UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


                (Mark One)
               [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                                 THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 1998
                                       OR

            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                                       THE
                         SECURITIES EXCHANGE ACT OF 1934

       For the transition period from __________________ to ______________


                          Commission File Number 0-2380

                               SPORTS ARENAS, INC.
             (Exact name of registrant as specified in its charter)


                               Delaware 13-1944249
               (State of Incorporation) (I.R.S. Employer I.D. No.)


        5230 Carroll Canyon Road, Suite 310, San Diego, California 92121
               (Address of principal executive offices) (Zip Code)

        Registrant's telephone number, including area code (619) 587-1060




Indicate  by check  mark  whether  the  registrant:  (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports);  and (2) has been subject to such
filing requirements for the past 90 days. Yes: X No:__ 

The number of shares  outstanding  of the  issuer's  only class of common  stock
($.01 par value) as of April 30, 1998 was 27,250,000 shares.


<PAGE>


                               SPORTS ARENAS, INC.

                                    FORM 10-Q

                          QUARTER ENDED MARCH 31, 1998

                                      INDEX






Part I - Financial Information:


Item 1.- Consolidated Condensed Financial Statements:

      Balance Sheets as of March 31, 1998 and June 30, 1997 ............   1-2

      Statements of Operations for the Three Months Ended 
            March 31, 1998 and 1997 ....................................    3

      Statements of Operations for the Nine Months Ended 
            March 31, 1998 and 1997 ....................................    4

      Statements of Cash Flows for the Nine Months Ended
            March 31, 1998 and 1997 ....................................  5-6

      Notes to Financial Statements ....................................  7-10


Item 2.- Management's Discussion and Analysis of Financial Condition
            and Results of Operations .................................  11-14



Part II - Other Information ...........................................    15


Signature .............................................................    16



<PAGE>


                      SPORTS ARENAS, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>
                                                            March 31,    June 30,
                                                              1998         1997
                                                           ------------ -----------
                                                           (Unaudited)
<S>                                                        <C>          <C>    
Current assets:
   Cash and cash equivalents                                  $362,084    $821,513
   Current portion of notes receivable                          25,000      25,000
   Current portion of notes receivable-affiliate                50,000      50,000
   Construction contract receivables                                 -     384,732
   Other receivables                                           146,442      82,972
   Costs in excess of billings on uncompleted contracts              -      17,462
   Inventories                                                 142,392      89,118
   Prepaid expenses                                            171,249     138,583
                                                           ------------ -----------
      Total current assets                                     897,167   1,609,380
                                                           ------------ -----------

Receivables due after one year:
   Note receivable                                             672,645     728,838
   Less deferred gain                                         (672,645)   (716,025)
   Note receivable- Affiliate                                  549,893     539,306
   Note receivable- Other                                       18,835      35,477
                                                           ------------ -----------
                                                               568,728     587,596
   Less current portion                                        (75,000)    (75,000)
                                                           ------------ -----------
                                                               493,728     512,596
                                                           ------------ -----------
Property and equipment, at cost:
   Land                                                        678,000     678,000
   Buildings                                                 2,461,327   2,461,327
   Equipment and leasehold and tenant improvements           1,979,665   1,752,244
                                                           ------------ -----------
                                                             5,118,992   4,891,571
      Less accumulated depreciation and amortization        (1,551,471) (1,291,861)
                                                           ------------ -----------
       Net property and equipment                            3,567,521   3,599,710
                                                           ------------ -----------

Other assets:
   Undeveloped land, at cost                                 1,665,643   1,665,643
   Intangible assets, net                                      348,161     447,608
   Investments                                               1,783,608   2,012,119
   Other                                                        98,778      86,699
                                                           ------------ -----------
                                                             3,896,190   4,212,069
                                                           ------------ -----------

                                                            $8,854,606  $9,933,755
                                                           ============ ===========
</TABLE>




                                       1
<PAGE>




                      SPORTS ARENAS, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED BALANCE SHEETS (CONTINUED)

                LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)

<TABLE>
<CAPTION>
                                                            March 31,    June 30,
                                                              1998         1997
                                                           ------------ -----------
                                                           (Unaudited)
<S>                                                        <C>          <C> 
Current liabilities:
   Assessment district obligation-in default                $2,260,802  $2,097,982
   Current portion of long-term debt                           369,000     481,000
   Notes payable, short-term                                   400,000     250,000
   Accounts payable                                            629,094     738,185
   Accrued payroll and related expenses                         55,718     116,249
   Accrued property taxes                                      481,925     408,784
   Accrued interest                                             27,596      29,353
   Accrued frequent bowler program expense                      60,059      60,239
   Other liabilities                                           242,250     147,324
                                                           ------------ -----------
      Total current liabilities                              4,526,444   4,329,116
                                                           ------------ -----------

Long-term debt, excluding current portion                    3,830,709   4,061,987
                                                           ------------ -----------

Distributions received in excess of basis in investment     10,177,008  10,083,802
                                                           ------------ -----------

