Published September 25 2012
Scheels Arena operators seek new deal from Fargo Park District
The proposed deal could ultimately extricate both the park district and the arena’s creditors from a potentially messy negotiation over the facility’s fate if the operators were unable to pay their debts.
The $25 million arena, which opened in 2008, is run by Metro Sports Foundation, a nonprofit. The foundation still owes $23 million to a consortium of more than a dozen local banks and financiers and has struggled to generate enough revenue to service that debt.
But it does not own the building, which it donated to the park district early on to shield it from property taxes. The foundation rents the arena from the district for $100 a year.
The new proposal put forth by the foundation could take the arena off the district’s hands altogether. It would give the foundation the option to buy the arena back from the Park District for fair market value or to match any offer for the arena from another party.
The proposal is part of a refinancing deal the foundation began negotiating last year with its creditors. That deal is still under negotiation.
Specifics of the deal haven’t been made public, but the foundation has told The Forum it would lower the nonprofit’s debt payments to a manageable level.
According to the text of the proposal the Park District’s facility committee will consider today, the buyback option would assist Metro Sports in its refinancing negotiations and help stave off potential foreclosure of the arena.
Bruce Furness, the Metro Sports board treasurer and former Fargo mayor, will present the proposal to the Park District committee.
Furness didn’t return calls seeking comment Monday or Tuesday.
Under the current arrangement, the district would have to work with the arena’s creditors to figure out what to do with the building if the foundation went under.
The Park District has said the creditors would be able to operate the arena, but not necessarily sell it.
That scenario – or any that involves foreclosure on the arena – is one “which the Creditors and the Park District desire to avoid,” according to the text of the new proposal.
At present, it’s not clear whether the Park District has the right to sell the arena, and the district has shown no inclination to do so.
“We don’t sell buildings,” said Roger Gress, executive director of the district.
He said the proposal comes entirely from Metro Sports.
“There’s nothing initiated on our part,” he said.
He said selling the arena to the foundation could jeopardize the facility’s tax-exempt status but wouldn’t affect the Park District.
The facility committee has two members. One of them, Ron Sorvaag, is a former Metro Sports board member. The other member is Joel Vettel, a Fargo police lieutenant. The full park board would need to approve the deal.
The Fargo Force, the junior league hockey team that is the building’s primary tenant, hosts its home opener Friday.
Readers can reach Forum reporter Marino Eccher at (701) 241-5502