Construction as of May 15. (Photo Courtesy: West Haymarket Joint Public Agency)

Construction of Pinnacle Bank Arena is ahead of schedule, and The West Haymarket Joint Public Agency (JPA) — the government agency formed to oversee the project — has appointed SMG to manage the property and SMG’s Savor Food & Beverage as concessionaire.

There are two separate contracts as per IRS rules, one for management and one for concessions. They are both ‘three plus three’ contracts, meaning that the agreement lasts for three years with a three-year option for renewal.

“The contract provides for $200,000 payment to SMG corporate each year, and there is a $100,000- bonus split 50/50, half geared toward fan experience and half toward revenue generation,” said Dan Marvin, the authority’s project manager for Pinnacle Bank Arena. “If they’re hitting targets in terms of number of people going through the turnstiles and revenue projections made on the pro-forma, then they can get the incentive.”

According to the contract gross income for incentive purposes is $2,129,997.

SMG will continue to receive $5,000 each month under the current consulting contract until Sept. 1, 2013, when the terms of the new contract kick in.

Savor will receive four percent of the gross concessions revenues.

SMG has been involved with Pinnacle Bank Arena for more than a year. “Early on, we wanted to use the expertise of SMG in the design of the building so, in order to not show favoritism, we struck a separate contract and paid them $5,000 a month to provide expertise on everything from food operations to revenue layout,” said Marvin. “We’re hopeful that by bringing on an operator early, we’ve avoided some of the mistakes that happen by not having that expertise from the very beginning.”

Though the JPA was open to RFPs from any company, SMG was the only company that responded.

“We let everyone know that it was an open contract and wanted to open it up to the AEGs or Global Spectrums, but I think they knew our relationship with SMG so they didn’t even send in a proposal,” said Marvin.

SMG manages the city-owned Pershing Center and has had a relationship with the city of Lincoln, Neb., since 1998. Tom Lorenz will be transitioning to GM of Pinnacle Bank Arena. He currently serves as general manager of Pershing Center, but “the long-term future of that venue is kind of clouded. I don’t know that we’ll be operating Pershing Center as a venue past 2014,” Marvin added.

Lorenz credited the JPA’s decision to contract with SMG for management of Pinnacle Bank Arena to the relationships they have built over the years managing Pershing Center.

“We understand the market quite well and have worked with the regional and local promoters to establish a good relationship, as well as with the University of Nebraska,” said Lorenz. “They’re comfortable not only with SMG, but with myself as a general manager.”

The new contract also calls for SMG to manage the Pinewood Bowl Theater in Lincoln’s Pioneers Park and operate an almost 500,000-square-foot festival space and parking area northwest of Pinnacle Bank Arena.

There are several ‘green’ initiatives built into the contract, including recycling guidelines and sustainability suggestions. “Having both pieces of the puzzle, SMG management and Savor for concessions, helps us coordinate our efforts as far as purchasing green, recyclable food and beverage containers, and how we arrange opportunities for recycling throughout the building,” said Lorenz. “Since the Midwest is so full of great foods and vegetables, we’ll do a lot of local purchasing. It makes sense from a freshness basis and helps the local economy.”

A rendering of the arena.

The 16,000-seat Pinnacle Bank Arena was designed by DLR, an architectural firm from Omaha, Neb. Construction has been contracted out to Mortenson Construction, out of Minneapolis, and local firm Hampton Enterprises has signed on to assist.

Construction costs for the arena hit $155 million. The total cost including construction, $8 million of architectural expenses, $1 million budgeted for preopening costs such as marketing, and other soft costs comes to $180,797,782. The arena is part of a much larger revitalization project for the downtown and Haymarket district with a total cost of almost $340 million.

“We are using the sales of suites, loge and club seats, and sponsorships — which adds up to about $45-$50 million — and applying that toward debt,” said Marvin. “Also, a group of citizens in Lincoln pledged $20 million toward the building, so the private sector is funding about 40-50 percent of Pinnacle Bank Arena.”

All 36 suites have been sold already. University of Nebraska, the building’s main tenant with a 35-year lease agreement to bring men's and women’s basketball to the arena, was given four suites. Another one went to the City of Lincoln and one to Pinnacle Bank. “The remaining 30 seats were sold by Legends Marketing out of Texas at about a nine-and-a-half-year term,” said Marvin. “There are 20 loge boxes and I think Legends Marketing has sold almost all of those also.”

University of Nebraska will have 35 home games, and the day before each game will be held for NCAA Shoot-Arounds for the visiting team to practice in the facility. The university will also host graduations and other occasional events.

“The main idea is to try and get an additional 80-100 events in the arena, and then have even more dates in the festival space and at the Pinewood Bowl Theater,” said Lorenz.

“We’re going to deal with a couple of different challenges,” Lorenz added. “First we need to make sure we have enough full-time and part-time staff in place. Lincoln has the wonderful issue of having one of the lowest unemployment rates in the country, so we’ll start looking here but we might have to look across the country to fill more spots.”

Lorenz said that there will be a learning curve the first year as people begin to understand the differences in the new facility and how it will work as far as parking and access. “The community is really excited about Pinnacle Bank Arena, so I don’t think it will pose a problem.”

Interviewed for this story: Tom Lorenz, (402) 441-8744; Dan Marvin, (402) 421-2024