Construction Boom Puts Old Arenas to Use
By Maryann Haggerty
Ask Warren Butler about the future of the Miami Arena, and he just sighs.
The arena, built in 1988, isn't good enough anymore for its two main tenants, the National Basketball Association's Miami Heat and the National Hockey League's Florida Panthers. Both teams plan to move to new arenas in the next few years.
That leaves the older sports palace in limbo. "Nothing has really been finalized," said Butler, executive director of the Miami Sports and Exhibition Authority, which owns and runs the facility on behalf of the city of Miami. "The things I've heard are very, very preliminary."
Major league sports teams, including those in the Washington area, are in the midst of an unprecedented construction boom. More than two dozen new sports venues have been built in the United States and Canada since 1990, and about 18 more are in some stage of planning, according to the National Sports Law Institute at Marquette University Law School in Milwaukee. That means a lot of old venues are being abandoned.
In some places, such as Philadelphia, the old arenas continue to host such lower-prestige events as college basketball and indoor soccer. And in some cases, the buildings struggle to make money. At least one, Richfield Coliseum outside Cleveland, sits vacant and unused. And many, such as the much-loved Boston Garden, have been demolished to make way for parking lots for their shiny replacements.
In the Washington area, three new sports venues are under construction, meaning that Memorial Stadium in Baltimore, USAir Arena in Landover and Robert F. Kennedy Stadium in the District will lose their big-league tenants. Memorial likely will be demolished, but owners of the other two facilities hope to keep them running profitably with lower-level events: soccer matches, concerts, college sports and probably plenty of truck and tractor pulls.
"There are events you could bring in here [at the suburban USAir Arena] that you could never bring downtown," said Wes Unseld, a top executive with sports team owner Abe Pollin, who owns both USAir Arena and the partially completed MCI Center downtown.
As a rule, sports teams aren't moving because the buildings are falling down around their ears. Instead, the old arenas are "economically obsolete" -- they don't have lots of luxury boxes and state-of-the-art concession stands, so they don't earn as much money as the new buildings can.
In some circumstances, though, it's possible to keep an old arena running at a profit. In Philadelphia, the new CoreStates Center sits about 100 yards away from the older CoreStates Spectrum. This month alone, the two buildings will house 58 events.
"There are incredible efficiencies with both buildings essentially in the same parking lot," said Peter Luukko, who oversees the complex for Comcast Spectacor, a Philadelphia company that owns both buildings as well as the Flyers hockey team and 76ers basketball team. "We don't have to have duplication of all the management staff."
To maximize use of the Spectrum, Comcast Spectacor bought an American Hockey League expansion team, the Phantoms. The building also is home to a professional indoor soccer team, the LaSalle University men's basketball team and a variety of ice shows, roller hockey games and monster truck shows.
"We have high school graduations, college graduations -- a lot of events we couldn't do when we only had one building because of date availability," Luukko said.
"Other than some of the major concerts -- and maybe the truck pull -- any of the sporting events we're bringing in now aren't even close to the income from the Flyers and Sixers," he said. But the Spectrum still makes money, he said, largely because there's no debt on it.
"The building itself still has 19,000 seats and can sell a lot of damn tickets," he said.
Having a paid-off mortgage makes a big difference in the economics of a sports venue, said Gary Lane, director of Denver's Division of Theaters and Arenas, which runs McNichols Arena. The Denver Nuggets have said they will move out of the arena to the planned Pepsi Center two miles away before the decade is out. The plan is to keep operating McNichols.
"If you have $160 million in a new arena, you're looking at $14 million or more in debt service annually," he said.
He also pointed out that from a business point of view, running an arena is different from running a sports team. Team owners have to pay multimillion-dollar player salaries. "That's a lot of revenue to make up," he said.
But the arena owner is just a landlord. "All landlords charge rent and expenses, and inside the rent and expenses, we are able to operate in black ink," Lane said.
But sometimes rent isn't quite enough, said J. Isaac, who oversees operations at Memorial Coliseum in Portland, Ore., the arena that used to be home to the Portland Trailblazers until the new Rose Garden opened nearby in 1995. Although the two venues are managed by the same company, Memorial Coliseum is owned by the city and the Rose Garden is owned by the owner of the Trailblazers.
"So far, we're doing all right; the problem is it is very difficult in the shade of a new state-of-the-art arena to make enough money to pay for the escalating capital repair costs you experience with an older building," Isaac said. "It's possible on an operating basis to break even or make a small profit, but the only way we're doing that is using" the same staff to run both buildings.
"What we are not covering even with that is capital improvement costs. The city of Portland is paying those from separate funds," he said. Those improvements are projected to cost from $500,000 to $1 million a year.
"We feel it's just a matter of time until something else is going to have to be done with this building," he said.
Plenty of plans have been floated for how to use Richfield Coliseum in the Cleveland suburbs, but none makes economic sense, according to John Graham, an executive with the company that owns Richfield and the new Gund Arena downtown. So the building has sat unused since 1994.
Among the unsuccessful ideas: an indoor amusement park, an office complex or a church. Still under consideration: using the building for stores or simply leveling it.
"These arenas are built for a very, very specific purpose, and it appears they are very, very difficult to retrofit," Graham said.
In Baltimore, the city kept Memorial Stadium operating much longer than anyone had expected after the Orioles left for Camden Yards in 1992, according to Edward Cline, deputy director of the Maryland Stadium Authority. The minor league Bowie Baysox used it, then the Stallions of the Canadian Football League, then the NFL Ravens this past season.
Since about 1989, commissions and consultants have studied the future of the site, a highly sensitive subject in the neighborhood, Cline said. Right now, demolishing the stadium to provide space for a training center for the Ravens appears the likeliest outcome, he said.
In Landover, USAir Arena owner Abe Pollin plans to keep the building running even while trying to book 200 nights a year at his new MCI Center, to be the home of the Capitals and the Wizards, next season's name for the Bullets. And the D.C. Sports Commission also plans to keep RFK operating, even as the Redskins head to a new stadium in Prince George's County. In both cases, the buildings being deserted are paid for and will attempt to attract a variety of lower-level events.
"We are giving up a major and will be bringing in minors," Jim Dalrymple, executive director of the D.C. Sports Commission, said when the Redskins ended their last season at RFK. "I think it's a stadium that can pay for itself and not be a drain on the taxpayers and bring some great entertainment to people."
For promoters of the non-sports events that use sports facilities, the new buildings mean a welcome array of choices. "We are always excited when there's a new venue to play," said Lisa Morgan, vice president of arena relations and tour planning at Feld Entertainment Inc. in Vienna, one of the nation's biggest bookers. The company puts on the Ringling Bros. and Barnum & Bailey Circus as well as Disney on Ice and other popular shows.
A choice of two arenas in a city "allows a management group to have enough flexibility with dates," she said. "October to May can be very tricky at prime buildings," because basketball and hockey are in season.
Arena owners with older buildings to fill also are "frequently" willing to make deals on prices. "Most times, they want to make sure they can pay the mortgage," Morgan said.
But some areas already have all the performance spaces they need. For instance, in Florida, she estimated there are 12 venues within a 100-mile radius. "South Florida is a good example of where not to build another arena," she said.
But arenas are being built there anyway, leaving the city of Miami with what could become an expensive problem. Butler, the arena authority director there, said the Miami Arena still has $37 million in debt outstanding.
A variety of ideas have been floated for how to use the building, even as a film sound stage, but nothing is certain.
"No formal talks have taken place about what could be done with it," Butler said, and it's not a crisis yet. "We've got at least three years left for the Heat."
© Copyright 1997 The Washington Post Company