NDSU unhappy with dome lease
The Fargodome would lose $532,000 over the next five years under a new lease agreement proposed Monday by North Dakota State University. The current lease between NDSU and the Fargo Dome Authority doesn't expire until July 2003. But Dick Rayl...
The Fargodome would lose $532,000 over the next five years under a new lease agreement proposed Monday by North Dakota State University.
The current lease between NDSU and the Fargo Dome Authority doesn't expire until July 2003.
But Dick Rayl, NDSU vice president of business and finance, said he's hoping a new contract can be negotiated by next week.
With input from Fargo Mayor Bruce Furness and City Commissioner John Cosgriff, Rayl drafted a new five-year contract which would begin on July 1. The proposed agreement was presented Monday to the Dome Authority's executive committee for review.
"It seems that in the course of negotiations conducted to date, too many concessions have been made that would be adverse to our bottom line," said Russ Johnson, Fargo Dome Authority president.
The dome would lose at least $532,000 over the next five years if the contract were approved as it stands now, Johnson said.
In the proposed lease agreement, NDSU asks for its dome rental cost to be reduced from $193,400 per year to $120,000 per year.
This rent reduction would bring NDSU in line with what other similar dome users pay for the facility, Rayl said.
But the rental reduction alone would cost the dome $73,400 per year for the next five years, Johnson said.
The primary reason the university has paid more for rent is because it receives priority rental dates, he said. NDSU has the right to rent the dome for 40 days per year.
But Rayl said NDSU has been paying a premium and should be reimbursed, as per the contract, for a portion of the additional money it has been paying.
As a result, NDSU proposes that the Dome Authority forgive all payments, equaling $220,000, for the first two years of its 10-year advertising and suite package contract as a way to compensate for some of the money the university believes the dome owes it.
Eight new spectator suites are being built in the dome and have been offered to advertisers as a way to help finance the dome's new video scoreboards. NDSU has a 10-year advertising and suite contract costing $110,000 per year.
The university also has asked for a 50 percent discount on its advertising and suite package payment for the years 2004-07.
"This is a significant sticking point for us," Johnson said. "This needs further negotiation."
This proposed agreement would be financially detrimental to the dome, especially considering the ongoing, additional costs the dome has undertaken for scoreboards and suites, Johnson said.
Rayl said the amount of money the dome owes NDSU is subjective. Johnson said the two entities will need to compromise on a dollar figure somewhere in the middle and go from there.
Representatives from NDSU and the Fargodome will meet in the next two weeks to further negotiate details of the lease agreement.
The Dome Authority must vote on the new lease agreement once its negotiated, but the Fargo city commission has the ultimate deciding power.
"The Dome Authority has a responsibility to the tax payers," Johnson said. "We have to see to it that we get the most bang for our buck."
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