Markham rolls out same arena plan yet again, this time with more promises

There’s yet another Markham arena plan afoot, with Markham Mayor Frank Scarpitti signing two new memorandums of understanding on Saturday that developer Graeme Rouston says will make funding the project come “100 percent from the private sector.” And how does that differ from the last plan that was supposed to do the same?

The breakdown of payments now looks like as follows:

  • $162.5 million from arena developer GTA Sports & Entertainment, same as in the original plan approved in April 2012.
  • Another $32.5 million in future lease payments from GTASE, based on a future lease that will be written in the future.
  • $80 million promised by developers as part of a special fee on new development near the arena, though it’s unclear how the city can go about collecting this if the new development doesn’t actually happen.
  • $50 million from … we’ll get back to you on that.

In other words, it’s all pretty much the same plan that it’s been for almost two years, except that now GTASE and other developers are promising that they really will pay all this money, instead of … actually, they always were promising it, but I guess now they’re promising it on paper. Not necessarily enforceable paper, but paper nonetheless.

The Markham council is set to vote on this plan today or tomorrow, and though the Toronto Sun says it expects it to be “rubber-stamped,” National Post columnist Bruce Arthur says it shouldn’t be:

Between now and then, someone should tell them that they are risking an enormous amount of money for a project that is somewhere between risky and outright insane.

“We have never been encouraging of this project,” said NHL commissioner Gary Bettman, reached by phone on Saturday. “And we have repeatedly said that if this building is built, it should be built with the expectation that they will not get a team.”

On the bright side, the Toronto metro area is a huge market, and there’s some recent evidence that even second arenas in big markets can be a success. On the less bright side, building arenas on spec for teams that never arrive has worked out significantly less well, and hanging financial plans on speculative future housing development around an arena is — “between risky and outright insane” sounds about right. There is much for the Markham council to consider before they get out their rubber stamps.


14 comments on “Markham rolls out same arena plan yet again, this time with more promises

  1. Those are hefty tolls, though given that I just paid $13 yesterday to cross a river, not unimaginably hefty ones. Most people wouldn’t be driving to Markham from Burlington, though, right?

  2. Neil, we don’t even need to leave Ontario to see how this will probably work out…

    Hamilton built a then-state of the art 18,000 seat arena in the mid 1980s for a team they “knew in their hearts” would come. It almost did, if you believe locals, but ultimately that franchise was swooped by the city of Ottawa (sort of) in 1992.

    Ottawa, of course, knew better than to build an arena downtown. So the arena was used by the developer as an anchor for a huge new development planned for Kanata, some 30 mins (maybe) west of city centre. Most of the new development never did happen, the developer (and team owner) went under, and only a succession of business owners (and a nice, cleansing bankruptcy) kept the team alive. Lots of people lost a lot of money owning the Senators, despite regular sellouts.

    Melnyk was on the radio a few weeks ago to respond to media reports he’d lost $90m running the Senators over the last decade. He said “that’s not true. It’s $110m”.

    As I understand the area around the arena in Kanata is now built up a bit more (nearly 20 years into it’s existence), but it’s nothing like full or thriving. When Melnyk wanted to wish an MLS team into existence, for example, a good deal of his plan seemed to be based on the idea that there was a lot of land around the arena that wasn’t being used for anything (other than as a snow dump for the city of Ottawa).

    Always been skeptical about the Markham project. The only upside to me has been that it would be a second (and maybe large – early reports had them considering 25,000 seats…) major arena in the GTA itself. That said, Markham is not really Toronto, so one wonders if events staged there would be as big a draw as the developers hope. What’s the slogan going to be? “Markham: Not quite as far away as Hamilton”?

  3. Neil: More for how, with no subway, and a toll highway, it’s going to be a tough commute. My personal ideal would be Woodstock, ON, but that ain’t happening…

    John: The area south of the arena (Town of Stittsville) has some minor growth, but going on the highway by the Arena is a pretty bizarre site: it’s like a guy just decided to build a hockey rink in a forrest. Some connection to Kanata with the tech park.

    People in Hamilton will say they were “swooped”, but the problem was nobody would pay $50,000,000 to put a team in Copps in a huge recession.

  4. Ty: As I recall, Firestone wanted approval for both the arena and development at the same time… but a moratorium was declared on the “non arena” development. He went under only a year or two later (before the arena was even finished as I recall, but I may be wrong about that). Not sure if any other development was ever applied for (or if it would have been approved).

    Re: Hamilton, I was told years ago that Ron Joyce was willing to write the check, but in the end no league agreement with the Leafs was possible (they wouldn’t answer the “what’s it going to take” question) and the other Ontario franchise was offered to Ottawa instead.

