Columbus Blue Jackets arena still a money pit for taxpayers

This time last year, the Columbus Blue Jackets‘ Nationwide Arena was reported to be turning a $500,000-a-year profit since its takeover by Franklin County in a much-maligned bailout plan — a profit that disappears once you take into account that the county is subsidizing arena operations with $4 million a year in subsidies. And how are things going now?

The arena spent most of its second year under public ownership operating at a deficit.

A recent rally, thanks to special events that included Bruce Springsteen, Cher and Demi Lovato, has nudged the arena $426,000 into the black, according to the latest revenue report.

Again, that’s “in the black” if you don’t count the annual county subsidies to the arena, meaning the building is actually losing more than $3 million a year, but Franklin County taxpayers are making up the difference.

And why is this, tell us, Columbus Dispatch?

Put simply, the contracts allow everyone else to make money from the arena except taxpayers.

The Blue Jackets take all concession and parking revenue for all hockey-related events. Performers, such as Springsteen, demand a certain percentage of all ticket sales (usually 85 percent or more) before agreeing to come to Columbus.

The public also pays for improvements inside the arena, such as the nets on the hockey goals. More than $900,000 in public money was spent in the past year to replace and repair seats.

That’s right: Columbus area taxpayers are paying for hockey nets for a team that keeps 100% of the revenues from hockey games. Also, cue the jokes about why they need to replace seats when they’ve barely been used in the first place.

Columbus sports fans celebrate bailed-out hockey team’s success with citywide apathy

It’s the two-and-a-halfth year anniversary, more or less, of the bailout plan for the Columbus Blue Jackets that has left county taxpayers covering annual losses on the team’s arena, enabling the team to stop losing money. And that’s apparently enough of an excuse for the Columbus Dispatch to check out how excited hockey fans are at having a money-making franchise to root for, and one that is finally poised to actually make the playoffs to boot:

The Blue Jackets are in fourth place in the eight-team Metropolitan Division, but they are 29th in a 30-team league in attendance, drawing 14,347 per game to Nationwide Arena, which has been filled to its 18,144-seat capacity only four times in 36 games this season.

Okay, not so hot. But things are at least improving slowly on the attendance front, right?

Although the Blue Jackets have seen a 23 percent bump in season-ticket sales over the past year — from fewer than 7,000 season-ticket equivalents early last season to 8,600 as of this week — attendance actually has dipped from last season’s 14,564 average.

Hmm. Maybe fans are starting slowly, getting their feet wet by watching more on TV?

Further, according to a recent report in Sports Business Journal, the Blue Jackets rank 29th in the NHL in TV viewership. According to sources, the Jackets attract an average of 6,000 households per broadcast on Fox Sports Ohio, down from 9,000 last season.

Okay, but once the team capitalizes on its newfound flushness and offers cheaper tickets, things will improve, right?

The Blue Jackets don’t appear overly concerned, either. Early this season, there were some thin crowds: eight games with fewer than 12,000 fans, including two with fewer than 10,000. Still, they’re raising season-ticket prices in almost every section of the building for next season.

Sigh.

The only silver lining is that sports attendance usually lags behind on-field (or on-ice) success by a year, since fans only wake up and decide to start buying tickets after they’ve seen a successful playoff run. Still, if the main thing Columbus bought with its bailout money is civic pride in its hockey team, residents aren’t exactly busting out with it.

But, hey, sunk costs and all, and at least local taxpayers can sit back and rest assured that they won’t have to spend anything more on the Blue Jackets from here on

The practical impact of low gambling and the resulting state tax revenue shortfall to Columbus and Franklin County residents is that a quarter of the $10.3 million received by Columbus that is dedicated to the arena lease is just $2.6 million — not enough money to cover the $3.3 million required to cover the bond payment schedule for 2013… According to [Columbus Coalition for Responsive Government] projections, if the current 23% shortfall happens in every year of the lease, the total added costs will be $97 million and a bond payment schedule that extends an additional 7 years – to 2046. The only thing that can prevent such a shortfall: we need more gamblers willing to belly up to the poker table and bet their retirement on a three-of-a-kind.

