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Ice rink stays in the red

June 29, 1998|By LAURA ERNDE

Two years ago, when Walter Dill challenged Hagerstown to open an ice rink before one opened in nearby Waynesboro, Pa., he predicted this area could not support multiple rinks.

"The first one that opens is going to be successful. The rest are going to crash," he said at the time.

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Hagerstown opened last August, four months before the Waynesboro rink.

But today it is Hagerstown's rink - not the one in Waynesboro - that has shaky finances.

Hagerstown Ice & Sports Complex is expected to lose roughly $100,000 in its first year, said Gary Wright, president of the nonprofit board that runs the rink.

By contrast, the Doris I. Billow Ice Arena in Waynesboro is breaking even.

"We're holding our own. We're doing fine. We're paying our bills," said Carol L. Henicle, Wright's counterpart at Cumberland Valley On Ice.

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Wright and the nonprofit Washington County Sports Foundation have a plan to revive the ice rink that involves a tax break plus loans from the city and a group of banks.

The Hagerstown City Council approved the plan last Tuesday and the banking agreement could be signed today.

The ice rink was in trouble from the time it opened its doors, said William M. Breichner, councilman and board member.

The $2.3 million rink cost about $210,000 more to build than anticipated and the board fell short of its fund-raising goals, Breichner said.

Founder Dill and many original board members resigned shortly after the rink opened.

The rink has fallen behind on its electric bill, Wright said. Electric use at the rink will cost about $50,000 a year, according to the rink's future spending plan.

The president of a professional rink management company hired by the new board says the original board had unrealistic expectations.

"The plan they were operating before was kind of pie-in-the-sky," said Jack Vivian, president of JRV Management Inc. of Ann Arbor, Mich.

Even city officials who backed the project suspected it might cost more than anticipated, Breichner said.

However, the city never wanted to take over the rink's operations, choosing instead to support it with the donation of land from the Hagerstown Fairgrounds and a construction loan, he said.

With the turnaround plan, the city hopes to give the rink a boost without spending tax dollars, Breichner said.

"It gets us where we need to be on a financial basis so we can forge forward," Wright said.

If everything goes as planned, the city's $1.4 million construction loan will be paid back with 4.7 percent interest, the same rate as the city's bond rate.

The monthly payment, now that the loan was increased by $225,000 last week, will be $11,294.

Also, the rink is committed to a $250,000 bank loan. The interest rate is to be 7.5 percent for the first five years.

The infusion of cash will help the rink pay off some of its debts, including the electric bill and a line of credit of $75,000 to the city and $75,000 to Hagerstown Trust, said city Finance Director Al Martin.

About $25,000 will go toward buying new rental skates.

"We have a whole room full of them out there that are falling apart," Breichner said.

A $100,000 line of credit from the banks will help keep the rink going during the summer months, when the season is slow and it's more expensive to keep the ice.

The city will for five years forego a payment in lieu of taxes from the ice rink. That would have brought in $100,000 to $150,000 in that time period.

Breichner said that is not an expense to the city because it would have been new income.

The city is backing the bank loan and line of credit up to $250,000.

Breichner and other city officials said they have confidence in the rink's new financial plan under JRV's management.

Under the plan, the rink would be in the black in 2001 after deficits of $26,200 in 1999 and $2,902 in 2000.

The plan depends on $40,000 a year in donations and $10,000 a year in sponsorship and advertising sales.

Despite the rink's financial troubles, the community has gotten behind the rink, Breichner said.

"Everyone who goes there comes away with a sense of enthusiasm," he said.

The rink is going to need that community support to make it work, Vivian said.

"It's a challenging time, but it's an exciting time," he said.

There is also the competition factor.

Vivian said having two ice rinks within 15 miles of each other is not ideal, especially in an area new to ice sports.

"If it was Detroit, it would be nothing," he said.

But since that's the case, Vivian said the rinks should work together to build clientele by forming leagues that play against each other.

"Both organizations are going to have to work hard to say they're breaking even. It isn't going to be easy," he said.

Vivian did the feasibility study for Waynesboro's rink, which was built in part with a $500,000 bequest from Doris I. Billow's in 1992.

Like Hagerstown's rink, that rink was built with a combination of public and private money, although it was a much longer process.

Both are run by nonprofit foundations.

Hagerstown officials will be watching the ice rink's progress, considering it has guaranteed up to $250,000 of the bank loan and line of credit, Martin said.

"We obviously will be keeping a close eye on things, as will the banks, to ensure they're meeting their goals and targets," Martin said.

Officials with the city and the rink said they are optimistic about the rink's future.

"We've heard the skeptics and everyone is working to make sure the skeptics are wrong," Breichner said.

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