A new UNC basketball arena could cost over $700M. Here’s why and how much the program could make. :: WRAL.com

CHAPEL HILL — For months, the contentious debate over the future basketball arena for the North Carolina men’s basketball team has been fueled, in the absence of numbers, by emotion.

The memories. The victories. The history of the Dean E. Smith Student Activities Center. The way the place erupts on a last-second shot to beat Duke. The banners and jerseys hanging above the iconic court.

But in meeting after meeting after meeting over the past few weeks North Carolina officials have begun to explain, in detail, the hard dollars and cents behind the Tar Heels’ arena options as they seek consensus on whether to renovate or replace their iconic 40-year-old on-campus venue.

The presentation includes a mission statement, six priorities and objectives, quantitative and qualitative breakdowns of seven potential venue options and overviews on legacy seats, premium seating and student seating at the Dean Dome and other sites.

“There’s emotion, there’s logic and there’s finance,” North Carolina athletics director Bubba Cunningham said this week. “I think now we’re starting to get more to the logic and the finance with everyone.”

The Tar Heels have spent $1.3 million since 2022 compiling the data from some of the nation’s top firms in arena design, construction and planning.

Cunningham, incoming athletics director Steve Newmark, senior associate athletics director Rick Steinbacher and others have met twice with an 11-member basketball council consisting of former players, students, key donors, other stakeholders and former UNC coach Roy Williams, a public supporter of renovating the Smith Center.

“The intent is not to be persuasive or to push in a certain direction,” said Newmark, who takes over as athletics director on July 1. “It’s to show all the work and all of the factual underpinnings for the options that we have going forward based on a common recognition that the status quo is not the ideal situation if we want to continue to evolve and adapt to the new world order.”

A new arena could be completed in time for the 2030-31 season, while a massive renovation of the Smith Center could be complete by 2028-29. That, of course, depends on the Tar Heels making a decision.

The seven options still under consideration range in cost from $153 million to $786 million, though it seems clear that three plans — renovate the Smith Center at its current location, build a new arena at on-campus Odum Village or build a new arena at the off-campus Carolina North site — have risen to the top of the list as UNC attempts to meet its mission: “Ensure the future success of Carolina Basketball while maximizing what it provides for Carolina Athletics and the University Community.”

READ: Full 17-page presentation

The options

A group that included, at the start, former Chancellor Kevin Guskiewicz, former Rams Club executive director John Montgomery, Cunningham, Steinbacher, several vice chancellors as well as small communications, finance and legal teams began work in 2022 on the basketball arena issue.

The university hired Tipping Points Sports (financial modeling), Legends (premium seating strategy and revenue opportunities), Populous (design concepts) and Mortensen (construction costs and planning). They also brought in other firms, including Venue Solutions Group (to evaluate current arena’s needs), Ayers Saint Gross (campus planning and mixed use), HR&A Advisors (urban real estate), Kimley-Horn (parking and transportation analysis) and Clancy & Theys Construction Company (local expertise in construction).

Based on information provided by those firms, the university defined costs for seven projects:

Remain: The Tar Heels could remain at the 40-year-old Smith Center, but even that would require an estimated $153 million over the next 20 years with about half of that due in the next five years to address problems with the roof, bathrooms and accessibility issues for those with disabilities. The arena would run an annual deficit, not generating enough revenue to cover the debt payments for the repairs.

Renovate: A major renovation of the Smith Center would cost $591 million, which includes $121 million in associated costs with replacing Koury Natatorium, home to the university’s swimming and diving teams. That venue would be replaced by the practice and training facilities for basketball teams. The renovation would net about $4 million annually. It would honor all permanent seat rights but doesn’t account for lost revenue during the renovation project itself. Playing games at the arena during the renovation would increase the cost and extend the timeline.

Rebuild: A complete teardown and rebuild of the Smith Center on the current 10.5-acre lot would cost $782 million, a figure which, again, includes replacement costs for the natatorium. A rebuild would produce an annual net cash flow of about $18 million, but that doesn’t account for lost revenue in the years during construction. It isn’t clear where the Tar Heels would play during the interim — or what impact it might make to not have a dedicated home arena in an era of annually shifting rosters. Permanent seat rights holders wouldn’t keep their seats under the proposal.

