Columbus arena still losing money for county, which now must find $2m a year for added repair work

Hey, how are things going for Nationwide Arena, home of the Columbus Blue Jackets, since Franklin County bailed out its private builders almost five years ago? Let’s see:

A modest uptick in casino-tax revenue will allow Nationwide Arena to go forward with one major maintenance project — replacing part of the heating and cooling system — but officials continue to search for ways to fund a goal of $2 million in updates and repairs each year…

The arena, which was taken over by the facilities authority in 2012, made a net operating profit of just under $250,000 in the first half of its fiscal year, from July through December; event revenue was $10.8 million.

Beyond an annual $2.1 contribution from the facilities authority, virtually all of the arena’s revenue comes from rental income.

So, same as last time we checked in: The arena is turning a small operating profit, but only because the county is shoveling tax dollars at it every year. So while it’s good news that casino taxes have rebounded from their dip a couple of years ago that left the county in danger of defaulting on its bonds, all this means is that the county hasn’t yet run out of money to shovel, at least not until something else at the arena breaks and needs repairs.

This is a reminder of two things: One, most new arenas don’t bring in enough money to come close to paying off their construction debt, if the reports out of Kansas City hadn’t already convinced you of this. And two, it’s a really bad idea to take over responsibility to repairing an arena that your local sports team built, while letting the sports team keep all the revenues that are needed to make the actual repairs.

In fact, if you’re a local elected official reading this, maybe you should print out that last paragraph and glue it to your computer monitor. It won’t guarantee you of being saved from Columbus’s fate, but it’ll at least give you a better shot.

Columbus figures out who’ll be stuck with tax tab from Blue Jackets bailout (hint: not the Blue Jackets)

If you’ve been waiting eagerly to hear whether the Franklin County Convention Facilities Authority or the Columbus school system will be on the hook when the Blue Jackets arena’s property-tax exemption expires in 2017, the winner is: both! Or the loser is both. Both the county and the school system will soon have less money, is the point:

The public owner of Nationwide Arena has offered to pay Columbus City Schools $586,000 a year, instead of almost $3 million that it would owe the district if the payment were based on the $143 million value that the Franklin County auditor puts on the structure.

If you’re going to say, “Hey, at least $586,000 a year is better than no property taxes at all!” keep in mind that the Blue Jackets owners have been paying $1 million a year in lieu of property taxes until now. So under the new deal the schools will get less money, and the county will have to cover that $586,000 annual tab. Everybody loses! Except the Blue Jackets owners, of course, who really managed to pull off quite the heist when they negotiated their arena bailout deal.

Blue Jackets bailout leaves Columbus schools, state arena board squabbling over tax money

The Columbus Blue Jackets arena saga is one of the weirder ones, with the team building an arena mostly with private money, then complaining it was losing money and getting the county to bail them out by taking the arena off their hands, then a local group trying to force the county to let residents vote on whether to default on the arena bonds (and failing). Now there’s a new twist: As part of the bailout deal, the Blue Jackets owners agreed to make an annual $1 million a year payment to the Columbus school system in lieu of property taxes. Starting in 2017, that deal expires — meaning the arena will be looking at a $4 million tax bill, and the Franklin County Convention Facilities Authority will have to pay it itself.

This sounds bad, and it sort of is if you’re the arena authority, which is why the people who run that body is asking the state legislature to extend the tax exemption. But when you think about it, this is just a squabble between two public agencies over who’ll pay whom: Either the arena board gets more money to run its building, or the school system gets more money to run its schools. Or, you know, the state could just throw some more money everybody’s way and everyone could go home happy, except the recipients of whichever services got cut to make sure that the arena and the Columbus schools were both made whole.

The main lesson here, really, is this one:

“I don’t know what they knew or didn’t know” about the looming tax bill, said Don Brown, the facilities authority’s executive director since February and previously Franklin County’s administrator. “I’m not aware that there was a public discussion.”

That? Don’t do that. If you’re going to bail out your local hockey team, at least have a public discussion about what all the costs are going to be, including those a few years out. That is all.

Columbus arena sparks opening of convenience store, bringing Twizzlers to struggling local economy

And now, here is an actual newspaper article from Columbus boasting about how the city’s new hockey arena prompted the opening of a 1300-square-foot convenience store:

“That’s the ideal tenant for that space,” said retail analyst Chris Boring, principal at Boulevard Strategies. “They’re not just filling space.”

