Rhinos could lose stadium
Publié : 29 janvier 2008 11:16
ity considers takeover as bank sues for $10.8 million in past-due loans
Brian Sharp and Steve Orr
Staff writers
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(January 29, 2008) — Citing a newly filed lawsuit claiming that the Rochester Rhinos organization defaulted on nearly $11 million in bank loans, city officials said Monday that they are contemplating steps to take over PAETEC Park.
The city already has met with a potential investor who the professional soccer franchise hopes will bail it out. Or the Rhinos' bankers could step in and operate the team.
Whatever happens, city officials say, the goal is to ensure that the stadium is a financially viable home for pro sports. But time is running out and options diminishing as more becomes known about what Mayor Robert Duffy calls "a total financial mess."
The Rhinos are scheduled to open their 2008 season May 2.
"If they fail to perform ... then the stadium reverts to the city," said Thomas Richards, the city's corporation counsel. "The question becomes whether we actually need to wait, or whether the financial situation is so obvious. We are considering that right now."
The lawsuit filed by a Chenango County bank and the city's reaction to it are the latest blows to struggling local sports impresario Steve Donner. His Rochester Americans hockey and Knighthawks indoor lacrosse teams have financial and legal problems, and the city has sought a change in management before granting them a new lease at Blue Cross Arena at the Community War Memorial.
Now Donner and Frank B. DuRoss, the other principal owner of the Rhinos, are at risk of losing access to the stadium they fought for years to have built. PAETEC Park is home to the Rhinos men's and women's soccer teams and Rattlers outdoor lacrosse team.
Donner, reached Monday night, said he does not consider the bank's action "an aggressive act." He said the team's new investor, whom he would not name, has addressed the team's short-term and long-term needs. He said negotiations were under way to purchase the mortgage from the bank.
"I'm very confident the plan we have will work," he said.
PAETEC Park opened in June 2006. The state contributed $19 million toward stadium construction, estimated to cover 80 percent of the cost. The city kicked in $4 million for infrastructure and has been put in charge of administering a $4 million state grant to complete 18 luxury suites and a press box. Uncertain about the Rhinos' financial situation even before the suit, the city has not released that money.
'We did not' need stadium
Rhinos attendance has flagged since the team moved from Frontier Field to the 12,500-seat stadium off West Broad Street near Lyell Avenue. Duffy said Monday that in hindsight, PAETEC Park should not have been built.
"Here is where government loses credibility," Duffy said. "In essence, we have spent all this money on this one public project, which has never achieved the promises that were made. I'm not pointing a finger at any one person. I think it shows a deep void ... in terms of decision making, in terms of financial projections, and in terms of protecting taxpayers.
"Did we need a second stadium? It is my opinion that we did not."
The lawsuit, filed Jan. 15, asserts that a Rhinos affiliate defaulted on five bank loans and owes $10.8 million.
NBT Bank of Norwich, Chenango County, filed the suit. The bank loaned $6 million to Rochester Rhinos Stadium LLC to help build PAETEC Park and made four other loans in 2007.
DuRoss lives in nearby Utica, where NBT has branch offices.
Payments on all five loans ceased in June or July 2007, says the suit, filed in state Supreme Court in Chenango County.
The loans were personally guaranteed by chief executive Donner, team president DuRoss and former general manager Chris Economides, according to the legal papers, and the three men are named as co-defendants. The affiliate that operates the soccer team, Empire Professional Soccer LLC, also is listed as a guarantor and co-defendant.
DuRoss and Economides declined comment when reached Monday. DuRoss referred all inquiries to Donner.
"This isn't the only debt over there," Richards said of PAETEC Park, though it is the largest of which the city is aware. "There are some other substantial debts. There are millions of dollars in additional debt."
The mayor said various parties have pressured City Hall to release the final $4 million in state funds, and creditors have approached him personally to do so. But that money is earmarked for stadium upgrades, not to pay bills.
The city would prefer that someone just take over the Rhinos, Richards said, because that option makes it more likely that creditors would be paid.
Florence Doller, NBT vice president and director of marketing, said Monday afternoon that the bank had no comment on the loans or the lawsuit. The lawyer who filed the case, Mitchell J. Katz of Syracuse, could not be reached for comment Monday evening.
NBT loaned the company $4 million in December 2004, shortly after construction of PAETEC Park began. The bank upped its building loan to a total of $6 million in August 2005. Terms were renegotiated several times so that the company didn't have to begin repaying until March 2007, according to the legal papers. Full repayment was due two years after that.
The NBT building loan represents the bulk of the money that team owners pledged to put into the stadium deal. Construction was paid for primarily with the $19 million in state grants.
The Norwich bank made three more loans totaling $4.6 million to the Rhinos stadium company in January 2007. Mortgage documents filed with the Monroe County clerk say the purpose of those loans, which had a term of two years, was "causing the (stadium) project to be constructed, equipped, developed, leased and operated."
The bank then made a final loan to the company, for $250,000, in May 2007. That money was due just one month later but was not repaid, according to the lawsuit. Payments on all the other loans were made through spring 2007 but halted after June, the suit alleges.
NBT subsequently demanded that the company and the guarantors make good on all the money owed to the bank. As of early January, that debt totaled $10.84 million, including interest, the legal papers say.
"We were told by Donner and DuRoss that they were going to get it straightened out," Richards said. "... We have serious doubts that they are going to be able to do so. I don't know if it's in anybody's interest to wait for them anymore."