Yep, this is working out just great. Happy baseball season, everybody!

Columbus kicks arena bond default vote off May ballot, lawsuits likely

Fire up a fresh batch of lawyers: The Franklin County Board of Elections has voted unanimously to kick off the May ballot a vote on allowing the public to cut off debt payments for the Columbus Blue Jackets‘ arena, on the grounds that petitions contained “misleading language.” The issue appears to be mostly over language saying that approving the petition would save the city $131 million in future bond payments, which either 1) is a speculative number or 2) unfairly assumes that voters would vote to default on the bonds (there would have to be a second vote on that in November), depending on which elections board member you ask.

You can read the petition (PDF here) for yourself and decide whether it’s fair: The actual problematic language appears to be the line that says:

FISCAL IMPACT: This amendment will result in savings for the City of Columbus in amounts ranging from $3.9 to $7.9 million per year, and totaling approximately $131,165,157 over the then-remaining period of the lease.

This does skip over the second-vote thing, but then, if voters didn’t explicitly approve funding of the arena payments, the payments wouldn’t be made, saving the city “approximately” that much. It’s poorly worded, but as to whether it’s poorly worded enough to kick it off a ballot … beats me, I’m not a lawyer.

What is clear and has been for a while is that local politicians, including those on the elections board, understandably hate hate hate the idea that voters could cut off checks to pay for things that local government has already decided to fund. No response from the petitioners yet that I can find (their website hasn’t been updated since November), but if we don’t see a big-ass lawsuit soon, I’ll be extremely surprised.

Columbus declares “no backsies” on Blue Jackets arena bonds, kicks ballot measure back to elections board

The city of Columbus has finally figured out how to respond to that campaign for a public vote on undoing the Blue Jackets arena bailout deal from 2011, and it’s to just declare the whole thing illegal and let the county board of elections sort things out:

At its first meeting of the year, the city council voted to send petitions to put the issue on the spring ballot back to the Franklin County Board of Elections, to determine whether the petition language meets requirements to get it on the ballot.

It’s unclear when the elections board would decide that issue…

City Attorney Richard C. Pfeiffer Jr. said yesterday that the proposal is invalid because voters cannot overturn the contract, which is to purchase the arena and operate it through 2039.

“The lease documents have been executed roughly two years ago, and this ordinance passed by council made it through the 30-day referendum period without a challenge,” Pfeiffer said. “The proposal would have no legal effect if approved.”

That’s what the initial response was to the plan for a vote on defaulting on the arena bond payments (including from me), but plenty of Ohio legal experts have since said that the initiative is totally legit. Whatever the board of elections decides, expect to see lawsuits challenging its ruling from the losing side, which means this could drag on for quite a while. What happens if a court case is still ongoing when it’s time to vote in May, I have no idea — anybody have an Ohio legal expert handy?

Columbus ballot measure to stop payments on Blue Jackets arena purchase set for May

As of yesterday afternoon, the Columbus arena backsies initiative already had enough signatures verified to qualify for the ballot, which means local voters will go to the polls next May to decide whether to stop automatic payments on the $42.5 million in bonds the city and county sold to buy the arena from its private builders back in 2011. (Actually the county sold the bonds, but the city and county both committed to paying them off — here, read the whole convoluted process for yourself, if you dare.) Future payments would then need to be approved by voters in a second ballot measure in November — which means all legal hell is about to break loose:

If approved by voters, the coalition wants that second vote to occur in November.

The initiative is likely to face legal challenges. Franklin County, Ohio State University, the Franklin County Convention Facilities Authority and the state also were part of the arena purchase. Their contracts are not subject to the vote.

City Attorney Richard C. Pfeiffer Jr. and elections officials said they are trying to determine whether such a two-part vote can be put on the ballot with one set of petitions.

“We are still looking into the matter, but those are the right questions to ask,” Pfeiffer said.

Another question city officials are asking: Can voters legally overturn a contract that the city already has signed?

