Live Nation says Markham arena can’t work without pro sports

At least one arena expert is skeptical about the plan to build a $325 million pro sports arena in the Toronto suburb of Markham without an actual pro sports team to play there:

Riley O’Connor, chair of Live Nation Canada, told the Star on Monday that the arena will need an NHL franchise, other pro hockey or basketball team, because concerts won’t be able to generate enough revenue for a successful business.

“You really need a major tenant to make that happen,” he said. “In almost all major Canadian arenas, that’s an NHL team, an AHL team, a major junior hockey team. You can’t do it on concerts alone.”

That’s significant in large part because Live Nation Canada is a “partner” on the Markham project, which apparently is Canadian for “consultant.” They’re also, of course, one of the largest concert promoters in North America, much beloved for their attentive care to providing a fan-friendly experience.

GTA Sports and Entertainment, which would help fund and then operate the city-built arena, insists that they can make a go of it with 133 events a year; Frank Russo of Global Spectrum, yet another arena manager consulting on the project, told the Toronto Star, “We certainly feel the arena can be viable with 130-plus nights of activity, including some form of hockey — whether it’s NHL or not remains to be seen.”

O’Connor counters that an arena would need more than 200 event days a year to break even, which would require a major sports tenant. Two hundred events a year, where have I heard that number before? Oh, right.

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4 comments on “Live Nation says Markham arena can’t work without pro sports

  1. You know, Neil, I tend to side with the consultant here (even if they are, more or less, just like ticketbastard).

    I have limited info on what arena operators might make from concerts, but what I do have suggests that a promoter is doing really well to net $100k out of a 2 or 3 night run by a major act (that would still play in indoor 18k arenas, of course). That is because the major acts name their cut, meaning the promoter is left to turn a profit on the scraps. From smaller acts, promoters can extract greater vig. But then, it is a larger share of a much smaller pie, in general.

    At that number, the arena would have to sell out with major shows 100+ times to generate $15m in net profit.

    I don’t see that paying the freight on a $325m building, let alone earning investors any kind of return. At 200 nights, it’s more doable… but still… can you draw people to a concert venue every other night, even in/outside a major centre like Toronto?

    The ACC is the busiest arena in Canada. I’m sure it’s busy (but likely not full) 200 nights a year. Just not sure the same will be true of an arena in Markham. I hope they can, but fear not…

  2. Live Nation *is* Ticketbastard. They merged a while back.

    From what I understand, the problem of concerts is twofold: There are fewer big acts as the music industry splinters, and there are more arenas capable of hosting them. So supply goes down, demand goes up, and suddenly the scraps get even smaller.

    That said, New York does seem to be able to support multiple arenas, so maybe Toronto can, too? Though if the ACC isn’t fully booked currently, maybe not…

  3. “That said, New York does seem to be able to support multiple arenas, so maybe Toronto can, too? Though if the ACC isn’t fully booked currently, maybe not…”

    Now when you throw the new arena in Brooklyn into the mix can New York still be able to support multiple arenas?

  4. It looks like it can probably support both MSG and the Brooklyn arena — but MSG has been booked to capacity pretty much forever. How the two Jersey arenas and the Nassau Coliseum will now fare is another story.

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