Tenant security deposits                                        24,062      27,847
                                                           ------------ -----------

Minority interest in consolidated subsidiary                 1,812,677   2,212,677
                                                           ------------ -----------

Commitments and contingencies (Note 4)

Shareholders' equity (deficiency):
   Common stock, $.01 par value, 50,000,000 shares
     authorized, 27,250,000 shares issued 
     and outstanding                                           272,500     272,500
   Additional paid-in capital                                1,730,049   1,730,049
   Accumulated deficit                                     (11,395,438)(10,813,818)
                                                           ------------ -----------
                                                            (9,392,889) (8,811,269)
   Less note receivable from shareholder                    (2,123,405) (1,970,405)
                                                           ------------ -----------
      Total shareholders' equity (deficiency)               (11,516,294)(10,781,674)
                                                           ------------ -----------

                                                            $8,854,606  $9,933,755
                                                           ============ ===========
</TABLE>




        See accompanying notes to consolidated condensed financial statements.


                                       2
<PAGE>




                     SPORTS ARENAS, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                  THREE MONTHS ENDED MARCH 31, 1998 AND 1997
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                            1998        1997
                                                            ----        ----
<S>                                                      <C>         <C> 
Revenues:
   Bowling                                                 $790,850  $  761,338
   Rental                                                   119,763     130,408
   Construction                                                 --          --
   Golf                                                      49,359      22,425
   Other                                                     49,176      32,786
   Other-related party                                       28,262      28,005
                                                         ----------- -----------
                                                          1,037,410     974,962
                                                         ----------- -----------
Costs and expenses:
   Bowling                                                  499,111     457,751
   Rental                                                    63,467      57,272
   Construction                                                 --          --
   Golf                                                     256,734      45,609
   Development                                               41,709      53,546
   Selling, general, and administrative                     769,932     424,691
   Depreciation and amortization                            134,245     160,940
                                                         ----------- -----------
                                                          1,765,198   1,199,809
                                                         ----------- -----------

Loss from operations                                       (727,788)   (224,847)
                                                         ----------- -----------

Other income (charges):
   Investment income:
     Related party                                           61,243      59,560
     Other                                                   39,687      43,862
   Interest expense related to development activities       (51,898)   ( 55,033)
   Interest expense and amortization of finance costs      (114,085)  ( 111,355)
   Equity in income of investees                          1,624,359      82,793
   Recognize deferred gain                                   43,380         --
   Gain on sale, other                                        9,175         --
   Loss on disposition of undeveloped land                      --     (468,268)
                                                         ----------- -----------
                                                          1,611,861    (448,441)
                                                         ----------- -----------

Income (loss) from continuing operations                    884,073    (673,288)

Loss from discontinued operations (Note 5b)                     --      (19,008)
                                                         ----------- -----------

Net income (loss )                                          884,073  $ (692,296)
                                                         =========== ===========

Per common share (based on weighted average 
 shares outstanding):
   Income (loss) from continuing operations                $0.03      ($0.02)
                                                           =====      =======
   Net income (loss)                                       $0.03      ($0.02)
                                                           =====      =======
</TABLE>



        See accompanying notes to consolidated condensed financial statements.


                                       3
<PAGE>




                     SPORTS ARENAS, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                   NINE MONTHS ENDED MARCH 31, 1998 AND 1997
                                  (Unaudited)

                                                            1998        1997
                                                            ----        ----
Revenues:
   Bowling                                               $2,106,492  $2,429,146
   Rental                                                   367,606     382,552
   Golf                                                     133,262      22,425
   Other                                                    100,760      94,618
   Other-related party                                       85,145      83,435
                                                         ----------- -----------
                                                          2,793,265   3,012,176
                                                         ----------- -----------
Costs and expenses:
   Bowling                                                1,497,405   1,715,359
   Rental                                                   184,830     176,235
   Golf                                                     514,752      45,609
   Development                                              115,407     121,005
   Selling, general, and administrative                   2,234,674   1,189,233
   Depreciation and amortization                            401,723     497,437
                                                         ----------- -----------
                                                          4,948,791   3,744,878
                                                         ----------- -----------

Loss from operations                                     (2,155,526)   (732,702)
                                                         ----------- -----------

Other income (charges):
   Investment income:
     Related party                                          185,046     173,410
     Other                                                   73,693     109,658
   Interest expense related to development activities      (162,820)   (192,345)
   Interest expense and amortization of finance costs      (355,457)   (357,557)
   Equity in income of investees                          1,802,859     210,240
   Gain on sale, other                                        9,175         --
   Recognized deferred gain                                  43,380         --
   Loss on disposition of undeveloped land                      --     (468,268)
   Gain on sale of bowling centers                              --    1,154,514
                                                         ----------- -----------
                                                          1,595,876     629,652
                                                         ----------- -----------

Loss from continuing operations                            (559,650)   (103,050)

Loss from discontinued operations (Note 5b)                 (21,970)    (30,285)
                                                         ----------- -----------

Net loss                                                 $ (581,620) $ (133,335)
                                                         =========== ===========

Per common share (based on weighted average 
  shares outstanding):
   Loss from continuing operations                        ($0.08)     ($0.00)
                                                          =======     =======
   Net loss                                               ($0.08)     ($0.00)
                                                          =======     =======







        See accompanying notes to consolidated condensed financial statements.