In that 2011 deal, Columbus also exempted the Blue Jackets from making their annual $9.5 million rent payments — adding up to a far bigger subsidy than the actual purchase price, even in present value — but that wouldn’t be affected by the May vote. (According to the petition, which the Columbus Coalition for Responsive Government finally got posted properly on its website.) Still, it would be unprecedented for a city to stop payments on an arena deal it already made, which is why Columbus and Franklin County elected officials are no doubt scrambling their lawyers as we speak.

Legal experts say Columbus referendum to defund arena bailout could have teeth

Before anyone asks: No, I didn’t skip posting anything yesterday just in order to keep the appeal for new FoS Supporters at the top of the page. (Big thanks to everyone who’s joined so far, though!) Yesterday was just one of those days where I was slammed from morning till night, and didn’t have time to visit the stadium world.

That means that today we need to play extra catchup, though, so let’s get to it:

It turns out that that crazy plan to hold a referendum to overturn Columbus’s 2011 Blue Jackets arena bailout isn’t so crazy after all, or isn’t necessarily crazy, or something like that. Two legal experts tell Ohio NPR station WOSU that the ploy might just hold up in court:

“Citizens can do this,” Ohio State Moritz College of Law Professor Dale Oesterle said.

Oesterle said Columbus City Charter allows voters to put an initiative on the ballot to create a new ordinance.

“This is an effort to put a new ordinance on the books which, in essence, affects the operation of an old ordinance that they disagree with. It’s very clever, actually.”

Oesterle says the law is unclear on what would happen if a new ordinance to stop payments on the arena were put into effect; another Ohio State law professor, meanwhile, Stephanie Hoffer, said that Columbus’ Convention Facilities Authority might have to go into default if this happened.

It’s still pretty inconceivable that Columbus would let things get this far — depending on how the referendum is worded, it could try to come up with other money to use to pay for the arena that it took off the Blue Jackets’ hands two years ago. (Hey, Minneapolis pulled it off.) But this referendum campaign is more clever than I gave it credit for, and likely to be watched closely in other cities with citizens who regret past stadium and arena deals, which is a whole lot of places.

Columbus set to hold public vote on defaulting on Blue Jackets arena bonds (but won’t actually do it regardless)

I don’t even know where to start with this:

A citizens group trying to change Columbus politics has turned in petitions seeking a ballot initiative to stop the city from paying on its purchase contract for Nationwide Arena.

The Columbus Coalition for Responsive Government submitted 17,200 signatures to the Columbus city clerk’s office yesterday to amend the purchase ordinance and stop payments to buy the arena by 2016.

While it’s a nice idea to try to undo a money-losing public bailout deal for the Blue Jackets from 2011, um, no, residents of a city can’t just vote to refuse to make good on contracts that the city already entered into. Or rather, they can apparently vote on it — if the petitions hold up, the referendum would be held — but it’s not going to stop the city from being obligated to make those payments. Or else I could suggest some other things we might vote to stop paying for.

The Columbus Coalition for Responsive Government is … well, the group is still rebuilding its website after it was hacked (in August, wha?), but it looks like it’s mostly dedicated to improving transparency in local government — one of its primary goals is “We support the return of public access television to the people.” (Its Facebook page features a cartoon of, man, I have no idea what’s going on there.) I’d cite the arena petition itself, but that page directs to an unrelated petition on district governance — curse you, hackers! — so it’s hard to say much more.

Except that clearly, enough people in Columbus are ticked off about the arena bailout that they’ll sign anything opposed to it, no matter who’s waving it in their faces and whether it will actually do anything. This is going to be the funnest ballot measure ever!

After public bailout, Columbus arena now making money, except for the making money part

Hallelujah! Just two years after getting bailed out by a public purchase costing $42.5 million plus $9.5 million a year in lease breaks, the Columbus Blue Jackets’ Nationwide Arena is set to turn a profit this year, according to Columbus Business First:

Nationwide Arena is on track to finish its fiscal 2013 with a $500,000 operating profit, even though arena managers had planned for a $260,000 loss when they put together the budget a year ago.

