Joint Public Agency, a three-member board that oversees the arena and surrounding entertainment district, voted in June to transfer to the arena $465,000 in sponsorship revenue it gets from IMG, an international sports and media company that sells advertising and sponsorships in the arena.
Many arenas use that revenue to operate, but Lincoln’s arena financing was structured very conservatively to ensure the city would have enough money to pay off the construction debt. Much of the money to pay that debt comes from a new tax on bars, restaurants, hotels and car rentals, and that money has come in higher than expected. Last year, the city took in over $14 million in occupation taxes, a mark it didn’t expect to hit until the year 2021.
Beutler said the arena has “put us on the national map” with 750,000 people attending events the first year. The surrounding private development was expected to take five years to hit the $100 million mark, but “happened within a year,” he said.
“We have learned many valuable lessons,” Beutler said, referring to arena manager Tom Lorenz of SMG’s staffing cuts, operational changes and the JPA shuffling of revenue streams necessary to post a profit.
Dave McBride, chairman of the arena’s advisory board, said the arena operating budget projections were “sort of like shooting in the dark” but the board felt all along they were conservative, prudent and realistic.
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