Quebec arena still set to lose money, will be mostly empty all winter

Hey, how’s it going in Quebec City, which opened its new hockey arena one year ago with little fanfare, since it didn’t have a hockey team to play in it? What’s the scoop, Globe and Mail?

It’s early to start bandying terms such as “white elephant”

Oh, that really doesn’t sound good.

In short: The Centre Vidéotron (named for a cable company that’s part of Quebecor, the company that owns operating rights to the arena and also is hoping to land an NHL team eventually) is having trouble filling dates (it only has a measly 12 nights booked with concerts between September and March) and losing money on operations. The arena ran up about $1.4 million in red ink in the four months of 2016 that it was open, half of which has to be covered by Quebec taxpayers according to the arena lease agreement — so it still has a shot at costing taxpayers their entire lease payment from Quebecor, as was projected in June. And, of course, it’s doing nothing to help pay back the roughly $300 million in construction costs that Quebec residents are on the hook for.

Eventually, once the Canadian exchange rate recovers, Quebec will probably get a new NHL team (because Quebecor is almost certainly willing to throw half a billion dollars at the NHL for one, and the NHL is almost certainly willing to take its money), and then everyone will be happy, or at least hockey fans will, which is close enough to “everyone” in the case of Quebec. But man, is this turning into a money pit in the meantime.


30 comments on “Quebec arena still set to lose money, will be mostly empty all winter

  1. Lol! Maybe the arena was built for the MLB team Montreal won’t be getting! Lol! You can take that little Alouette to the bank!

  2. I agree that it was a colossal waste of taxpayer money thrown at this arena, and I can’t believe there aren’t any laws to protect taxpayers from things like this, but it is in Quebec, which is a province famed in Canada for its corruption. Having said that, I think it’s very likely we’ll see a team there within 5 years.

    I was living in Quebec City last summer as they were finishing up the arena. Although the Nordiques were only a team for less than 25 years (first WHA and then NHL) and they moved to Colorado in 1995 (more than 20 years ago), the amount of Nordiques paraphernalia still available around town is staggering.

    Quebec is a city of only about 800,000 people, but it’s definitely a hockey city. And the city, province and Quebecor (a communications company which owns a huge cable empire throughout the province) will be willing to spend a ridiculous amount of money to get a team there. Without a team, it’s a huge amount of money wasted for a mostly-empty arena – with a team, people will be so happy to finally have a team back that the gobs of wasted taxpayer money will be mostly forgotten.

    It will happen, it might just take 3 or 4 years.

    • I agree that they’ll likely get a team in a few years. Whether that will help the city’s finances much is less clear — owning both the team and a separate arena management arm would allow Quebecor to play lots of games with their bookkeeping.

    • Jason, good thing that the corruption in Quebec was addressed by a public commission. Once that said, remember what RCMP and the FBI said during the commission: The level of corruption that is demonstrated in the province of Quebec is identical if not worse elsewhere (large cities) in Canada and in the USA.

      So this a a global problem, not specific to a province or a city. The only difference, is that in Quebec, we decided to address the issue and take action for the future.

      Regarding the waste of money on the Videotron Center, please, make sur you have your facts right. Old Colisée would a money whole in the future (lots of renovations required just to maintain it). So TCO (Total Cost of Ownership) of CV must reflect the costs saving by the city on the Old Colisée.

    • “It will happen, it might just take 3 or 4 years.”………..Meanwhile, a lot of money is being lost. “With a team, people will be so happy to finally have a team back that the gobs of wasted taxpayer money will be mostly forgotten.”……Great rationale. Who cares about money, as long as a city has a team. “It’s definitely a hockey city.” Yep, and city has lost a team once before. Maybe by the time they have a 5th team, it will stick.

      • Jimmy Joe you seem to be disagreeing with my post and I’m not sure why. I think my post was pretty clear that I think the 2 levels of government spending all this money on the new rink was a horrible idea. I’m just saying I think the city/province will choose to double-down by throwing a bunch more money at getting a team, rather than publicly admitting it was a terrible decision in the first place.

        So to be clear, I don’t think a single penny should have been spent by the city or the province on this arena, but neither of them care about my opinion. And that’s why I think if Quebecor comes to them and says we need some more money/tax breaks/etc. in order to get a team here, the city and/or province will hop on board and do whatever takes to make it happen.