With so many visitors, office workers and residents within a block or two of Nationwide Arena and the nearby Greater Columbus Convention Center, “it’s a no-brainer,” Boring said. “There are all kinds of places to eat and drink in the Arena District, but what if you just want a candy bar or a bottle of water? There’s really no place right now for that.”

In related news, the Chicago suburb of Bridgeview just sold another $16 million worth of bonds to help pay off its money-losing Chicago Fire MLS stadium, but this year a new gas station opened nearby.

No, Columbus Blue Jackets’ future isn’t actually threatened by county’s arena loan woes, yeesh

Mike Ozanian, aka the guy who’s been overseeing the Forbes sports team valuations since before Forbes was even doing them, took a look at the Columbus Blue Jackets arena loan payments mess yesterday, and declared that the team may be “economically nonviable” in its current home.

On the face of it, this doesn’t make a lot of sense: Franklin County has skipped out on paying off its debt on the Blue Jackets’ arena (which the Blue Jackets initially took on, then decided it’d be way better if somebody else were stuck with paying for) because money from taxes on new casinos is running way below expectations. That doesn’t say anything about whether people in Columbus like hockey, just about how much they like spending their money at casinos — and about how rose-colored the glasses were that Franklin County officials donned before approving this deal.

What Ozanian seems to be getting at, though, isn’t anything about the current arena payments mess, but rather what it will reveal about the Blue Jackets’ shaky underlying finances. Team execs demanded the money in the first place, after all, because they said they couldn’t possibly pay off the arena that they themselves built while also running an NHL franchise in Columbus, and Franklin County agreed to bail them out. Now that the bailout money is on hold, Nationwide (which originally built the arena with the team) will have to wait on its loan payments. The Blue Jackets owners, meanwhile, will be on the hook for arena operations and maintenance, which are … actually just barely being paid off by what casino tax money is coming in, but, you know, if that number drops, then they might have to pay something toward running their own arena!

Certainly, any cost for the Blue Jackets will be a lot, given that Ozanian’s own figures for Forbes show that the team was losing larger and larger sums of money until the arena operating costs were taken off their hands in 2013. On the other hand, the team did make an estimated $4.9 million profit last year under the new deal, and casino revenues would have to drop by an awful lot before the Blue Jackets’ share of operating costs would make a significant dent in that. And anyway, under the bailout deal the Blue Jackets are committed to playing in Columbus through 2039, so it’s not like they could do much even if they were “nonviable.”

So mostly Ozanian’s article comes down to “County’s Threat to Make Blue Jackets Pay Own Arena Costs Reminds Everyone How Broke Team Was Before Public Bailed Them Out.” Poor, sad Blue Jackets. Hey, I know what would cheer them up — a nice fun trip to a local casino! Because that always helps!

Franklin County not making payments on Blue Jackets arena, because turns out there’s no money, oops

Hey, everybody, remember when Franklin County refused to let residents vote on whether to stop payments on the Columbus Blue Jackets‘ arena because if the county voted to pay for things and then didn’t that would make them look terrible? Turns out the county has stopped making payments after all, for a simpler reason — they don’t have any money! It’s irony!

The city-county authority financed the $52 million deal through loans from Nationwide and the State of Ohio in March 2012. To make the payments, the city and county pledged to use a portion of casino tax revenue.

But casino revenue is far below projections. And Franklin County Convention Facilities Authority Executive Director Bill Jennison said no payments have been made to pay off either loan. More than $3 million remains unpaid.

County officials say that if casino taxes don’t start rolling in, they’re not going to fill in with general revenues, but rather will just make bondholders sit and wait for their cash. Wait how long?

[Activist Jonathan] Beard ran his own numbers and expects the city-county authority to be paying on the loan far beyond 2039 based on current casino-tax revenues returns.

“We showed a $1.8 billion deficit at the end of 100 years when we’d still be paying on the [arena]. So it’s this huge albatross,” Beard said.

Yep, that’s a while. I’m guessing at some point somebody is going to suggest selling a few hospitals to save the county’s bond rating in the meantime.

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?