Through open records requests, Deena Winter of Nebraska Watchdog has learned that the Nebraska athletic department will likely not have to make a rent payment for the initial season using Lincoln's new Pinnacle Bank Arena, thanks to the mens' basketball team selling out. In fact, if the numbers are correct, the athletic department will instead be receiving a check. How did this happen?
Nebraska's lease agreement for the arena specifies that Nebraska will pay $750,000 as a base rent, but then receives several credits:
- $300,000 since the arena keeps the concession revenue. At the Devaney Center, NU sold the concessions, and thus pocketed the revenue from it. That's not the case at the new city-owned facility.
- Under state law, new entertainment facilities (like arenas) can apply to receive 70% of state sales tax revenue generated at and around the arena as a turnback tax. The lease specifies that the turnback tax from tickets gets credited to the athletic department.
- On each ticket, the city of Lincoln charges a surcharge on each ticket. $1 for each ticket goes back to the athletic department, per the lease arrangement.
Thanks to Tim Miles, interest in Nebraska basketball has greatly increased since the arena was first announced. That's meant more ticket sales, which means more ticket surcharge revenue and more sales tax revenue going back to the athletic department. According to Nebraska Watchdog, the balance should show a net credit of $29,000 after the rent is subtracted from all of the credits. The original budget showed that Nebraska planned to spend $225,000 on rent this past season.
These figures do not include revenue from suites and premium seating, which should amount to approximately $131,000 for Nebraska basketball. Game expenses were $83,000 for staffing the new arena last season, plus over $200,000 on meals, according to Nebraska Watchdog.
Last month, Nebraska Watchdog reported that operations at Pinnacle Bank Arena were running at a deficit, as utilities and revenues were running less than anticipated. Some of that is due to the way that revenues are split between the joint public agency that built the arena and the arena itself. The agency, which is paying off the bonds that were used to build the arena, has reported better than expected numbers. The split was arranged this way to ensure that the bonds were paid off, but that's resulted in the arena operations running at a deficit.
Nebraska's deal to use the Pinnacle Bank Arena has turned out to be a very good one, thanks in large part to the surge of interest this past season. Nebraska didn't really need a new arena, as the Devaney Center was in decent shape, though it needed some upgrades. In that light, the city needed Nebrasketball in the new arena more than Nebrasketball needed the new arena. And that led to the deal being better for Nebraska.