  3. Neil, you can do better than that. I highly like your work but make sure to have the right facts regarding the Videotron Center. Quebec city received upfront more than $30M CAD for naming rights (those revenues are generating interest) and they will received another ~$35M CAD if a NHL team occupy the arena in the future.

    The city already received a rent of $1.4M and they had to refund half of it considering the operating cost of the arena opening and the operation during the first quarters of Year 1.

    Finally, the city received money on each tickets sold as well as each parking fees during an event. Those revenues are not included into the $1.4M.

    So bottom line, you can’t take one or two numbers without looking at the other variables and draw conclusions like you just did. You’re affecting your credibility big time by doing so.

      • The arena is open since fall 2015 and it’s a money pit? How much was costing every year the old Colisée?

        How much the CV generated in the last few months with Celine Dion shows (just to name this one, with 67 368 entries)? How much money the arena will generate with boxing galas in the next year (dates are not yet available, but there are few galas per year)?

        Using words like “money pit” demonstrate a complete misunderstanding of what is going on in Quebec city.

        • Five nights of Celine Dion are nice, but they’re not going to fill a $4m operating deficit on their own.

          Most arenas are close to breakeven on operating costs, and Quebec’s looks to be no exception. Which would be fine, except then you still have to pay off the construction, which is the real money pit.

    • The initial $30m in naming rights money offset about a tenth of the initial $300m public outlay. As for the rent money, they’re likely to have to refund all of it for 2016, if the early operating losses continue as expected. So, no, it’s still doing nothing to repay the public costs.

      Thanks for the concern trolling about my credibility, though, it’s always appreciated!

      • Neil, get your facts right. The city is responsible of 50% of the operating deficit up to the annual rent. All other revenues are not linked to the operating deficit.

        And we are talking about 4 months in 2015 which included the opening expenses (it’s a one time expense).

        There are three groups that funded the CV: Quebec Government, Quebec city and “J’ai ma place” fans.

        https://translate.google.com/translate?sl=fr&tl=en&js=y&prev=_t&hl=en&ie=UTF-8&u=http%3A%2F%2Fwww.journaldequebec.com%2F2016%2F06%2F21%2Fdeficit-du-centre-videotron–labeaume-renverse-par-la-couverture-mediatique&edit-text=&act=url

        For all those expenses, cost of maintaining the Colisée Pepsi must be subtracted (Quebec city does not have to pay to maintain the old Colisée).

        I’m not saying Quebec city makes money, but between making money out of it and a money pit, the range of possibilities (and wordings) are huge.

        FYI, CV is ranked #75 in number of tickets sold in 2016 (6 months). Not too bad with less than a year of operation.

        http://www.pollstarpro.com/files/Charts2016/2016MidYearWorldwideTicketSalesTop200ArenaVenues.pdf

        • So how much was the city/provence losing on the old Colisée Pepsi?

          And if it was so bad why not just demolish it and get out of the stadium business entirely.

          • Colisée Pepsi was costing $1.2M/year to operate it. Right now, they will reduce those costs to ~$120K/year.

            Everything inside the Colisée that could be sell (seats, scoreboard, …) will be sold until the building will be ready to be demolished. Demolition costs are evaluated at ~$500k.

            So the city is saving $1M/year. That saving (that must be indexed to the real cost of living in the coming years) must be considered into the overall CV TCO.

          • So let me get this straight, they traded losing C$1.2 million a year for the right to lose C$1.4 a year for operation costs on a new one plus C$26 million on financing costs for construction?

            How is that an improvement?

          • The rent in 2016 is $2.5M and the city can’t loose more that 50% of it. So $1.25M.

            Then, expected additional revenues are $1M on tickets and $435K on parking.

            All those numbers without a NHL team.

            Bottom line, yes, the city is paying for a new arena (they financed part of it) but it’s far from deals where private owners get all the revenues with minimal expenses and risks.

            http://www.journaldequebec.com/2016/06/21/deficit-du-centre-videotron–labeaume-renverse-par-la-couverture-mediatique

            At least, the city is getting what they paid for. And taxpayers knows exactly what they are getting.

          • Except that the Colisée was at least already paid for. If right now the city is getting $2.7m a year in net revenues to pay off $26m a year in construction costs, that’s, um, pretty bad.

          • Neil, again you need to deduct from the $26M the cost of renovating the Pepsi Colisée to have an arena up-to-par with the CV.