                                       4
<PAGE>




                     SPORTS ARENAS, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                   NINE MONTHS ENDED MARCH 31, 1998 AND 1997
                                  (Unaudited)

                                                            1998        1997
                                                            ----        ----
Cash flows from operating activities:
  Net loss                                                ($581,620)  ($133,335)
  Adjustments to reconcile net income (loss) to the
    net cash provided (used) by operating activities:
      Amortization of deferred financing costs and           17,595      22,879
discount
      Depreciation and amortization                         405,916     502,250
      Undistributed income of investees                  (1,802,859)   (210,240)
      Interest income accrued on note receivable from      
        shareholder                                        (153,000)   (141,114)
      Interest accrued on assessment district             
        obligations                                         162,820     154,925
      Recognized deferred gain                              (43,380)        --
      Gain on sale                                          (10,279)   (686,246)
    Changes in assets and liabilities:
      Decrease in receivables                                12,240     109,455
      Decrease in costs in excess of billings                39,445       9,075
      Increase in inventories                               (53,274)     (1,567)
      Increase in prepaid expenses                          (46,219)     (9,114)
      Increase in accounts payable                          151,355     145,239
      Decrease in accrued expenses                          133,885    (282,132)
      Other                                                   4,743      26,955
                                                         ----------- -----------
        Net cash used by operating activities            (1,762,632)   (492,970)
                                                         ----------- -----------

Cash flows from investing activities:
   Increase in notes receivable                              62,248      80,233
   Other capital expenditures                              (280,956)   (243,121)
   Acquisition of Penley Sports                                 --     (172,071)
   Proceeds from sale of bowling centers                        --    2,052,185
   Proceeds from sale of Ocean West Builders                 30,207         --
   Proceeds from sale of other assets                        26,950      10,000
   Contributions to investees                                   --      (30,000)
   Distributions from investees                           2,084,511     512,990
   Payments to holder of minority interest                 (400,000)        --
                                                         ----------- -----------
        Net cash provided by investing activities         1,522,960   2,210,216
                                                         ----------- -----------

Cash flows from financing activities:
   Scheduled principal payments                            (369,757)   (871,489)
   Proceeds from short term debt                            400,000         --
   Payments on short-term debt                             (250,000)        --
   Other                                                        --       (8,270)
                                                         ----------- -----------
        Net cash used by financing activities              (219,757)   (879,759)
                                                         ----------- -----------

Net increase (decrease) in cash and equivalents            (459,429)    837,487
Cash and cash equivalents, beginning of year                821,513   1,093,465
                                                         ----------- -----------
Cash and cash equivalents, end of year                     $362,084  $1,930,952
                                                         =========== ===========




                                       5
<PAGE>




                     SPORTS ARENAS, INC. AND SUBSIDIARIES
          CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Continued)
                   NINE MONTHS ENDED MARCH 31, 1998 AND 1997
                                  (Unaudited)

SUPPLEMENTAL CASH FLOW INFORMATION:
   Supplemental Schedule of Non-Cash Investing and Financing Activities:

Long-term debt of $45,486  was  incurred  to  finance  capital  expenditures  of
     $79,572 in 1997.

The sale of the stock of Ocean  West  Builders  on  January  1, 1998 for $67,678
   resulted in the following decreases in assets and liabilities:  Cash-$37,471,
   contract   and   other   receivables-$309,022,    prepaid   expenses-$13,553,
   equipment-$44,041,       accumulated      depreciation-$6,687,       accounts
   payable-$260,446,   accrued   expenses-$28,236,   billings   in   excess   of
   costs-$21,983, and notes payable-$19,007.

The sale of other  assets  for  $26,950  resulted  in  decreases  of  $54,980 in
   equipment and $38,309 in accumulated depreciation.


































        See accompanying notes to consolidated condensed financial statements.



                                       6
<PAGE>



                      SPORTS ARENAS, INC. AND SUBSIDIARIES
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31 1998 AND 1997
                                   (Unaudited)


                      SPORTS ARENAS, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                            MARCH 31, 1998 AND 1997
                                   (Unaudited)


1.    The  information  furnished  reflects  all  adjustments  which  management
      believes are  necessary to a fair  statement  of the  Company's  financial
      position,  results of operations  and changes in cash flow for the interim
      periods.

2.    Due to the seasonal fluctuations of the bowling operations,  the financial
      results for the  interim  periods  ended March 31, 1998 and 1997,  are not
      necessarily indicative of operations for the entire year.