  5. https://maps.google.ca/maps?q=scotiabank+place&hl=en&ll=45.298032,-75.931664&spn=0.001249,0.002122&sll=49.303974,-84.738437&sspn=19.000465,28.520508&t=h&z=19&layer=c&cbll=45.298141,-75.931996&panoid=nL66DrMkCzd_l1ZLIpFaKA&cbp=12,114.97,,0,5.8

    Nice Google Streetview example of what I was talking about.

    If I recollect, Firestone ran into the Provincial government because he was developing so close to the 417, 1000 yds from a 400 series requires provincial approval, and they just slaughtered him at the Ontario Municipal Board.

  6. It should be noted, for sports business posterity, that Bob Rae’s NDP government, while arguably crippling the Senators out of the gate, played a pretty big role in ending the baseball strike due to their ban on replacement workers.

  7. There’s an interesting article in the Toronto Star that says that in order for a professional sports team to thrive it takes the passion and dedication of community (Winnipeg) and not simply a population base (NY Islanders).

    It argues that people who live in Markham identify as being from Toronto, whereas a place like Hamilton makes a bit more sense because they kind of have their own thing going on.

  8. Great point, Jon. Look at most Detroit teams getting far higher attendance totals than most Miami teams, despite way more people (and much more importantly, way more rich people) in Miami.

    In all honesty, this is a terrible move. The fact the NHL isn’t pulling the “This seems like a great potential venue that might see a future team” BS that every league pulls is a HORRIBLE sign. Even when the leagues have zero intention of moving a team into a new arena like this (cough cough Kansas City cough cough) they still say something like that as a way of putting pressure on other cities to build/renovate their venues. When they don’t? That really means they have zero intention of moving anyone there, ever, end of story. This needs to get shut down now or this will be a financial disaster.

  9. Ty/John: From my recollection, at the time of the 1992 expansion, there were four front runners: Ottawa, Hamilton, Tampa and St Petes. Ottawa and Tampa were willing to pay the NHL demanded expansion fee, Hamilton and St Petes were not (or at least were trying to get the fees down). Thus the former got the teams, even though it was generally thought that the latter had better ownership groups in place. Further, Ottawa was trying to build the arena downtown, but was coming against zoning laws or something along those lines. I think their current location was more a last resort. They also had to pay $17mn or so to build the off ramp by the arena.

  10. IIRC, there were a few other players…Seattle’s bid was poison-pilled from the inside by Sonics ownership, Milwaukee and San Diego balked at the fee, and Anaheim tried to buy the Sens when the arena scuffle happened.

  11. lb71: Ottawa has an arena downtown (that the Sens played in while their present one was being built). I don’t recall there ever being a serious effort to build an NHL calibre arena downtown, but there aren’t many large enough parcels near the city centre to house any kind of sports facility

    Firestone was a land developer and wanted the arena to anchor a mixed use development on the edge of Kanata. I don’t remember if they ever studied a downtown arena plan or not, but I do know the real interest Firestone had was in a real estate play. He was out of the picture within a year or two of the franchise taking the ice, much to the pain of Rod Bryden’s pocketbook…

  12. Ryan: To be fair to the NHL, they can’t be seen to be actively encouraging arena construction in anticipation of a franchise arriving (Bettman has said the same thing about QC as he just said about Markham… build it if you want, but don’t expect we are coming). That said, they certainly will be happy if it is built, even if it is only used as leverage for other cities to pay teams to play in the arenas they built for them for free.

    I do agree that unless Markham has some agreement with TSN (or Rogers) to put a second team in the Toronto market (and end those two bitter media rivals’ brief partnership…), building the arena would be foolish. They might not lose their shirts if they can fill the venue with concerts and the like, but I think everyone has to be aware that the only way they make any money is with a hockey team… and even then I’m not sold on the huge potential of T2.

    The Mets/Yankees and Dodgers/Angels do well sharing a market, but in most other 2 team markets one team is clearly the dominant earner. If you had to pay the same money for the Lakers or Clippers, Cubs or White Sox, which would you choose?

  13. It’s doable, but my inkling is that the Leafs will want T2 in the Western Conference.

    MLSE is 75% one company that has Bell and Rogers as shareholders, and 25% Tannenbaum. I could easily see Rogers being given an option on a team in the TV deal, with Bell using a shotgun clause in the corporate agreement to take the rest of the shares, with perhaps a discount as the indemnity payment for invading MLSE turf. MLSE would provide more than enough programming for TSN in Ontario anyway.

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