            It’s not $0 vs $26M.

            I don’t have the final number but at the end, to have an up-to-date arena, there is a cost. But you can’t just put the actual numbers without deducting the opportunity cost from it. That’s a basic principle on ROI and TCO.

            And I will stop there because the Opportunity Cost is even more complex, like what events would have been avoided/not happening in the CV if only the Pepsi Colisée was there. And let’s use a 10 year horizon to calculate the final numbers to have e better view of the investment.

            Now we are talking about the real numbers and how to use them. Not just using a simplistic article that use 4 months of operations revenues/costs for a $370M investments.

            CDPQ Infra is leading a $5.5B project in Montreal (REM) for electric train (and this is just phase 1). Are they going to use Year 1 of train usage in 2021 to determine if it’s a good or a bad investement?

          • No, I don’t have to deduct that (and no economist or accountant would, either), because there’s no reason that Quebec needed an upgraded arena. That’s like saying, “Sure, your new car cost $40,000, but it would have cost $50,000 to upgrade your old car to be the same, so it didn’t really cost you anything!”

            If the numbers change five years out, great. But neither you nor anyone else has shown any evidence that the numbers are going to change, so we’re left with “It’s losing money hand over fist now, but give it time!” More often, time just means compounding your losses.

          • Neil, I strongly suggest that you read (sorry it’s in french), the letter from Quebec city Mayor to announce the CV construction.

            https://www.ville.quebec.qc.ca/apropos/portrait/amphitheatre/historique/docs/maire_amphitheatre.pdf

            We may debate about the fact that Quebec city needed or not a new arena. But bottom line, the city decided that yes, they need to replace the Pepsi Colisée and the city would be the owner.

            And on November 3, 2013, Régis Labeaume was re-elected with a strong 74.1% and 18 out of 21 candidates from l’Équipe Labeaume where elected as Councillors.

            In a democracy, I have to say that he said what he would deliver and he delivered it. And the citizens backed him up.

            If the investment was so bad for the city and the taxpayers, then, why he was elected for the third time in a row?

            Time will tell if this investment was a wise choice.

          • “If the investment was so bad for the city and the taxpayers, then, why he was elected for the third time in a row?”

            Most voters are not single issue voters, they could be perfectly happy with the mayor in numerous other ways (assuming they’re fairly well informed in the first place).

  4. It’s cool. At least there will be a team in Vegas. That will surely be a massive success…. Ahahahahahahaha. Couldn’t say that one with a straight face.

  5. Shouldn’t the NHL pay Quebec a retainer fee for being the go-to threat city that helps all the other teams get better arena deals?

  6. It’s amazing the number of comments here that seem to support such a colossal waste of taxpayer money. Ask taxpayers to fund things like adequate street lighting, roads free of holes, money for public schools, and a criminal justice system that keeps pace with crime, and then watch their heads explode. Tell taxpayers to fund a privately-owned sports venue, and listen to them come up with all kinds of excuses (oops, I meant “reasons”) for why it’s such a good investment. The ancient Romans probably felt the same way about the chariot races at the Coliseum.

    • I like new stadia and I think everybody should help pay for them, whether they use them or not.

      I don’t think anybody here has ever used that one, so I thought I’d try it out to see how it looks in print.

      Lots of folks just don’t see the personal benefit to things like good roads, good schools, good courts. Stadia are relatively “sexy”. (FWIW, I like ’em, too. I just don’t expect everybody to help pay for them.) So some crunch numbers in creative ways. Others find interesting definitions for public “infrastructure”. Go figure.

    • Bread and Circuses.

      It’s why my landscaping company’s plan to “have the taxpayers build us a new shed to keep our rusty shovels in because, otherwise we might have to take our rusty shovels to the next town and leave this town without a landscaping company that uses rusty shovels. And we’ll also leave behind a vacant shed that you folks will have to deal with too” never really worked out the way I’d hoped.

      I mean so far. Now if there was a commissioner for landscaping companies that could breeze into town and sabre rattle about all the terrible things that happen to towns that don’t build new garden sheds for landscaping companies, well, things might be different.

    • David, the Colosseum was a money drain even then. History says it subsidized by a tax on brothels.
      Incidentally, the Colosseum never held chariot races, that was the Circus Maximus. Gladiator events were the Colosseum’s specialty

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