3. Investments:

   (a) Investments consist of the following:
                                                     March 31,        June 30,
                                                       1998             1997
                                                    ------------    -----------
      Accounted for on the equity method:
        Investment in UCV, L.P.                     $(10,177,008)  $(10,083,802)
        Vail Ranch Limited Partnership                 1,745,682      1,974,193
                                                     ------------   ------------
                                                      (8,431,326)    (8,109,609)
        Less Investment in UCV, L.P. classified
         as liability-Distributions received in 
         excess of basis in investment                10,177,008     10,083,802
                                                     ------------   ------------
                                                       1,745,682      1,974,193
                                                     ------------   ------------

      Accounted for on the cost basis:
        All Seasons Inns, La Paz                          37,926         37,926
                                                     ------------   ------------

           Total investments                         $ 1,783,608   $  2,012,119
                                                     ============   ============

     The  following  is a  summary  of  the  equity  in  income  (loss)  of  the
     investments accounted for by the equity method:
                                               1998            1997  
                                            ----------      ----------
        UCV, L.P.                          $    258,859      $ 210,240
        Vail Ranch Limited Partnership        1,544,000            --   
                                            -----------    -----------
                                            $ 1,802,859      $ 210,240
                                            ===========    ===========

     The following is a summary of distributions received from investees:
                                                1998           1997 
                                                ----           ---- 
        UCV, L.P.                           $   312,000      $ 393,500
        All Seasons Inns                            --          12,106
        Vail Ranch Limited Partnership        1,772,511        107,384
                                            -----------       --------
                                            $ 2,084,511      $ 512,990
                                            ===========       ========

   (b) Investment in UCV, L.P.

     The operating  results of this investment are included in the  accompanying
     consolidated  statements of operations based upon the partnership's  fiscal
     year  (March  31).  Summarized   information  from  UCV,  L.P.'s  unaudited
     statements of income for the nine-month periods ended December 31, 1997 and
     1996 are as follows:


                                                     1997         1996   
                                                   ---------     ---------
        Revenues                                  $3,368,000    $3,250,000
        Operating and general and                  
              administrative costs                 1,122,000     1,100,000
        Depreciation                                 143,000       146,000
        Interest expense                           1,584,000     1,584,000
        Net income                                   519,000       420,000



                                       7
<PAGE>



   (b) Investment in UCV, L.P. (continued):

     On May 4, 1998, UCV paid off its existing $19,833,500 note payable with the
     proceeds of a new loan of $25,000,000.  The new loan is for a term of three
     years and is payable in monthly payments of interest only for the first two
     years and then in monthly  payments of interest  and  principal  based on a
     25-year amortization schedule and the then adjusted interest rate. Interest
     is adjusted monthly and based on Libor plus 200 basis points (approximately
     7.64%  as of May 12,  1998).  The  loan  also  provides  for  two  12-month
     extensions upon meeting certain operating criteria.  UCV used the remaining
     $4,500,000 of proceeds after deducting approximately $500,000 of loan costs
     to fund distributions of $2,000,000 to each of the two limited partners.

   (c) Investment in Vail Ranch Limited Partners:

     On January 1, 1998,  Vail Ranch Limited  Partners (VRLP) sold the developed
     portion of the  development  for  $9,500,000  to Excel Realty  Trust,  Inc.
     (Excel), resulting in a gain of approximately $3,300,000. In addition, VRLP
     entered into a joint venture  agreement with Excel to develop the remaining
     13 acres for which VRLP will receive a $1,000,000 distribution from the new
     joint  venture upon  execution  of the joint  venture  agreement,  which is
     expected  in May 1998.  VRLP is in the  process  of  determining  the total
     distributions  to be made  from the sale  proceeds,  however,  the  Company
     received  partial  distributions  of  $1,772,511.  VRLP  estimates that the
     Company  will  receive an  additional  $600,000  in May 1998 when the final
     distributions  from the sales proceeds are calculated and the joint venture
     agreement with Excel is consummated.

     Pursuant  to the  agreement  with the  former  limited  partner in Old Vail
     Partners,  the Company paid $400,000 to the former  partner as his share of
     the amounts received from VRLP after deducting  amounts due the Company for
     advances.

4. Contingencies:

   (a) Old Vail Partners  (OVP), a consolidated  subsidiary and 50 percent owned
     by the Company,  owns  approximately  33 acres of undeveloped land that are
     located  within a special  assessment  district of the County of Riverside,
     California  (the  County)  which was created to fund and develop  roadways,
     sewers,  and  other  required  infrastructure   improvements  in  the  area
     necessary for the owners to develop their  properties.  Property within the
     assessment  district is collateral  for an allocated  portion of the bonded
     debt that was issued by the assessment  district to fund the  improvements.
     The annual  payments (made in semiannual  installments)  due related to the
     bonded  debt are  approximately  $144,000  for the 33 acres.  The  payments
     continue through the year 2014 and include interest at approximately  7-3/4
     percent. OVP is delinquent in the payment of property taxes and assessments
     for the last five  years.  The  property  is  currently  subject to default
     judgments to the County of  Riverside,  California  totaling  approximately
     $1,520,538 regarding delinquent  assessment district payments  ($1,076,440)
     and property taxes ($464,587).

