Tom Whitehurst

IceRays pay rent on time

While the Corpus Christi IceRays owners wrangle over finances, local taxpayers should find it reassuring that the team is up to date on its rent payments to the city for Memorial Coliseum.
   It also might be interesting to know that, the way the IceRays' lease works, the city paid the IceRays more than the IceRays owed to the city for using the coliseum last season.
   The way it works is, the city guaranteed itself as much revenue as it had been taking in from the coliseum, pre-IceRays, and let the IceRays have anything above that. That includes rent and concessions, adjusted for inflation each year. So, each month, if the revenue is below the target, the IceRays write a check to the city to make up the difference, and vice versa if it's above target.
   On top of that, the IceRays pay the city for any IceRays-generated expenses above normal - the big one being the electricity bill. It goes way up because of the extreme air-conditioning needed to maintain the ice, and it's why the coliseum is so cold during college basketball games and other events during the eight months a year that the IceRays use it.
   City paid $117,385
   The goal in setting up the lease that way was to help the IceRays succeed without subsidizing the team, said Harold Peterson, the city's director of convention facilities.
   Last hockey season, the rent-plus-concession target was $34,573 per month. And for the eight months of IceRays occupation last season, the city ended up paying the team $117,385, according to city officials.
   IceRays-generated expense overruns, meanwhile, totaled $58,573, city officials said. The team still owes the city $26,073.
   If you can't help but wonder why the IceRays still would owe the city money when the city pays them more than they pay the city, you also should know that city officials say the IceRays are right on time with their payments, like a good tenant should be.
   The city is watching the latest development among the team's ownership, but from a respectful distance. A group of owners has filed a lawsuit seeking financial information they say has been denied them by the general partner, Bill Davidson. And they have cited some expenditures that they find curious, including $140,000 to El Paso's hockey team, which Davidson owns a piece of, and $200,000 in unsecured loans to Davidson and other IceRays officials.
   Anchor tenants
   "They're current with all the terms and conditions of our contractual relationship," City Manager David Garcia said last week. "We really don't have an issue right now. It's pretty much internal with the partners of the IceRays."
   He's also confident that, whatever the outcome, the IceRays will be around to occupy the city's new 10,000-seat when it opens in 2004 - if the IceRays so choose. He doesn't know exactly how the lease would work, but it's sure to be different from the coliseum lease. The coliseum lease is peculiar to the circumstances of the coliseum. There was a precedent for how much money the coliseum ought to be generating.
   Not so, yet, with the arena. The IceRays likely will be paying a combination of rent plus percentages of ticket sales, parking and concessions, Garcia said. And the IceRays, along with the Texas A&M University-Corpus Christi men's and women's basketball teams, will be offered a preferred status of sorts, as anchor tenants, he said. For the sake of negotiating, both the university and the IceRays have the option of staying at the coliseum, he said.
   "In terms of the financial transactions, we've told the IceRays that they basically could choose either venue. If they don't like the terms of the new arena they could stay at the coliseum. We've told the same thing to the university."
   The hand that fed
   As for what's going on with the IceRays, the situation is murky and likely to remain so unless it gets opened up in court. The IceRays are a private business that keeps a lot of information private, including who some of the owners are. But the $117,385 they generated above normal coliseum rent should be some indication that they churn a good income.
   When the current ownership group bought the team in 1999, it was disclosed that the team had run up a $250,000 debt despite taking in revenues described as huge. How huge never was disclosed. And whether the amount was ascertainable was questionable because the team was so out of control, according to folks who had dealings with them.
   The buyers included a lot of local businessmen with reputations for being capable of putting a pencil to a problem and finding a solution. But a lot of them said that they mainly were just hockey fans who wanted to support the team and didn't want to be hands-on. In the lawsuit, the plaintiffs basically assert that they couldn't have been hands-on if they tried.
   It was interesting to see Bill McBean, president of Vista Automotive Group, on the list of plaintiffs. At the time of the sale, a lot of the questions about the team included questions about Davidson, and McBean's backing did a lot to dispel those questions.
  
  

---

---

  © 2000 Corpus Christi Caller Times, a Scripps Howard newspaper. All rights reserved.