Proposed manager of Markham arena with no sports team says arenas can’t survive without sports teams

Oh, this is embarrassing:

A key partner in the proposed $325-million arena in Markham, which doesn’t have a main tenant, has downplayed a remark by the company’s chairman who indicated big sports and entertainment centres need major pro teams to ensure financial success.

That’s right, sports fans: Comcast-Spectacor (aka Global Spectrum) chair Peter Luukko told the Associated Press regarding the Phoenix Coyotes arena, which his company will operate under the terms of the team’s new owners’ new lease with Glendale, that “for any arena or stadium in a major market to be successful, it needs to have a major league sports team.” That’s the same Comcast-Spectacor that wants to manage the proposed Markham arena that was approved in January despite having no major-league sports tenant. It’s shouldn’t be an exactly surprising or controversial statement, given that Comcast-Spectacor’s competitors Live Nation had previously said that a Markham arena couldn’t work without the guarantee of a major pro sports team. But it is embarrassing, especially since, as Markham deputy mayor Jack Heath put it, “You can’t be selling one message in Phoenix and another one in Markham.” Oh, can’t you now? Clearly, Mr. Heath, you don’t know anything about the arena game.


28 comments on “Proposed manager of Markham arena with no sports team says arenas can’t survive without sports teams

  1. The Toronto/Markham market is much much bigger than the Phoenix/Glendale market. With that said, the comments made by Peter Luukko regarding the Glendale arena does NOTapply to the Markham arena. Toronto/GTA is one of the most underserviced markets for arenas. You are crazy if you are trying to say that the two markets are the same. Deputy Mayer Jack Heath is wrong, every market in North America is different and therefore different messages can be given based on the circumstances.

  2. Yes, every snowflake is unique and there’s absolute nothing one can observe and use statistical correlation to help derive a general rule. Otherwise, people like Zimbalist would be able to just write a paper/formula and abandon their careers of being a sports economist who seems to say what the hand that pays him generally requires.

  3. Interesting comments. In Edmonton, I believe the Katz group was claiming that they required the concert business to make the arena successful (they wanted the group managing the old arena to have to sign a no compete agreement)… As long as public money is involved, claims will be made to extract as much money as possible.

  4. My sense is that concerts are preferable to sports in most cases, since concerts at least pay rent whereas sports teams increasingly don’t want to. (Which is one reason why the Sprint Center in Kansas City is in no hurry to land a sports team.) But in general, the main challenge for most arenas is filling dates – unless you’re the only game in town (K.C.) or you’re sited in a humongous town (Brooklyn), it’s very hard to fill the 200 dates a year you need to turn a profit.

    More here:

    http://www.slate.com/articles/sports/sports_nut/2012/08/seattle_sonics_arena_is_chris_hansen_s_promise_of_a_no_strings_attached_sports_facility_too_good_to_be_true_.html

  5. Neil – I agree which is why I think the no compete issue first arose in Edmonton. Northlands has a mature concert business and fewer hockey dates would open up space for more concerts; concerts that the ‘owner’ of the new venue would like to profit from. It will be interesting to see how the two venues coexist. Ridiculous that a city with ~1million people will own 2 huge arenas.

    The inevitable cost overruns will be ‘icing on the cake’.

  6. Anyone know whether patrons of concerts spend more or less in the surrounding area than those of sports? If an arena is being TIF-funded that would be a factor, at least as far as the is-it-worth-it-from-the-city’s-perspective question is concerned.

  7. According to the near-Seattle ShoWare Center (minor league hockey, with relatively inexpensive tickets and free parking) the sports patrons dine out more than concert patrons. They say there’s some shopping by concert patrons, but neglected to ask the sports patrons (is not being in the survey “ND” or “too low to be considered”).

    http://kentwa.gov/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=22261&libID=21809

  8. Hrm, the ShoWare data is interesting and agrees with Neilk, that the sports tenant isn’t all that profitable. Concerts were only about 10% of the attendance but 26% of the total income. Minor League Hockey was 50% of the attendance but only 41% of the income.

  9. North Little Rock, AR has an 18,000 seat arena. No sports teams. The ones they had were a freaking joke. But, nobody is calling for them to tear the stupid thing down. $.