     The principal balance of the allocated  portion of the assessment  district
     bonds  ($1,184,362 at March 31, 1998 and $1,208,224 at June 30, 1997),  and
     delinquent principal,  interest and penalties ($1,076,440 at March 31, 1998
     and  $889,758 at June 30,  1997) are  classified  as  "Assessment  district
     obligation- in default" in the  consolidated  balance  sheet.  In addition,
     accrued  property taxes in the balance sheet include  $464,587 at March 31,
     1998 and $399,140 at June 30, 1997 of  delinquent  property  taxes and late
     fees related to the 33-acre parcel.




                                       8
<PAGE>



   (a) (continued):

     In November 1993, the City of Temecula  adopted a general  development plan
     that  designated  the property  owned by OVP as suitable for  "professional
     office" use, which is contrary to its zoning as  "commercial"  use. As part
     of the  adoption  of its  general  development  plan,  the City of Temecula
     adopted a  provision  that,  until  the  zoning is  changed  on  properties
     affected by the general  plan,  the general  plan shall  prevail when a use
     designated by the general plan  conflicts  with the existing  zoning on the
     property.  The  result  is  that  the  City  of  Temecula  has  effectively
     down-zoned OVP's property from a "commercial" to "professional office" use.
     The property is subject to Assessment District liens that were allocated in
     1989 based on a higher  "commercial"  use.  Since the  Assessment  District
     liens  are not  subject  to  reapportionment  as a result of  re-zoning,  a
     "professional   office"  use  is  not  economically  feasible  due  to  the
     disproportionately  high allocation of Assessment  District costs.  OVP has
     filed suit against the City of Temecula  claiming that the City's  adoption
     of a general  plan as a means of  effectively  re-zoning  the  property  is
     invalid.  Additionally, OVP is claiming that, if the effective re-zoning is
     valid,  the  action is a taking  and  damaging  of OVP's  property  without
     payment  of  just  compensation.  OVP is  seeking  to  have  the  effective
     re-zoning  invalidated and an unspecified amount of damages. The outcome of
     this litigation is uncertain.  If the City of Temecula is successful in its
     attempt  to  down-zone  the  property,  the  value of the  property  may be
     significantly impaired.

   (b) The Company is involved in other various routine  litigation and disputes
     incident to its business. In the management's opinion, based in part on the
     advice of legal counsel, none of these matters will have a material adverse
     affect on the Company's financial position.

5. Significant Events:

   (a) Short  term  debt:  The  Company's  $300,000  line of  credit  expired on
      November  1, 1997 and was not  renewed.  In  November  1997,  the  Company
      entered into a short-term loan agreement with Loma Palisades, Ltd. (Loma),
      an affiliate of the Company's  partner in UCV, whereby Loma would lend the
      Company up to $800,000.  The loan bears  interest at "Wall  Street"  prime
      rate plus 1 percent on the amounts  drawn.  Interest is payable  monthly ,
      the  principal  is due  within 30 days of demand  and the  agreement  will
      expire upon  consummation  of new financing for UCV. As of March 31, 1998,
      the Company had borrowed $450,000 of which $300,000 was repaid.

      The  balance  was  paid in May  1998 and the  loan  agreement  expired  in
      conjunction  with the closing of the new  financing  for UCV  described in
      Note 3b.



                                       9
<PAGE>




   (b)Effective  January 1, 1998, the Company sold its wholly owned  subsidiary,
      Ocean West Builders,  Inc. (OWB), to Michael Assof,  OWB's president,  for
      67,676 cash. The sale price is subject to adjustment  based on the profits
      realized on jobs in progress at December  31,  1997.  The  following  is a
      summary of the  results of OWB's  operations  for the three and nine month
      periods ended March 31, 1998 and 1997, which are presented as discontinued
      operations.  Prior  periods have been restated to include this business as
      discontinued operations:

                                          Three Months        Nine Months
                                          ------------      ----------------
                                         1998     1997       1998       1997
                                         ----   ------     --------   --------
   Revenues                               --     240,212  $1,361,485 $2,000,916
   Construction costs                     --     205,858   1,211,739  1,765,683
   Selling general & administrative:
      Direct                              --      23,404     123,647    168,515
      Allocated                           --      28,000      44,000     91,000
   Depreciation                           --       1,585       4,193      4,813
   Interest                               --         373         980      1,190
   Gain on sale of asset                  --         --        1,104        --
   Income  (loss)  from  discontinued      
      operations                          --     (19,008)    (21,970)   (30,285)

     The following is a summary of the assets and liabilities of OWB included in
     the consolidated financial statements at June 30, 1997:

          Cash                            84,995
          Accounts receivable            399,460
          Costs in excess of billings     17,462
          Prepaid expense                 14,277
          Equipment                       35,117
            Accumulated depreciation     (17,348)
          Accounts payable               325,675
          Accrued expenses                40,162
          Note payable                    11,052
          Advances from parent           134,829
          Accumulated deficit             22,245

     The Company  will  continue to provide  administrative  services to OWB and
     receive a fee based on an allocation of its corporate overhead.