Bowles Lot: When Cunningham first began to think about a new basketball arena around 2012, the Bowles Lot was his first thought. The 4.7-acre parking lot is next door to the Smith Center. It would cost $673 million to build a new arena there and it would generate about $24 million in annual net cash flow. It is by far the smallest area under consideration. It wouldn’t require a new natatorium.

Odum Village: The former site of the university’s married and family housing units contains about 14 acres on campus. The buildings on the site are being demolished now, as part of a long-term plan and independent of any talk of a basketball arena. The location emerged as a candidate later in the process. It would cost $703 million for a new arena and it would generate about $25 million in annual cash flow — without accounting for any additional money generated by an entertainment district or mixed-use development.

Tasked with finding every potential option on the core campus, Steinbacher and Gordon Merklein, UNC’s associate vice chancellor for real estate, drove the campus seeking other spots in the spring of 2024. The group explored and dismissed other potential locations: UNC’s fraternity court, the Woollen/Fetzer/Student Recreation Center corridor, the Rams Head Parking Deck and the UNC Ambulatory Care Center/EPA building site. But the trip helped add Odum Village as a potential location.

Friday Center: The Friday Center is about a six-minute drive from the Smith Center and currently serves as a park-and-ride location for many fans on gamedays. A new arena would cost $741 million and generate about $21 million in annual cash flow — not counting potential entertainment district or mixed use development. The site has between 42 and 45 acres.

Carolina North: UNC plans to build a campus at the Carolina North property, the former home of Horace Williams Airport. It is about 230 acres of university-owned land located about 1.5 miles from Franklin Street. A new arena at the location would cost $786 million and would generate $26 million in annual cash flow before any mixed-use or entertainment district revenue. Given the size of the parcel and the lack of existing buildings, the mixed-used potential at Carolina North is considered high, the only spot to earn that designation in UNC’s analysis.

Making the case public

In the presentation, officials list six key priorities and objectives behind the arena: a premier basketball-first collegiate arena, preserve the legacy and tradition of Carolina basketball, best-in-class student-athlete training facilities for the men’s and women’s programs, improve student seating for maximum in-game impact, elite fan experience and increase revenue opportunities.

“We have six things that are really important to the success of Carolina basketball,” Cunningham said. “Everyone values those differently.”

Those dovetail with the three top priorities that UNC Chancellor Lee Roberts outlined in January for a new arena: winning, students and fan experience.

Top advocates for renovating the Smith Center previously complained about the lack of public comparison between the options. The Committee for a South Campus Arena, which formed late last year in opposition to a proposed move to Carolina North, has called for more information about the potential costs and revenue generation possibilities for a renovation and a new build.

“All the energy the administration and the athletic department and South Building has spent on this has been on why we move,” said Rusty Carter, a member of the committee, former member of the Board of Trustees, friend of Williams and longtime supporter of the program. “They have not spent 10% of that energy on why we should and can stay. That is the issue here and it’s created this quagmire and standoff and the us vs. them.”

The group has been vocal in its opposition to moving the Smith Center, enlisting Williams and former national player of the year Tyler Hansbrough in video messages that advocate keeping the arena where it is. They’ve launched a “Renovate, Don’t Relocate” campaign with T-shirts, an online petition signed by more than 37,000 people, and advertisements in The Daily Tar Heel student newspaper.

Cunningham acknowledged the university “dropped the ball” on communications about the Smith Center from late 2024, when the Tar Heels were going through a football coaching change, to late 2025 when it began informing key stakeholders of a plan to move to Carolina North.

The presentations to various groups are an effort to include everyone in that process. There is no timeline for a decision even as plans work begins for the Carolina North campus.

“If we’re going to do a $600- to $800-million project, the university community has to be behind it,” Cunningham said. “And that community is the basketball program, the students, the alumni, the season-ticket holders. It’s the whole community.”

Legacy seats

The Dean Dome was built in the mid-1980s for $33.7 million, slightly more than its $31.5-million projected cost. It was built entirely with private donations, which actually raised more than $36 million for the arena. One of the perks for those donors was the ability to maintain rights to specific seats in the new arena in perpetuity.

There are still between 1,200 and 1,300 individual account holders for 4,357 permanent seats in the Smith Center. More than 50% of those seats are in the lower bowl. In order to keep those seats, donors must give annually and purchase tickets.

Cunningham said it’s incorrect to lump all of those fans and supporters into a single category.

“Some of them are incredible donors to the university,” he said. “Some are continuing to pay the minimum to keep the rights. And some are paying the minimum and then not even attending the games.”

