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SABRES HOPING TO REDO LEASE

Payroll shortages, $32 million in losses over the last three years and an $80 million debt load tied largely to Marine Midland Arena added up to the cash-flow crisis that is forcing an imminent ownership shift in the Buffalo Sabres.

But that power shift won't end the team's deep financial troubles.

That's why, even before the weekend's events, the Sabres were attempting to renegotiate their 30-year lease at the arena -- a move that team officials said could save the financially strapped franchise $6 million per year.

John J. Rigas, the Sabres' owner-in-waiting, said he wasn't actively involved in the push to renegotiate the lease. So if he does take over, Rigas said, he would take a step back to consider the renegotiation as part of a total review of the team's finances.

"There's no question we have a serious financial problem facing us, between the arena and the Sabres," Rigas said Sunday from his Coudersport, Pa., home.

"My inclination is that we have to re-evaluate the whole situation," he added. "Into that will come the lease."

The Buffalo News reported Sunday that Rigas, the founder of Adelphia Communications Corp., is expected to take controlling ownership of the Sabres, as soon as this week.

"I think we made a lot of progress in the last week," Rigas confirmed. "We do expect something to happen, but there's no certainty until all the i's are dotted and all the t's are crossed. But I'm optimistic."

The renegotiation bid is another example of Buffalo's two major-league franchises trying to sweeten their lease deals to compete with the big-market teams in the skyrocketing economics of pro sports.

It's also the saga of a small-market city like Buffalo -- with a stagnant economy, no Fortune 500 companies and a shrinking fan base -- straining to keep its franchises from moving.

As Rigas moves to take control of the Sabres, a renegotiated lease would be one possible way to help such a small-market team survive.

As part of the renegotiation bid recently launched by Sabres President Lawrence Quinn, the team wants New York State to make the biggest concession: forgoing repayment of its $25 million investment in the project.

The Sabres also approached the City of Buffalo and Erie County about taking fixed annual payments, rather than their shares of the arena's profits. (The county's share actually goes to a separate state fund for waterfront projects in Erie County.)

"It's not $6 million we're taking away from the city and county," Quinn said. "It's $6 million that we're creating through a better financing arrangement."

The arena, built as a $127 million life preserver for the Sabres, was a solid financial success last year, turning a $1.27 million profit, with almost $825,000 of that going into the Sabres' pocket. Higher ticket and suite revenue also helped the team severely slash its losses, down to $4 million last season.

A sweeter lease deal -- with its possible $6 million savings -- is all part of a long-term vision to build a franchise that's competitive on the ice and the balance sheet.

Under Quinn's stewardship, that has meant keeping the team's payroll in the low $20 million range, nurturing and developing young talent and not entering the bidding wars for high-priced free agents.

Although Quinn's future with the organization may be shaky with Rigas taking control, the new ownership will face the same small-market financial pressures. Rigas declined to comment Sunday on Quinn's status.

While serious lease renegotiations have not begun, the three governments are willing to discuss revising the lease. In return, government officials want assurances about the Sabres' financial viability.

"The county has advised the Sabres that the renegotiation plan must be fair, and the Sabres must provide a plan that will give good assurances that they will be able to solve their financial problems and remain in the community for the long term," Richard M. Tobe, a spokesman for County Executive Gorski, said last week.

Here's what the Sabres have proposed:

That the team and the arena merge into a single company, allowing the team to consolidate its debt and refinance at a lower rate. That would help the Sabres eliminate costly debt reserves and prepayment requirements.

That the state give up its 15.4 percent share of the arena's profits each year.

There is precedent. As part of its pending lease deal with the Bills, the state has committed $95 million in the next six years, including an outright grant of $3 million per year. And the New York Islanders, which are in the process of being sold, reportedly are hoping to pry $30 million from the state.

"The Sabres are very important to Western New York and the entire state," said John Melia, a spokesman for the Empire State Development Corp., the state's economic development agency. "They have requested a meeting with us, and of course, we'll be happy to meet with them."