                                       10
<PAGE>




ITEM 2.  MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND 
          RESULTS OF OPERATIONS:

                         Liquidity and Capital Resources

Excluding  the  balance  of  the  assessment-district-obligation-in-default  and
property  taxes in default  related to the same  property  which are included in
current  liabilities,  the Company has a working  capital deficit of $903,888 at
March 31,  1998,  which is a $681,274  increase  from the  similarly  calculated
working  capital  deficit of  $222,614  at June 30,  1997.  The  increase in the
working capital deficit is attributable to the cash used by operating activities
for the nine months  ended March 31,  1998.  The  following is a schedule of the
cash provided  (used) before  changes in assets and  liabilities,  segregated by
business segments:

                                            1998         1997        Change
                                          ---------   ----------   ----------
       Bowling                          $ (177,000)  $ (206,000)  $   29,000
       Rental                              120,000      130,000      (10,000)
       Construction                        (19,000)     (25,000)       6,000
       Golf                             (1,625,000)    (128,000)  (1,497,000)
       Development                        (121,000)    (164,000)      43,000
       General corporate expense and      
         other                            (183,000)     (98,000)     (85,000)
                                        -----------   ----------   ----------
       Cash provided (used) by          
         operations                     (2,005,000)    (491,000)  (1,514,000)
       Capital expenditures, net of       
         financing                        (281,000)    (243,000)     (38,000)
       Principal payments on long-term    
         debt                             (370,000)    (871,000)     501,000
                                        -----------   ----------   ----------
       Cash used                        (2,656,000)   (1,605,000) (1,051,000)
                                        -----------   ----------   ----------

       Distributions received from       
         investees                       1,685,000      513,000     1,172,000
       Proceeds from sale of assets         30,000    2,052,000    (2,022,000)

As  described  in  Note 4 of  the  Notes  to  Consolidated  Condensed  Financial
Statements, Old Vail Partners is delinquent in the payment of special assessment
district  obligations  and property taxes on 33 acres of  undeveloped  land. The
County of  Riverside  has  obtained  judgments  for the  defaults in  assessment
district payments and property taxes. The amount due to cure the judgments as of
March 31, 1998 is $1,520,000.  If the County of Riverside  takes the property to
public sale and the  judgments  are not  satisfied  prior to the sale,  Old Vail
Partners  could lose title to the property and the property would not be subject
to  redemption.  Also  as  described  in  Note 4 of the  Notes  to  Consolidated
Condensed  Financial  Statements,  Old Vail Partners is contesting an attempt by
the City of Temecula to effectively  down-zone the property.  As a result of the
judgments and the attempts to down-zone the property,  the recoverability of the
carrying value of this property is uncertain.

UCV, L.P. (UCV) is currently  evaluating the  feasibility  of  redeveloping  the
apartment  project from 542 units to  approximately  1,100 units. In conjunction
with the planning for possible  redevelopment and the September 1998 maturity of
UCV's  long-term  debt, on May 4, 1998, UCV paid the existing  $19,833,500  note
payable with a portion of the proceeds from new long-term  debt of  $25,000,000.
After  paying the note  payable  and loan  costs,  the net  proceeds to UCV were
approximately $4,500,000.  UCV made distributions of approximately $4,000,000 to
its partners of which the Company received $2,000,000.

On January 1,  1998,  Vail Ranch  Limited  Partners  (VRLP)  sold the  developed
portion of the development for $9,500,000 to Excel Realty Trust,  Inc.  (Excel).
In addition,  VRLP entered into a joint venture  agreement with Excel to develop
the  remaining 13 acres for which VRLP will  receive a  $1,000,000  distribution
from the new joint venture upon execution of the joint venture agreement,  which
is  expected  in May  1998.  VRLP is in the  process  of  determining  the total
distributions to be made from the sale proceeds, however, the Company received a
partial distributions of $1,772,511.  The Company estimates that it will receive
an additional $600,000 from the sales proceeds in May 1998 when the calculations
are  finalized.  In  accordance  with  the  partnership  agreement  for Old Vail
Partners  (OVP),  the Company paid $400,000 to OVP's limited partner in February
1998. The limited partner will be entitled up to an additional $120,000 when the
Company receives the remainder of the distribution from VRLP.



                                       11
<PAGE>

Management  estimates  positive cash flow of  $1,000,000  to $1,100,000  for the
remaining  quarter of the year ending June 30,  1998 from  operating  activities
after  adding  estimated  distributions  from UCV  ($2,172,000)  and Vail  Ranch
Limited  Partners  ($600,000  net of  distribution  to OVP limited  partner) and
deducting  capital  expenditures and scheduled  principal  payments on long-term
debt and short-term debt. The debt payments include extinguishment of short-term
debt of  $400,000  and a special  principal  payment of  $400,000  on one of the
long-term notes payable as part of a proposed plan to extend the maturity date.


