The trustees of Cross Insurance Arena didn’t know how much the arena was making from Portland Pirates’ hockey games when they sat down to discuss lease changes with the team last month.

Those talks ultimately failed when the team confirmed Wednesday that the Pirates are being sold and will be moving to Springfield, Massachusetts, for next year’s American Hockey League season. The departure results in the loss of the county-owned arena’s prime tenant. The Pirates played 38 regular-season games a year at the Portland arena, and business leaders say their presence was a key part of the city’s winter economy, filling bars and restaurants before and after games.

AT A GLANCE: THE CROSS INSURANCE ARENA TRUSTEES There are nine seats on the board that oversees the Cumberland County-owned Cross Insurance Arena. One of the seats is vacant: • Mitchell Berkowitz (chair), representing Yarmouth, North Yarmouth, Cumberland, Gray, Raymond, Casco, Naples, Harrison and Bridgton • Sam Surprise (vice chairman), Portland, Long Island • David Maroon (treasurer), at-large • Neal Pratt, representing Falmouth, Scarborough and Westbrook • Gary Plummer, representing Gorham, Windham, Sebago, Standish and Baldwin • Beth Edmonds, representing Pownal, Brunswick, Freeport, Harpswell and New Gloucester • Joe Gray, at-large • Dale Olmstead, contract compliance officer for the Cumberland County Recreation District Related Headlines Portland blindsided by Pirates' plan to leave for Springfield after 23 seasons

Mitchell Berkowitz, chairman of the arena board, said the trustees didn’t need to know how much revenue the Pirates produced for the arena because “there were other techniques we could use” in the discussions. He said Thursday he still doesn’t know how much revenue the hockey games brought in, and otherwise declined to be specific about the trustees’ negotiating approach.

Knowing how much the county made from the Pirates lease “isn’t the only direction I would use” in trying to fashion a deal with the team to prevent it from leaving the state, he said.

Berkowitz also said he didn’t notify the city that the Pirates might leave because it was “speculative” that Portland officials could have done anything to convince the team to abandon the sale and remain in town. He invited the five county commissioners to a meeting to discuss the lease last week, Berkowitz said, and two attended.

On Wednesday, Portland Mayor Ethan Strimling denounced the trustees’ failure to notify the city, saying he and other city officials were caught off-guard by the team’s departure. He also called for changes in the arena’s governing structure of nine trustees appointed by the Cumberland County commissioners and said the $100,000 limit on damages for breaking the lease was too low.

“The governing structure over there I think has to be looked at so it’s a little more accountable to taxpayers, especially the biggest taxpayer in the pool,” Strimling said. “Portland taxpayers are putting money into that place and I’m pretty frustrated we had no warning, no voice at the table, no nothing in terms of the conversation.”

DETERIORATING TEAM FINANCES

Without knowing how much revenue the team brings in, it’s difficult to assess whether Strimling’s criticism of the $100,000 fee is warranted.

Repeated calls Thursday seeking information on hockey revenues from Matt Hepich, general manager of the arena for the management firm Spectra, were not returned. The arena’s monthly financial reports reviewed by the Press Herald contain references to the amount of revenue above or below budget that comes in from hockey games, but not the actual or budgeted receipts. The lease calls for the team to pay the arena $1,000 per game, plus arena expenses, but there are complex revenue-sharing deals for concessions and ticket sales.

Berkowitz said the team approached the trustees “in the last two or three weeks” to say the Pirates’ finances “weren’t sustainable” under the current lease structure, which was hammered out in early 2014 after long and occasionally acrimonious negotiations that included a lawsuit filed by the team against the county. The arena was, at the time, closed for a $34 million upgrade and the team flirted with moving to Glens Falls, New York. But businessman Ron Cain, who bought a majority stake in the team in late 2013, decided to keep the Pirates in Portland.

During the recent discussions, the team told the trustees that the Pirates could be sold and moved out of Portland if there weren’t changes to address the team’s losses. Brad Church, the team’s chief operations officer, declined to provide details on the Pirates’ finances, but said expenses were increasing faster than revenues.

Church said Thursday that county officials offered “concessions” on the lease terms, but neither he nor Berkowitz would say what changes were being considered. The trustees met twice to discuss changing the lease – once last week and again Monday, but both discussions were held in executive session.

Berkowitz said he wouldn’t provide details on the lease changes the trustees considered because the team has not formally notified the county of the sale and relocation. Church told trustees Thursday that a letter of intent for the sale and move had been signed, but said he hasn’t actually seen the letter and doesn’t know who is buying the team or the location of the Pirates’ new home,

However, Church said he is going to league meetings in Chicago next week to seek approval of the sale and relocation.

Berkowitz said trustees felt pressured to come up with a proposal for the Pirates because they knew that AHL teams had to submit schedules to the league by May 10, next Tuesday.

ARENA REVENUE FALLING SHORT

Without knowing the hockey revenues, it’s impossible to say what impact the loss of the prime tenant will have on the arena’s overall financial situation.

The arena posted an operating loss of $600,000, excluding an annual bond payment of more than $1 million related to the recent $34 million renovation, for the year ending June 30, 2015.

The county is currently picking up nearly $3 million in costs that were expected to be covered by increased revenue from events at the arena, said County Manager Peter Crichton.

When the arena was renovated, the hope was that more bookings and business would generate enough money to cover the cost of repaying the 25-year bonds sold to finance the work. Those annual payments are $1.9 million now and will rise to $2.1 million in the next few years. Additionally, Crichton said the arena lost $530,000 during the last calendar year, and had $450,000 in capital needs. All of those costs have been passed on to county taxpayers.

In one bit of good news, Royce Cross, CEO of Cross Insurance, said his company doesn’t plan to reconsider its naming rights agreement with the arena despite the departure of the venue’s key tenant.

Berkowitz said the arena has attracted some concerts and other performances to supplement the income from hockey, but that industry is in poor financial shape these days. He said Spectra, which was hired a year ago to manage the facility, has failed to meet performance benchmarks that would make it eligible for bonus payments, but he has faith in the company’s ability to run the arena and make it successful.

Berkowitz also said that the goal of the renovation was never to make it a better place just for the Pirates. Before the renovations, the arena was unable to accommodate many traveling acts because of deficiencies in areas such as the loading dock and backstage facilities.

Reconnecting with tour operators to promote Portland as a venue takes time, Berkowitz said, likening the situation to putting a new teacher in a classroom of struggling students.

“Would you expect that the students after one year would move to an ‘A’?” he said. “It takes time to rebuild.”

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