That the city and county agree to accept fixed annual payments for the rest of the 30-year lease. The city now gets 7.35 percent of arena profits, while the county's share (reserved for waterfront projects) is 12.25 percent.

Mayor Masiello said the Sabres' proposal would mean that the city still would get back its investment, but in a different way. Instead of the Sabres getting 65 percent of any profits, as they do now, they would get all the profits, although the city and county would get their cuts first.

"I think that's a reasonable suggestion on their part," the mayor said last week. "If it helps them in the long run and has a minimal impact on us, then we'll work with them."

So would the county, which wants to keep the Sabres viable so the team can help jump-start waterfront projects just outside the arena's doors, Tobe said.

But Masiello first would want the Sabres to live up to their end of the bargain.

"We -- the city, the county and the state -- gave them a first-class facility so they can draw fans," he said. "Now they have a corresponding obligation to give the public a better product that will entice fan support."

Marine Midland Arena was built on an unusual public-private partnership, with the Sabres and their banks putting up almost 55 percent of the $127 million cost. That has left the team and the arena, both owned by the same people, shouldering a huge debt load of roughly $80 million.

In hindsight, Quinn contends that the Sabres left too many bargaining chips on the table and didn't use all the negotiating tools commonly used by other professional sports teams.

"For a market this size, the Sabres should have said, 'Build us an arena, give us all the revenue, and we'll stay,' " Quinn said last week.

Under Quinn, the Sabres have clung to a long-range plan that hinges on tight financial discipline.

"We really are committed to winning in the only way we possibly can, to go with a development program instead of a free-agency program," he said. "Keep your players for a long time, keep your costs down and realize that any negotiation has consequences for the other 22 players. . . . We're trying to field a team that can win and stay together for a long time."

Whether that plan will remain intact under Rigas' ownership is uncertain.

So far, it has been a tough sell, made tougher by the off-season turmoil involving the departures of former coach Ted Nolan and star center Pat LaFontaine.

If the Sabres want to follow that development plan, they will be helped in part by the National Hockey League's nearly 3-year-old collective bargaining agreement with its players. That includes a rookie salary cap, limited free agency for younger players and no salary arbitration for a player's first five years.

Still, the Sabres face some high hurdles.

Ticket revenues are running roughly $450,000 behind last year's pace through the first 14 home games. Although the Sabres expect that gap to narrow over the next few dates, the team needs to win and draw well to keep pace with last year's late-season success at the box office.

Two recent contract deals, giving Eric Lindros of the Philadelphia Flyers $16 million over two years and Paul Kariya of the Anaheim Mighty Ducks $14 million for two years, have raised the salary bar.

While the Sabres haven't competed for such players, the escalating players' salaries will hurt the team in arbitration and with its Group II free agents -- young veterans with limited freedom to change teams.

The team needs to do a better job tapping the Canadian market. Only about 8 percent of the team's season-ticket holders live in Canada.

But the Sabres see great potential in the Canadian market, with the Toronto Maple Leafs joining the Sabres' division next season and the possibility of Sabres games being carried on a regional cable television network in Ontario. Canadians don't see the Sabres' local telecasts, which air only on the Empire Sports Network.

"Our biggest problem is, when you cross the Peace Bridge, it's like crossing the Iron Curtain," Quinn said. "Our feeling is that we've lost a tremendous number of Canadian customers in the last 10 years because our games were blacked out there."

Buffalo is the second-smallest U.S. market with an NHL franchise, and several other small cities -- Quebec City, Hartford and Winnipeg -- all have lost their teams in the last three years.

One example: The large-market Boston Bruins collect $8.2 million more just from season tickets than the Sabres do from all ticket sales combined.

No matter who's in charge, the Sabres will have to spend their money wisely, draft well, take advantage of the arena's revenues and ride out some stormy times.

"In short," Quinn recently told season-ticket holders, "we are in for the fight of our lives and have to stay on top of our game."

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