                              Results of Operations

The following is a summary of the comparison of the results of operations of the
nine and three-month periods ended March 31, 1998 to the same period in 1997:

<TABLE>
<CAPTION>
                                            Real        Real                
                                           Estate      Estate                   Unallocated
                               Bowling    Operation   Development     Golf      And Other      Totals
                               -------    --------    ----------      ----      ---------      ------
<S>                          <C>          <C>         <C>          <C>          <C>          <C>
Nine Months Ended
-----------------
Revenues .................   $ (322,654)  $(11,592)         --     $  110,837      4,498      (218,911)
Costs ....................     (217,954)     8,595        (5,598)     469,143        --        254,186
SG&A-direct ..............      (30,378)      --            --      1,018,803     10,016       998,441
SG&A-allocated ...........      (82,854)    (9,000)         --         97,000     41,854        47,000
Depreciation and 
  amortization   .........     (168,459)     3,704          --         58,592     10,449       (95,714)
Interest expense .........      (25,852)      (993)      (29,633)      23,009      1,844       (31,625)
Equity in investees ......         --       48,619     1,544,000          --         --      1,592,619
Gain (loss) on disposition   (1,154,514)      --         468,268        1,225     51,330      (633,691)
Segment profit (loss) ....     (951,671)    34,721     2,047,499   (1,554,485)    (8,335)     (432,271)
Investment income ........                                                                     (24,329)
Income from discontinued                                                                    
  operations .............                                                                       8,315
Net loss .................                                                                    (448,285)

Three Months Ended
------------------
Revenues .................       29,512    (10,069)          --        26,934   $ 16,071        62,448
Costs ....................       41,360      6,195       (11,837)     211,125        --        246,843
SG&A-direct ..............        1,661        --            --       288,799     26,781       317,241
SG&A-allocated ...........      (41,727)    (4,000)          --        36,000     37,727        28,000
Depreciation and                
  amortization ...........      (50,602)    (1,059)          --        21,271      3,695       (26,695)
Interest expense .........       (4,864)      (339)       (3,191)       7,108        881          (405)
Equity in investees ......          -       (2,434)    1,544,000          --         --      1,541,566
Gain (loss) on disposition          -          --        468,268        1,225     51,330       520,823
Segment profit (loss).....       83,684    (13,300)    2,027,296     (536,144)    (1,683)    1,559,853
Investment income ........                                                                      (2,492)
Income from discontinued                                                                        
  operations .............                                                                      19,008
Net income ...............                                                                   1,576,369
</TABLE>

BOWLING OPERATIONS:
-------------------

On August 7, 1996, the Company sold its three bowling centers located in Georgia
and then on December 15, 1996, the Company sold the video game  operations  that
were located in the two San Diego bowling  centers.  The Company has no plans to
sell the two remaining bowling centers located in San Diego.



                                       12
<PAGE>




The  following  is a summary of the changes to the  components  of the loss from
operations of the bowling segment during the nine and three-month  periods ended
March 31, 1998 compared to 1997:

                                     Georgia     Video   California
                                      Bowls      Games     Bowls    Combined
                                     -------     ------   -------    --------
        Nine Months:
        ------------
        Revenues                    (333,039)   (25,603)   35,988   (322,654)
        Bowl costs                  (254,846)   (18,138)   55,030   (217,954)
        Selling, general &
         administrative:
          Direct                    (104,483)       --     74,105    (30,378)
          Allocated                  (39,889)       --    (42,965)   (82,854)
        Depreciation                 (18,488)       --   (149,971)  (168,459)
        Interest expense             (20,301)    (3,514)   (2,037)   (25,852)
        Segment profit before        
          gain on sale               104,968     (3,951)  101,826    202,843 

        Three Months:
        -------------
        Revenues                        (252)       --     29,764     29,512
        Bowl costs                       --      (1,151)   42,511     41,360
        Selling, general &
         administrative:
          Direct                     (17,803)       --     19,464      1,661
          Allocated                      --         --    (41,727)   (41,727)
        Depreciation                     --         --    (50,602)   (50,602)
        Interest expense                 --      (1,159)   (3,705)    (4,864)
        Segment profit before         
          gain on sale                17,551      2,310    63,823     83,684

The following is a comparison of operations of the two remaining bowling centers
in California:

Bowling revenues increased 2% in the nine-month period and 4% in the three month
period. In each period the bowling centers  experienced a 3-4% decline in league
revenues, however these decreases were offset in each period by 10-14% increases
in open play revenues.  Management feels this will be a continuing trend through
the remainder of the year.

Bowl  costs  increased  by 4%  and 5% in  the  nine  and  three  month  periods,
respectively.  Increases in payroll and related  costs of $22,000 and $24,000 in
the nine and three month periods,  respectively,  were primarily attributable to
the increase in the minimum wage. The remainder of the increases in the nine and
three  month  periods  were  primarily  attributable  to  increases  in food and
beverage costs associated with the increase in snack bar revenues.

