Centennial Authority, Carolina Hurricanes agree to lease extension

The Centennial Authority and the Carolina Hurricanes agreed to a five-year lease extension to keep the NHL team at PNC Arena through 2029 and includes several new financial benefits for the Hurricanes.

The lease extension, previously agreed to by the Hurricanes and their management company, was voted on by the authority board on Thursday. The new deal gives the team a $1.78 million rent break for the 2020 fiscal year and eliminates the rent payments for the fiscal years 2021 through 2029.

The Hurricanes, and their parent company, Gale Force Sports and Entertainment, moved to North Carolina in 1997 and began playing at the 18,600-seat arena near the State Fairgrounds two years later. The lease extension potentially keeps the team in Raleigh through the 2028-29 season.

Historically, Gale Force has managed the arena — with NC State men’s basketball as the other main tenant and booked a concert schedule — while also paying rent.

That’s a significant concession by the authority. Under the previous agreement, the team paid an annual base rent of $2.45 million. The authority board voted 16 to 3 to pass the new agreement on Thursday.

"All in all we think it is a good deal," Centennial Authority chairman Tom McCormick said in an interview with WRAL on Thursday. "Our goal when we started this process was to keep the Hurricanes here. We think they are a strong economic contributor to the community."

According to the authority, PNC Arena annually contributes $262 million to the Wake County economy.

The agreement includes a profit-sharing cut for the authority of "50 percent of verified, cumulative consolidated positive operating cash flow."

The Canes contributed an additional $780,000 in rent last year to the authority after their successful Stanley Cup playoff run – their first postseason trip in 10 years.

Thursday’s agreement sets the stage for a a potential showdown between the authority and Hurricanes owner Tom Dundon over the future of the arena and the team. The building is either due for a significant multimillion dollar upgrade or, as Dundon suggested early this week on 99.9 The Fan, an entirely new home.

A deal with Wake County was approved last August to put $9 million a year from the hotel, restaurant and tourism tax into a renovation project for the arena and the area around it. That amount could change due to the economic fallout from the COVID-19 crisis.

The terms of the new lease agreed to on Thursday prohibit Dundon from moving the team before June 30, 2024 and include a relocation penalty for subsequent years.

The team would owe $31 million to the authority if it left before July 1, 2024. The “early termination fee” goes down each year ($20 million in 2025, $12 million in ’26, $6 million in ’27, $3 million in ’28 until it hits $0 for the final year of the agreement in ’29.

One concession by the Hurricanes included in the lease agreement is for the team's payroll to be at the "mid-point of the NHL salary cap." If not, Gale Force would owe $2 million to the authority for that season.

The team also agreed to annually contribute $1 million in cash or in-kind benefits to youth hockey and/or charities in the state.