WB/Scr. Penguins and Arena Board modify lease to salvage hockey season

WILKES-BARRE TWP. — The Wilkes-Barre/Scranton Penguins and the team’s landlord salvaged the season without fans at a cost to both.

The Penguins and the Luzerne County Convention Center Authority agreed to reduced revenues due to the schedule shortened by the ongoing novel coronavirus pandemic and the decision not to allow fans in the seats at the Mohegan Sun Arena at Casey Plaza.

The terms were spelled out in the addendum to the lease agreement the Authority made public Wednesday after its monthly meeting at the arena it owns and operates.

For the 2019-2020 season the Penguins were scheduled to skate on their home ice at the arena for 38 games. WBS Hockey LLC, the legal name on the lease, was to pay the Authority $5,763 in rent per game, had the season not been cut short last March by the COVID-19 pandemic. The rent was set in the 10-year lease that went into effect on July 1, 2019.

The American Hockey League set a 32-game schedule for the Penguins that runs from February to mid-May this year. Half of the games will be at the arena, but at a reduced rent of $4,070.50 per game, according to the addendum.

At the lower rent, the Penguins would pay $65,128 compared to the $218,994 at the higher rent for a full 38-game season. But the addendum called for the Penguins to pay $5,325 per week in fixed costs or a total of $79,875 for maintenance of the ice and facility during the shortened season. The parties will mutually agree on staffing for the games from stagehands, security guards, housekeepers, video production and a Zamboni driver.

With no one in the seats, there are no sales at the concession stands and catering. The addendum eliminated the monthly 18% in adjusted gross revenues for each the Authority would have paid the Penguins for a full season. It also conditionally cut out the Suite Buyout Fee of $3,500 per game the Authority would pay the Penguins for exclusive control of the marketing and licensing and sale of Suite tickets.

The Penguins will retain the first $499,999 in advertising revenue from the inner bowl area of the arena. Once the revenue reaches $500,000 the Penguins must pay the Authority $184,500. As the revenue increases above $500,000, the Penguins and Authority split it and the Suite Buyout Fee goes into effect.

If the abbreviated season is cancelled and a the attendance restrictions are loosened and a minimum of 1,500 fans allowed to attend, the addendum no longer applies and the lease takes effect. In either case the Penguins would pay a pro-rated amount of the Fixed Costs or the Authority would return any pre-paid Fixed Costs.

The arena can allow up to 500 fans but chose not to, said Will Beekman, general manager of the arena for the management firm of ASM Global.

In response to a question from Authority board member Carmen Ambrosino about the permitted attendance figure, Beekman said the state allowed the arena to have 15% of the 10,000-seat capacity. But as the number of COVID-19 cases spiked again last year, the limit was lowered to 5 %, Beekman said.

When the arena, the authority and the Penguins analyzed a 500-person limit, it determined it wasn’t worth bringing in the staff and opening concessions.

“It didn’t make a whole lot of sense financially for us, for the Penguins to do so. So we’re just waiting ‘til we get that number back up there, hopefully again to that 15% pretty soon. At which point I think it makes a little more sense to start selling tickets,” Beekman said.

The Authority also approved a resolution to comply with the terms of two state grants from the Department of Community and Economic Development. Authority Chairman Gary Zingaretti said the $1.5 million from the Redevelopment Assistance Capital Program will fund improvements to the arena required in the lease with the Penguins. The $250,000 from the Marketing to Attract Tourists Program will be used for premium seating, he said.