Selling,  general and  administrative  expense  directly  related to the bowling
segment   increased  by  19%  and  7%  in  the  nine  and  three  month  periods
respectively. A portion of the increase in the nine month period is attributable
to a $38,000 increase in promotion of which $17,000 related to a credit recorded
in first  quarter of 1996 when the  Company  discontinued  its  frequent  bowler
program.  The remaining $21,000 increase related to increases in other promotion
costs related to food and beverage comps and other  promotional costs related to
special  programs.  The  increase  in  the  three  month  period  was  primarily
attributable to a one time charge of $10,000 for payroll related expenses.

Depreciation  expense  decreased  by $50,602 and  $149,971 in the three and nine
month  periods,  respectively,  due to equipment and goodwill  acquired in 1983,
when the bowls were  purchased,  becoming  fully  depreciated  after the similar
periods in 1997.

RENTAL OPERATIONS:
------------------

There were no significant changes to the components of the rental segment in the
nine and  three-month  periods  ended  March 31,  1998  except  for the  $48,619
increase in the equity in income of UCV for the nine month period. The income of
UCV increased primarily due to a $118,000 increase in revenues in the nine month
period,  which was attributable to a 2% increase in rent rates and a decrease in
the vacancy rate from 1.9% to 1.1%.



                                       13
<PAGE>




CONSTRUCTION OPERATIONS:
------------------------

Effective  January 1, 1998,  the Company sold the stock of Ocean West  Builders,
Inc. to its President, Michael Assof for $67,676 cash.

REAL ESTATE DEVELOPMENT OPERATIONS:
-----------------------------------

Development  costs and expenses  primarily  consists of legal costs  incurred to
contest the City of Temecula's  attempts to down-zone the undeveloped land owned
by Old  Vail  Partners.  Interest  expense  related  to  development  activities
primarily  relates to interest  accrued on the past due and  current  assessment
district  obligations of Old Vail Partners.  This interest expense  decreased by
$29,633 and 3,191 in the nine and three-month periods,  respectively, due to the
payment of a $340,000 note payable in April 1997. As described in Note 5c to the
consolidated condensed financial statements,  Vail Ranch Limited Partners (VRLP)
sold the developed portion of the shopping center in January 1998 which resulted
in a gain of  approximately  $3,300,000.  This resulted in an increase in income
from investees of $1,544,000.

GOLF OPERATIONS:
----------------

Sales during the nine and three-month  periods ended March 31, 1998 continued to
be insignificant  because the Company has not yet developed sales with golf club
manufacturers or distributors. The Company expects that it will be another three
to six months  before the  Company is able to develop  sales with these types of
customers.  Sales during the nine and  three-month  periods were  principally to
custom golf shops.  The  following is a breakdown of the  character of the costs
associated with the golf operation:

                                                 Nine Months  Three Months
          Costs  of goods  sold 
            & manufacturing overhead                325,000      174,000
          Research & development                    190,000       84,000
                                                  ---------    ---------
               Total golf costs                     515,000      258,000
                                                  ---------    ---------
          Marketing & promotion                     750,000      245,000
          Administrative-direct                     374,000      149,000
                                                  ---------    ---------
               Total SG&A-direct                  1,124,000      394,000
                                                  ---------    ---------
          Allocated corporate costs                  97,000      36,000
                                                  ---------    ---------




                                       14
<PAGE>




                                     PART II
                                OTHER INFORMATION
                                -----------------



ITEM 1. Legal Proceedings

        As of March 31, 1998,  there were no changes in legal  proceedings  from
        those set forth in Item 3 of the Form 10-K filed for the year ended June
        30, 1997.


ITEM 2. Changes in Securities

          NONE


ITEM 3. Defaults upon Senior Securities

          N/A


ITEM 4. Submission of Matters to a Vote of Security Holder

        On December 23, 1997 the Company held its annual shareholder  meeting in
        which the following item was voted upon:
                                                       Tabulation of Votes 
                                                   ---------------------------
                                                  For        Against     Abstain
                                                  ---        -------     -------
       Election of Directors:
          Harold S. Elkan                      22,932,896    105,399     105,054
          Steven R. Whitman                    22,932,296    105,699     105,354
          Patrick D. Reiley                    22,932,496    105,574     105,279
          James E. Crowley                     22,932,496    105,599     105,254
          Robert A. MacNamara                  22,932,496    105,574     105,279


ITEM 5. Other Information

          NONE


ITEM 6. Exhibits & Reports on Form 8-K

     (a) Exhibits: NONE

     (b) Reports on Form 8-K:  NONE





                                       15
<PAGE>



                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.




     SPORTS ARENAS, INC.



     By:  /s/ Harold S. Elkan
     ------------------------
                 Harold S. Elkan, President and Director


     Date:   May 15, 1998
     --------------------




     By:/s/ Steven R. Whitman
     ------------------------
           Steven R. Whitman, Treasurer,
           Principal Accounting Officer and Director



     Date: May 15, 1998
     ------------------





                                       16
<PAGE>