Move threat: Columbus

More evidence that arena subsidy ideas never die, they just go dormant: Five months after the Columbus Blue Jackets abandoned their plan to have the county to give them millions of dollars in lease concessions, the Columbus Chamber issued a report today warning that the team could move without a massive infusion of cash. And where would that cash come from? The report mentions selling more tickets, but most of the options involve public money:

  • Funneling state, city, or county money directly to the team, from alcohol and cigarette taxes, hotel/motel tax, car rental taxes, or a special Arena District tax.
  • Have Nationwide, owner of the team’s arena, cut their rent and/or give them a larger share of arena revenues.
  • If Nationwide isn’t amenable to that, have the public buy the arena, and then give the team lease concessions. Either city tax-exempt bonds could be used, or federal Build America Bonds, which were authorized as part of the economic stimulus package.

The report asserts that the Blue Jackets are losing more than $10 million a year, and blames it on the fact that the team has to pay rent and doesn’t get a cut of naming rights, seat licenses, or parking. Of course, the team also has never won a playoff game, which can’t be helping ticket sales. And it’s not like the team’s owners didn’t know what was in the lease when they signed it in 1997.

What’s happening here, says the National Post, is that the NHL’s revenue model is imploding, and its teams are looking to the public for a bailout:

OK, add them to the list. We’ve been saying all along that Phoenix was only the first franchise to implode, and that the structural flaws inherent in the new NHL — salary floor, little national TV money, too many non-traditional markets — could combine with the still-dormant U.S. economy to create a wave of similar failures.

And when you look at the attendance numbers creeping in from across the league, some of them are chilling, and not in hockey-rink-in-the-morning chilling.

Phoenix, of course, is beyond repair — its last two home games have featured reported paid attendance of 6,495 and 5,855. But others are hemorraghing, too. The New York Islanders, waiting forever for an arena, are averaging 11,909. Nashville: 13,398. Tampa Bay: 14,329. Florida: 14,397. Atlanta: 14,893. And remember, these are tickets sold, not patrons in attendance, and in many cases they include any number of cut-rate deals.

The Blue Jackets’ last attempt at getting subsidies crashed and burned, but it looks like the team and its backers are trying hard to move the debate in the direction of “It’s not whether we give them money, but how.” Columbus Mayor Michael Coleman told Business First of Columbus that “we will not use city tax dollars from our general operating fund that are dedicated for basic city services,” but that “the public and private sectors should explore options that keep them in Columbus.” This is common mayoral code, and means that any special taxes not dedicated to the general operating fund — in other words, like the sin and other taxes proposed by the Columbus Chamber — are very much on the table.

The NHL may or may not be headed for a wave of failures — and it’s debatable whether teams losing money when they’re lousy should be considered a “failure” — but it’s almost certainly heading for a new wave of eyeing taxpayers’ wallets.

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6 comments on “Move threat: Columbus

  1. Now wait. A week ago I read how the team and the Arena District is a huge money making success. (OK I just re-read it. It’s millions in tax revenue- slightly different.) Then two days ago Ohio voters approve casino legislation. Now today, “We can’t survive”.

    My bold prediction for tomorrow- Bettman says, “The club was never in jeopardy and any suggestion that it was is silly.”

    Opps too late,

  2. Yes, those NHL franchises are just money making machines…

    The scary thing for the league is that Columbus actually has decent attendance (albeit with ticket prices some way from ‘market’ rate).

    When Phx was going under the most frequent comment on the AZ blogs was “tell me when they are packing up, I’ll come down and help”.

    One suspects people in Columbus wouldn’t notice if the Jackets left either… but then, where would they go?

    The NHL has overexpanded badly. They should pay for that themselves, not with taxpayer dollars. If only 16 or 20 markets can truly support NHL clubs, then that’s how many teams there should be.

  3. The great thing about having the local Chamber of Commerce making your threats for you is nobody can demand that you provide specifics. Plausible deniability.

  4. John:

    The NHL not only overexpanded, they also expanded to large population bases in the Sun Belt, mistaking them for large hockey markets.

    The NHL can support close to the number of teams they have now — they just need to relocate them to hockey cities — Winnipeg, Hamilton, Quebec, Milwaukee — you know, places where they don’t need ice machines to play hockey.

    The only problem is: what will they do with all of these empty arenas once these franchises have moved on?

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