How did it manage this? Well, it helped that part of the NHL season was wiped out by a lockout, because apparently the arena spends so much on running hockey games that it loses money on them. (Admittedly, this isn’t tough when the Blue Jackets’ revised lease says the team doesn’t have to pay rent.) Plus, it’s getting about $4 million in subsidies from the Franklin County Convention Facilities Authority. And finally, it isn’t actually making money, since a projected shortfall this year is being covered by a surplus from 2012.

But not to worry: So long as the NHL keeps cancelling games, and the public keeps underwriting the arena’s losses, Columbus can look forward to years more of an arena that only bleeds money slowly. And headlines about how this is actually a “profit,” because that’s what newspapers do.

NHL lockout threatens small business owners with crushing weight of boredom

One more “OMG the hockey lockout is costing businesses money!” story today, from NBC4 in Columbus, which reports that “many businesses in the Arena District” are hoping for the lockout to end, because:

“I think for the good of the game, I think both sides know that they have to get there,” said Mike Darr, owner of the R-Bar Arena.

Darr said it would be nice to have the extra revenue from hockey fans coming in, but the lockout has not hurt his business too much.

“It’s still a fun area to hang around in. There are a lot of neighborhoods, we are kind of a neighborhood bar also. It’s not been detrimental. It’s just sometimes been boring,” Darr explained.

Darr is the only arena-area small business owner quoted, so it’s hard to say how typical his experience is. Still, somebody might want to pass along to the city and state officials wringing their hands over lost tax revenues that people haven’t stopped drinking beer now that hockey is no longer being played — they’re just crying into it instead. Or rather, given that it’s the Blue Jackets we’re talking about, crying into it even more than usual.

No, Virginia, there isn’t an NHL lockout economic crash

The other holiday news tradition, of course, is to slack off from actual reporting by writing vague analysis pieces on things that aren’t really new news, like the NHL lockout, since you can write them anytime in December and then keep them in the can until Christmas week. Last Thursday it was San Jose Inside asserting that the lockout is hurting local businesses; on Sunday, it was the Columbus Dispatch claiming that local government is losing millions of dollars because the Blue Jackets aren’t playing:

Roosting birds outnumber rowdy fans lately in Nationwide Arena, left empty most nights during the bitter NHL lockout.

It’s an attendance figure that is not lost on state, Columbus and Franklin County officials, who estimate they’ll lose $3 million to $4 million in tax revenue if the NHL season is canceled.

That sum represents lost income taxes from players and other workers associated with hockey, and sales taxes from concessions, restaurants and other commercial activity near the arena, which the city and county bought last year.

Really? Do we have to go over this again? Okay, fine: Yes, people are spending less money at the arena because there’s no hockey. And yes, that means less sales tax money from spending around the arena going into public coffers.

It doesn’t mean less sales tax money overall, though. As I’ve noted before, studies of sales tax revenues in cities during sports work stoppages found “no statistically significant effect on taxable sales is found from the sudden absence of professional sports due to strikes and lockouts.” That’s because when people aren’t spending their money on hockey, they’re usually spending it on something else — and they’re almost certainly spending it within the same state and county, and given that Columbus has become the largest city in Ohio by annexing every suburb in sight, likely within the city limits, too. So if tax revenue is going down in downtown Columbus, it’s likely going up everywhere else.

And while the county is now the owner of the arena (since it bought out the arena from its private owners as a bailout of the Blue Jackets last year), it only gets to collect parking and concessions sales for non-hockey events — so if anything, the county should be in a position to bring in slightly more money since there are fewer hockey dates cluttering up the schedule. Emphasis on “slightly,” though, since it’s tough to book vacant dates when the NHL has so far only been cancelling games a few weeks in advance. Still, even in its capacity as arena manager, the lockout shouldn’t be hurting local government revenues.

A more honest headline, then, would have been “NHL lockout has both tax costs and benefits.” And maybe reporter Lucas Sullivan could have called one of the five economists who’ve studied the economic effects of strikes and lockouts for comment, instead of the only quotes coming from county and league officials. Hey, it’s nice to want things.