LEWISTON — While he supports the idea of having more ice available for skaters in the Twin Cities, the owner of the Androscoggin Bank Colisee cautioned Saturday that anyone proposing a new arena should crunch the numbers carefully before making a commitment.
City councilors are scheduled to vote Monday on developer George Schott's proposal to build a dual-rink ice arena on land he owns behind Shaw's Supermarket and the Auburn Mall on Turner Street in Auburn.
Asked Saturday what he thought of the idea, Colisee owner and general manager Jim Cain said those proposing the new arena need to consider what net income after operating expenses would be available to service debt on the facility and pay taxes.
Cain has been an arena consultant for the past 15 years, during which he's worked with owners of a couple of hundred of arenas nationally, he said. His company operates several arenas in Michigan and New York and several in the planning stages.
Revenues would come from renting ice, selling food and drinks, and advertising and sponsorships at the proposed Auburn arena, he said. About 10 percent to 12 percent of the revenue generated by those things would be available to cover debt service and taxes after the arena is fully operational and fully booked, typically about three years after opening, he said.
"In my view, the numbers just won't work," he said. "Somebody's got to pay the bill. That would be the city of Auburn."
A similar arena in Dover, N.H., was able only to cover operating costs, but struggled to pay off the bond and repay the city, Cain said. He was sought as a consultant to help turn the numbers around and improve the income stream.
"They're on a much better footing now, I understand," he said.
"These types of businesses run on nickles and dimes," he said. "They're not immensely profitable types of businesses."
He recommended that the city and developers look closely at their estimated figures before making a formal decision.
The Colisee has been successful for several reasons, he said. In addition to making available roughly 1,200 hours of ice time each winter for youth hockey, the Colisee is an event center.
It's that side of the business that generates "significant revenues," largely through food and beverage sales during those 35 to 40 days of events each year, he said.
The more people in the building, the more money made on refreshments.
At a recent mixed martial arts event, roughly 3,000 people packed the Colisee, he said. "Ours is a different mix on the programming side."
"I think it's just important to recognize that there are certain limitations on how much revenue you can generate by renting ice," he said. Rates are largely market driven. In the Twin Cities area, the going rate is about $230 an hour for ice time.
An arena in northern New Jersey, where he was recently working as a consultant, charged $400 an hour, which generated about $3 million a year. But they're struggling to cover their debt service, he said.
"It's a difficult decision to make, but one where a lot of advice needs to be sought, particularly because of the risk," he said. "You need to be talking to people in the industry" in order to arrive at the best financing model.
Youth hockey leaders sought to rally citywide support Friday at a news conference at the Hilton Garden Inn and Auburn city councilors promised to review financial plans.
In the proposal, developer Schott would borrow the $8.5 million to build the facility using private financing, leasing it back to the city each year for 30 years, according to a July agreement. The city would have the option of buying the property outright during that time.
Plans call for the proposed rink to have seats for 800 spectators in one rink, 200 in a second rink, 300 in a shared mezzanine and standing room for hundreds more.
The new arena would also feature 14 locker rooms for teams, a pro shop and a warm, second-floor spectator area with a concessions stand.