  10. Chris, having travelled extensively, throughout North America (what a cool guy I am), let’s not get too carried away here. Houston is bigger than Toronto. I’ve been to both. Houston leaves much more of an impression in terms of human development. Toronto would be my choice of the two to have a weekend getaway, but New York it ain’t.

  11. The sports/concert question is also one that depends on market. Typically concert goers do spend more (because seeing 65yr old rockers is considered a “once in a lifetime” event?) as the events are more akin to one offs… whereas you can always buy that Keith Tkachuk retro Yotes jersey another day…

    Having said that, if you are attracting A list bands/performers, the share of revenue you are left with after all the fees and trailers are paid is significantly lower than you might hope. I recall former Columbus GM Doug MacLean saying that after a Rolling Stones concert at the arena (which the Jackets control, despite not paying for it, not paying to play in it and, these days, being paid to play in it) that he might have cleared $100k.

    Now, you no doubt do quite a bit better when it’s a lesser act… but then, the gross is much lower also.

    I’m not sold on the Markham project myself, but I do tend to agree with those above that a second “major” concert venue in the GTA will do just fine. Let’s not forget that the last time an MLSe rival planned an arena in the GTA (the Raptors), they ended up getting bought out by MLSe just to avoid all that messy competition. And this was after MLSe had claimed publicly that the present site of the ACC was “wrong” and that there was “no business case for an arena there”.

    yeah. The Leafs and Raptors seem to be doing just fine in the busiest venue in the country…

  12. Mike:

    If you just count “city” population, that might be true. Then again, if that’s what you’re doing, Miami is about the 45th largest market (well behind Jacksonville!) in the US and not the 10th… so clearly the NBA champs need to think about relocating upstate.

    That’s why people don’t count just “city” residents… they count CDP/CMA populations.

    There are around 8m people in the GTA/Golden Horseshoe. Even if you don’t count the “outlier” communities (Hamilton, K-W etc) and focus just on Toronto itself, it’s still in with Dallas-FW, Phila, & Houston for the 5th largest media market in North America.

    en.wikipedia.org/wiki/List_of_North_American_metropolitan_areas_by_population

  13. Should be pointed out that Comcast Spectrum manages Budweiser Gardens in London, Copps in Hamilton, and the GM Centre in Oshawa. Bet the latter two are thrilled to have their booking company pushing for an option that will probably take dates away from their arenas.

    John:

    MLSE mocking the location of the Air Canada Centre in the 1990s is uproarious for anyone who’s ever been in Toronto longer than a few days. Thanks for reminding me.

    If I had millions to throw around and build a rink, I’d go for Downsview.

  14. I look at metropolitan areas. I know how T.O. people attempt to inflate their numbers, by adding places like Hamilton. It’s pointless to argue facts. I also look at human development. Height and number of highrise buildings, ect. By any measure, Houston wins.

  15. I’m not downing on T.O. at all. I just to say that, because it’s a great city. It’s close. Houston is the best comparison, I think on paper. Toronto is a top five city in every way. Houston is like the U.S. version of Calgary. It’s a skyscraper city. Toronto is way better in every other way, and damn close/equal in towers. That’s all I was saying.

  16. ‘Toronto would be my choice of the two to have a weekend getaway, but New York it ain’t.’

    Don’t tell them that …..:o…..and I live here.

  17. I know, Jon. I was simply trying to compare the city to a true peer. Which, Houston clearly is. Compare T.O. to Chicago, or more absurdly New York City, if you wish. It doesn’t make it real. In spite of what people say (and I make a good living in geopolitics) about the EU, China, etc. The fact is the EU is useless, they were useless in Seriba and today. China is a third-world country, of 1.3b people. 1.1b of the people live a Lagos-type lifestyle. Our “allies” always tend to root against us, and read the headlines, etc. If you go beyond the headlines, and look at the numbers, you see an enormously powerful country (USA), with no rival. That is the reality.

  18. Actually, you said “Houston is bigger than Toronto” and “NY it ain’t”. The second point is correct. The first is not.

    You are certainly free to express a preference (or tell us you make a good living travelling around the world) for one city over another, but Houston CMA/CDP is not bigger than Toronto’s just because you say it is and you work in geopolitics. And the facts presented do not come from “Toronto People”, btw.

