The problem is not too many arenas but too little programming done to fill their schedules, state official says.
If you looked at the bare statistics, it might seem hard to make a good case for Ramsey County buying the financially troubled Vadnais Sports Center to bolster the county’s ice rink offerings.
In the past decade, ice hours rented at the county’s arenas have increased by only 3 percent. In the past five years, revenues generated by the arenas have declined by 20 percent.
It could be that there are more than enough ice sheets to meet demand. Or it could be that Ramsey County’s aging arenas have lost business to state-of-the-art facilities in such places as Stillwater and Woodbury — not to mention Vadnais Heights.
Whatever the reason, it’s not uncommon for local governments like Ramsey County to rescue ice arenas from public and private owner/operators who have struggled to make ends meet.
Waconia has taken over its ice arena from its co-partner, a hockey club unable to meet its financial obligations. The Forest Lake school district is waiting for the state to approve its purchase of an ice arena from the local nonprofit athletic association, which had trouble operating the facility.
But the metro area isn’t actually seeing a lot of ice arenas going out of business, because there’s a fairly good balance between ice supply and demand, said Barclay Kruse, associate director of the Minnesota Amateur Sports Commission based in Blaine.
An arm of the commission, a state agency charged with creating economic development through amateur sports, warned Vadnais Heights officials in 2009 that projections for the sport center’s revenues and expenses were way off.
City officials never asked the commission to help with planning for the facility, which it would have done for free.
“There’s not too many ice arenas,” Kruse said. “The Vadnais facility, if it was built differently and wasn’t so expensive, could have been and still could be a successful ice arena under a different operational model.”
Based on its record since 2008, Ramsey County may be able to supply that model.
The county has been able to cover operating expenses for its 11 ice arenas with arena-generated revenues, even though they’ve declined. County Board Chair Rafael Ortega said that built-in efficiencies will enable the county to run the Vadnais center cost-effectively.
And with the county’s 11 arenas constantly in need of pricey repairs, he said the chance to buy the Vadnais facility for less than half its $26.5 million cost is “a great opportunity.”
“When I look at the work we have to do to renovate our old facilities, or take one down and build another one, we’d be talking $10 million or more” anyway, Ortega said.
Although he wouldn’t disclose the amount of the county’s bid — which was due Friday — the asking price for the Vadnais center is $13 million. Bids were to begin at $8 million.
Vadnais Heights built the sports center, which opened in 2010, with bonding and then transferred ownership to the nonprofit Community Facilities Partners.
The financing included $11.6 million of tax-exempt Federal Recovery Zone Facility bonds, which the city got through Ramsey County.
The county earlier had granted Vadnais Heights $500,000 from its Environmental Response Fund to test the site, a former landfill, for toxins.
City officials believed that revenues generated by the facility would cover debt service.
When that didn’t happen, Vadnais Heights paid the debt service for a while before walking away and leaving the facility to the nonprofit, which is putting it up for sale.
Projections also proved incorrect five years ago in Waconia, where the city and the Waconia Hockey Association built an ice arena for $6.6 million. The hockey club fell behind on its ice sales pledge and had to renegotiate its contract, making the city full owner.
Waconia’s payment this year on the facility is $559,000, of which $95,000 goes to cover a shortfall in operating expenses, City Administrator Susan Arntz said. The operating loss grew this year, she said, because the city added staffers to work on boosting the arena’s revenues.
In Forest Lake, the $4.5 million ice arena built in 2008 by the Forest Lake Area Athletic Association wasn’t in debt. The nonprofit volunteer group just didn’t have the resources to operate the two-rink facility.
So the school district decided in May to buy it for $3.3 million, a markdown from the arena’s $5 million market valuation.
The main tenant will be the athletic association.
Kruse identified what he said was the biggest problem faced by new ice arenas: creating enough programming to keep the place humming as much as possible.
The adage of “build it and they will come” isn’t true, he said.
“You will not magically generate thousands and thousands of participants,” he said. “Just building a facility will not do it.”
Tournaments should be scheduled in off seasons and shoulder seasons and not in prime time, he said, much as they do it at the National Sports Center. “We don’t need to sell ice in the winter,” he said.
It’s not that there isn’t enough skating time, Kruse said, just that there aren’t enough ice hours that are considered convenient.
“The prime hours for youth hockey are 5:30 to 8:30 p.m.,” he said. “If you asked [the hockey associations], they’d all love to skate at 7 every night at a rink 5 miles from their house.”
Kevin Duchschere • 651-925-5035