Aspiring Gretzkys and Lipinskis Spur an Ice - Rink Boom
By Robert Berner
03/06/1998
The Wall Street Journal
Page B1
(Copyright (c) 1998, Dow Jones & Company, Inc.)
Ice skating is so hot there's an ice shortage -- and a binge of new rink construction.
"We are jammed from seven in the morning until midnight," says Stephen Morrow of Heartland Ice Arena outside
Chicago.
The Sky Rink at New York's Chelsea Piers is open 22 hours a day, 363 days a year, but it still can't accommodate
everyone who wants to play hockey, says Jensine Mayor, the rink's daytime operations manager. (Downtime
between 2 a.m. and 4 a.m. is used to groom the ice.)
And ice skating is likely to get another boost from the Winter Olympics in Nagano, Japan, where the U.S. women's
ice-hockey team won a gold medal and figure skater Tara Lipinski's victory over Michelle Kwan won the best
ratings of the Games for CBS.
To respond to the demand, the nation's biggest round of ice-rink building since the 1950s and 1960s is under way.
Toronto-based ARC International Corp. expects to construct a minimum of 25 rinks over the next five years. Family
Golf Centers Inc. of Melville, N.Y., is building ice rinks next to many of its 75 driving ranges. General Growth
Properties Inc., a big Chicago mall developer, is adding rinks at its shopping centers.
Even the National Hockey League is getting into the act. It plans to announce a partnership with a real-estate
company to build nearly 100 rinks in the next 10 years, says Bryant McBride, director of new-business development
at the NHL. The league figures it can make money from skaters and perhaps spin the rinks off as a public company
as it builds the NHL brand and professional hockey's following.
In all, an estimated 200 rinks are under construction in the U.S., with many more on the drawing board. In Canada,
where hockey has long been popular, 5,500 rinks serve 30 million people. In the U.S., there are only 2,200 rinks for
265 million people, according to the NHL.
After two years of operations, Arnold Tenney, chief executive of ARC, figures his rinks will earn a return on
investment of more than 20% before interest, taxes, depreciation and amortization. ARC has already rolled out rinks
in Rockville, Md., and plans to start construction on three more in Danbury, Conn.; Chesapeake, Va., and Lansing,
Mich.
Family Golf tries to locate its rinks at driving ranges that have 300,000 to 500,000 people within a 10-mile radius.
Its target is customers with household incomes of $45,000 to $55,000.
Just as builders of office buildings try to prelease space before going ahead with construction, ARC books ice with
local hockey leagues and figure-skating groups before proceeding with a rink.
It also tries to gain a competitive advantage by exploiting its size-cutting architectural and engineering costs, for
example, by using one of the three designs it has commissioned for new rinks. Owning multiple rinks also means it
can cut better deals for the hockey sticks, skates, pucks and other paraphernalia it sells at its rink-side pro shops.
The rink builders face huge costs from heating, cooling and labor. "The economics are difficult at best," says Lewis
Kostiner, owner of Johnny's Ice House in Chicago. He estimates he's making a 2% to 3% return on his investment in
the single rink he owns, which is only a year old.
Builders of ice rinks face another big challenge: They often have to compete with municipal rinks. At the moment,
most U.S. skating rinks are owned and operated by towns or cities, which subsidize their operations.
Heartland's Mr. Morrow, whose rink is located in the Chicago suburb of Lincolnwood, also worries about another
shakeout such as one that swept rinks in the 1970s. In the greater Chicago area alone, the number of rinks has
increased more than 50% in three years, to about 40. Ten more are under construction. "You could find that rinks go
the way of racquetball courts," Mr. Morrow says.
"We certainly have some concerns about that," agrees Peter Martell, executive director of the Ice Skating Institute, a
national association for recreational skaters in Buffalo Grove, Ill.
But most rink builders shrug off that concern, saying demand for ice time is so strong that any shakeout is years
away. The Skating Institute estimates that the ranks of recreational and figure skaters have risen 20% since 1993.
Interest in hockey, particularly among girls and women, is even more explosive. From 1991 to 1997, the number of
female hockey players has jumped more than fourfold, to 23,830 from 5,573, according to USA Hockey Inc., the
governing body of amateur hockey in America. The number of male hockey players, by comparison, has risen 74%,
to 338,629 from 195,125.
One big reason is the growing popularity of in-line skating. "It makes the fundamental element of our game a
neighborhood sport," says the NHL's Mr. McBride. Another is the popular series of Walt Disney Co. movies about a
kids' ice-hockey team called the Mighty Ducks.
The back-to-back Winter Olympics of 1992 and 1994-with gold-medal performances by American skaters and the
Tonya Harding-Nancy Kerrigan knee-whacking melodrama-also raised skating's profile. And NHL expansion into
the South and West, plus greater TV coverage of hockey games, has bolstered interest, too.