    Depending on what communities are included, the case can likely be made for any of the “top ten” NA cities to be “5th”. That’s why people rely on independent assessments of CMA/CDP population, rather than doing a personal assessment on who and what should be included (Houston is, for example, clearly way ahead of Toronto in refineries and toxic waste dumps… at least for now).

    We might be able to push Chicago all the way down to 8th or 9th if we were particularly savage about not accepting suburban community population… but that isn’t how the objective processes work.

  19. John:

    What you’re trying to argue is either incorrect or intellectually dishonest (I’m not sure which, as I don’t know your motives).

    Toronto metro (CMA) = 5,583,064 (2011)
    Greater Toronto (‘Metro,’ or CMA plus some)= 6,054,191 (2011)
    Greater Toronto and Hamilton Area (*Two distinct metro areas according to the Canadian census*) = 6,574,140
    ‘Golden Horsehoe’/Southern Ontario (urbanized area) = 8,759,312

    Houston metro (MSA) = 6,177,035 (2012 est.) / 5,920,416 (2010)
    Greater Houston (CSA) = 6,371,677 (2012 est.)
    Greater Houston + Port Arthur-Beamount = 6,775,857
    East/Southeast Texas = ~7-9 million

    In better American terms, what you’re trying to argue is like arguing this:

    San Francisco-Oakland metro (MSA) = 4,335,391(2010)
    San Francisco-Oakland/San Jose (CSA) = 8,370,967 (2012) / 8,153,696 (2010)
    San Francisco-Oakland/San Jose/ Stockton/ Sacramento = 10,567,449 (2012)

    Or, bettter yet:
    Los Angeles (MSA): 12,828,837
    Los Angeles/Riverside (CSA): 17,786,419
    Southern California: ~24-25 million

    What Canadians refer to as the ‘Golden Horseshoe’ is not the same thing as an MSA or CSA by American standards. The ‘Golden Horseshoe’ includes places such as Peterborough and Niagara Falls, which are 264 km apart (i.e. which takes over 2.5 hours to drive between without traffic).

    Also, for the record, it’s a bit absurd that people keep saying ‘North America’ in this argument. Has everyone forgotten Mexico? We can all agree that Mexico City, New York, Los Angeles, and Chicago are bigger than Toronto, Houston, et al without statistical manipulation. Neither Houston nor Toronto cracks the top 5 by the next set of definitions, however. Dallas is 5th by MSA/CMA alone. Washington-Baltimore is 5th by CSA. And there’s a whole host of ‘urbanized areas’ that are bigger than the ‘Golden Horseshoe’ or Southeast Texas.

  20. Whew. And to think I hesitated bringing up the CSA thing after John’s 7/13 3:22pm post ;)

    Okay, Toronto = Big. Still, should Markham be getting into the business of subsidizing some businesses to the detriment of others?

  21. “What you’re trying to argue is either incorrect or intellectually dishonest (I’m not sure which, as I don’t know your motives).“

    Come on people, let`s take it easy.

  22. Some just can’t, Ty.

    There is nothing dishonest about a region of 7.5-8m people (as discussed waaaay above) being larger than one of 6.2-6.5m.

    Unless you like to be creative at math, that is.

  23. Keith: Good one! I would say no, Markham shouldn’t be subsidizing entertainment businesses. But then, neither should most other cities that do.

  24. It is dishonest, however, if you’re asserting that *Toronto* is 7.5-8 million people. Toronto metro is in a *region* that has 7.5-8 million people within a 2.5 hour drive of each other. Toronto metro is 5.5 or 6 million, depending on which Canadian metropolitan definition you’re using.

    As noted before, the region that you’re claiming is Toronto spans over 260 km. If you went 260km from Houston you’d run into Austin and nearly San Antonio.

    Heck, as we all know, Philadelphia and Washington are just suburbs of Baltimore (a circle that spans 228 km), unless Philadelphia is really part of New York, since it’s just 156 km from there. I’ve also heard that Daytona Beach and the Tampa Bay area are just suburbs of Orlando (Daytona to St. Petersburg is 260 km).

    You may as well start referring to San Diego as ‘Los Angeles’ (the cities are 193 km apart), Milwaukee as Chicago (a scant 148 km apart), Cleveland-Akron-Youngstown-Pittsburgh as one big metro area (Cleveland to Pittsburgh is 214 km apart), etc.

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