It would be nice if the arena master teleported you back somewhere else. When my party returned to hommlet, my summoned fire elemental immediately killed the little kid standing there. I'm running a NG party with no cleric so even though I feel like I should resurrect the kid, I'm not sure that's an option. Also, for those discussing the difficulty of the undead fight: hide from undead (1st-level spell) works really well in that fight. Pre-buff hide from undead and then you can position everyone to avoid spells.