Richards said the city, which owns the land on which the stadium is built, leased that land to the Rhinos stadium company for $1 a year. The lease stipulates that the company must field a viable soccer team each year or the stadium reverts to the city.
http://www.democratandchronicle.com/app ... /1002/NEWS
Brian Sharp and Steve Orr
Staff writers
Post Comment
(January 29, 2008) — Citing a newly filed lawsuit claiming that the Rochester Rhinos organization defaulted on nearly $11 million in bank loans, city officials said Monday that they are contemplating steps to take over PAETEC Park.
The city already has met with a potential investor who the professional soccer franchise hopes will bail it out. Or the Rhinos' bankers could step in and operate the team.
Whatever happens, city officials say, the goal is to ensure that the stadium is a financially viable home for pro sports. But time is running out and options diminishing as more becomes known about what Mayor Robert Duffy calls "a total financial mess."
The Rhinos are scheduled to open their 2008 season May 2.
"If they fail to perform ... then the stadium reverts to the city," said Thomas Richards, the city's corporation counsel. "The question becomes whether we actually need to wait, or whether the financial situation is so obvious. We are considering that right now."
The lawsuit filed by a Chenango County bank and the city's reaction to it are the latest blows to struggling local sports impresario Steve Donner. His Rochester Americans hockey and Knighthawks indoor lacrosse teams have financial and legal problems, and the city has sought a change in management before granting them a new lease at Blue Cross Arena at the Community War Memorial.
Now Donner and Frank B. DuRoss, the other principal owner of the Rhinos, are at risk of losing access to the stadium they fought for years to have built. PAETEC Park is home to the Rhinos men's and women's soccer teams and Rattlers outdoor lacrosse team.
Donner, reached Monday night, said he does not consider the bank's action "an aggressive act." He said the team's new investor, whom he would not name, has addressed the team's short-term and long-term needs. He said negotiations were under way to purchase the mortgage from the bank.
"I'm very confident the plan we have will work," he said.
PAETEC Park opened in June 2006. The state contributed $19 million toward stadium construction, estimated to cover 80 percent of the cost. The city kicked in $4 million for infrastructure and has been put in charge of administering a $4 million state grant to complete 18 luxury suites and a press box. Uncertain about the Rhinos' financial situation even before the suit, the city has not released that money.
'We did not' need stadium
Rhinos attendance has flagged since the team moved from Frontier Field to the 12,500-seat stadium off West Broad Street near Lyell Avenue. Duffy said Monday that in hindsight, PAETEC Park should not have been built.
"Here is where government loses credibility," Duffy said. "In essence, we have spent all this money on this one public project, which has never achieved the promises that were made. I'm not pointing a finger at any one person. I think it shows a deep void ... in terms of decision making, in terms of financial projections, and in terms of protecting taxpayers.
"Did we need a second stadium? It is my opinion that we did not."
The lawsuit, filed Jan. 15, asserts that a Rhinos affiliate defaulted on five bank loans and owes $10.8 million.
NBT Bank of Norwich, Chenango County, filed the suit. The bank loaned $6 million to Rochester Rhinos Stadium LLC to help build PAETEC Park and made four other loans in 2007.
DuRoss lives in nearby Utica, where NBT has branch offices.
Payments on all five loans ceased in June or July 2007, says the suit, filed in state Supreme Court in Chenango County.
The loans were personally guaranteed by chief executive Donner, team president DuRoss and former general manager Chris Economides, according to the legal papers, and the three men are named as co-defendants. The affiliate that operates the soccer team, Empire Professional Soccer LLC, also is listed as a guarantor and co-defendant.
DuRoss and Economides declined comment when reached Monday. DuRoss referred all inquiries to Donner.
"This isn't the only debt over there," Richards said of PAETEC Park, though it is the largest of which the city is aware. "There are some other substantial debts. There are millions of dollars in additional debt."
The mayor said various parties have pressured City Hall to release the final $4 million in state funds, and creditors have approached him personally to do so. But that money is earmarked for stadium upgrades, not to pay bills.
The city would prefer that someone just take over the Rhinos, Richards said, because that option makes it more likely that creditors would be paid.
Florence Doller, NBT vice president and director of marketing, said Monday afternoon that the bank had no comment on the loans or the lawsuit. The lawyer who filed the case, Mitchell J. Katz of Syracuse, could not be reached for comment Monday evening.
NBT loaned the company $4 million in December 2004, shortly after construction of PAETEC Park began. The bank upped its building loan to a total of $6 million in August 2005. Terms were renegotiated several times so that the company didn't have to begin repaying until March 2007, according to the legal papers. Full repayment was due two years after that.
The NBT building loan represents the bulk of the money that team owners pledged to put into the stadium deal. Construction was paid for primarily with the $19 million in state grants.
The Norwich bank made three more loans totaling $4.6 million to the Rhinos stadium company in January 2007. Mortgage documents filed with the Monroe County clerk say the purpose of those loans, which had a term of two years, was "causing the (stadium) project to be constructed, equipped, developed, leased and operated."
The bank then made a final loan to the company, for $250,000, in May 2007. That money was due just one month later but was not repaid, according to the lawsuit. Payments on all the other loans were made through spring 2007 but halted after June, the suit alleges.
NBT subsequently demanded that the company and the guarantors make good on all the money owed to the bank. As of early January, that debt totaled $10.84 million, including interest, the legal papers say.
"We were told by Donner and DuRoss that they were going to get it straightened out," Richards said. "... We have serious doubts that they are going to be able to do so. I don't know if it's in anybody's interest to wait for them anymore."
Richards said the city, which owns the land on which the stadium is built, leased that land to the Rhinos stadium company for $1 a year. The lease stipulates that the company must field a viable soccer team each year or the stadium reverts to the city.
http://www.democratandchronicle.com/app ... /1002/NEWS