Carter, the spokesman for the committee opposed to moving off campus, said his group wants the university to initiate a “buyback program” to compensate the long-time ticket holders. He is worried they won’t be compensated in any way if UNC builds a new arena.

“That is not the Carolina Way,” Carter said. “It’s not a reasonable position unless you don’t care about anything but money.”

Since the Smith Center’s construction, others have earned the right to buy tickets through endowing scholarships. Those endowed tickets account for 2,096 seats, more than 80% of which are in the lower bowl. Those rights can be passed down one generation, but they are not for specific seats and require giving at a high level.

The permanent legacy seats and the endowment seats make it difficult to meet one of the top objectives: improve student seating for maximum in-game impact.

Student seating

The Tar Heels averaged about 2,800 students per game entering Tuesday’s game against Clemson, a number that has been trending downward for the past two decades for a variety of factors. For the Duke game, a season-high 5,400 students attended the game. Every student who showed up, including those on the stand-by line, got into the Tar Heels’ memorable 71-68 win over the Blue Devils.

Tickets that aren’t used by students are sold to the general public. Fans, for example, can purchase a ticket package that includes all home games, except for Duke to accommodate the student demand for that game.

Its standard allotment of 3,000 student tickets per game — which flexes up or down depending on the opponent and day and time of the game — puts UNC on par with Connecticut and Kentucky.

Students now can stand in risers behind one basket, five lower-level sections and near the top of the upper deck in about a third of the arena. One potential seating arrangement would place the students in larger sections behind both baskets, though any final decision won’t be made until much further down the line.

Capacity at the Smith Center is 21,750. Any new venue, including a renovated one, would include fewer seats, likely between 16,200 and 17,700. So if the number of students remains the same, the percentage of seats held by students would go up.

“It’s their program,” Roberts said in January. “It’s their team. It’s what makes college basketball so great, and it also makes it a tough place to play. What helps a competitive advantage in a basketball arena is the students on their feet and hollering, not people like me chatting to their friends and looking at their phones.”

The group studied student seating at Connecticut, Duke, Florida, Illinois, Indiana, Kansas, Kentucky, Louisville, Michigan State, Ohio State, Texas, Syracuse and Virginia, comparing the number of student seats, arena capacity, student enrollment and physical location at each school’s home arena. That information is included in the presentation.

How will UNC pay for it?

Athletics department expenses, including direct revenue sharing and the funding of top-tier rosters, in football and basketball are skyrocketing. Now the Tar Heels will be asking fans and donors for hundreds of millions more to renovate or build an arena.

To help pay for the new arena, the program would require all season-ticket buyers to be members of The Rams Club, which covers the cost of scholarships for UNC athletes. Most seats would require a capital gift, which would give the donor rights to the seat for 10 years. Then buyers would have to pay for the seat lease and, finally, the cost of the tickets.

In any new arena option, the university is expected to generate $404 million from capital gifts and philanthropy, about half the cost of the most expensive options. In the Smith Center renovation scenario, the school could generate an estimated $257 million in capital gifts and philanthropy assuming that it fully honors current permanent seat rights.

UNC would have more than 3,200 premium seats in a renovation or new build — up from its paltry 54 currently.

Rams Club staff is meeting to determine how many donors need to buy suites and what the price of the capital gift and the seat lease would be for that suite. They’re looking at how many courtside seeds would need to be sold and attempting to identify potential customers for them. Steinbacher said when the football program opened the premium Blue Zone that half of the buyers didn’t previously have season tickets.

“A new premium experience is going to bring buyers that you don’t already have,” he said.

Officials will continue to hold meetings, refining the data presented to answer new questions that crop while inching toward a decision that could define the next 50 years or so of UNC basketball. 

The next iteration of the Smith Center — and UNC plans to keep Smith’s name on the arena and Williams’ name on the court — will be the place, Tar Heel fans hope, where memories are made, victories are celebrated and history is made.

“We have to continue to be patient,” Cunningham said. “I mean, as a department, we’ve been working on and off for the past 12 years, and now we’re getting a lot closer to the end, and everybody does want to rush to the end. As we’ve indicated, the basketball program is key to where we’re headed. Student participation is key to where we’re headed. Our donor base is key, our fan base. So we’re now exploring with them, how do we fulfill this charge of ensuring the future success of Carolina basketball? We’re gonna ask all of them to be patient as we work through with them on their priorities.”