Hurricanes on PNC Arena lease negotiations: ‘The economics of the deal have to change in our favor’

While the Carolina Hurricanes’ lease with PNC Arena is still five years away from expiration, negotiations over an extension are about to begin – and there’s a lot more on the line than last time around.

It took two years to negotiate the last five-year extension, through 2024, and this time around it figures to be more complicated and possibly more contentious.

The Hurricanes have a new owner and the building, which turns 20 next fall, is in need of massive renovations that could exceed $150 million. And the scheduling issues with N.C. State that erupted into open warfare in 2013 are still simmering behind the scenes, with the building sitting empty for three lucrative Saturdays this winter because the school and ACC blocked dates they did not end up using.

With that as the backdrop, the authority on Thursday approved up to $100,000 to hire Dan Barrett of CAA Icon as a consultant and negotiator, the first step toward pursuing a new agreement with the Hurricanes.

Under the current arrangement, the Hurricanes pay the Centennial Authority $2.45 million in rent in return for use by the hockey team and the right to manage the arena, making money by booking concerts, conventions and the like. But the Hurricanes have never been able to generate the kind of profits envisioned operating the arena, in part because despite its growth Raleigh still isn’t at the same level as big-city metropolitan markets, in part because the team has struggled in recent years.

The Hurricanes also argue that while their lease was generally an industry-standard deal when the building opened, it no longer is 20 years later.

“If you look around the league, for public buildings, we’re at the bottom of the league,” Hurricanes president Don Waddell said. “It’s nothing that anyone did wrong. Those were the times back in the ‘90s. But if we’re going to be a sustainable franchise in this marketplace for a long time, the lease plays an important role. The economics of the deal have to change in our favor.”

The Hurricanes will also be pushing for more scheduling flexibility, something that’s been a sore spot in the past with N.C. State. The university has scheduling priority, but because the NHL schedule is prepared over the summer and the ACC basketball schedule isn’t finalized until the fall, key weekend dates are often left blocked by the Wolfpack that end up being released too late to book concerts.

That will be left to the Hurricanes and incoming N.C. State athletic director Boo Corrigan, Centennial Authority chairman Thomas McCormick said.

Meanwhile, the lease is somewhat unavoidably intertwined with the multimillion dollar package of proposed renovations that have been on hold since 2016, when the ownership uncertainty surrounding Peter Karmanos’ attempts to sell the team made it unrealistic to pursue. The authority last month submitted a request for funding from the hotel- and-restaurant tax fund that helped finance the original construction of the arena as well as the Raleigh Convention Center.

While the building’s behind-the-scenes infrastructure has been maintained at a high level by the arena authority, public-facing areas from the arena bowl to the entrances have an understandably dated look compared to state-of-the-art arenas elsewhere, and the authority has received several consultant recommendations for changes inside and outside the building.

McCormick said the renovations aren’t contingent on a lease extension, but the authority spent considerable time meeting behind closed doors discussing the latter Thursday, aware of the Hurricanes’ desire to modify the structure of the lease.

“At this time, we don’t know what the Hurricanes mean by that,” McCormick said. “This closed session today was simply to discuss the kinds of things that we could do, the authority could do, if it wanted to respond to something like that.”

This doesn’t figure to be a fast process, and it may occasionally be acrimonious at times, which is typical of this kind of negotiation, but it’s a critical one for the future of PNC Arena and the Hurricanes, and Thursday was its official beginning.