It’s everybody threaten the Senators will leave Ottawa without a new arena week!

The Ottawa Senators story so far: Then-owner Rod Bryden built an arena in the suburbs in 1996 to be the anchor of a new retail district, then that didn’t work and he went bankrupt. Then new owner Eugene Melnyk decided in 2014 that what he really wanted was an arena downtown, blaming this on the suburban one not being “built to last,” and started angling for development rights to a plot of downtown land, which he got the rights to negotiate for last year. But Melnyk still needs to negotiate how much he’ll pay for those rights, plus whether he’ll get public money toward construction costs despite having promised that “no government money” would be involved, all of which means it’s high time for move threats! Levied by anyone other than Melnyk, because that’s the way this game works.

First up, NHL commissioner Gary Bettman:

“A new downtown arena is vitally important to the long-term future, stability and competitiveness of the Senators,” Bettman said. “The process is ongoing, but I think asking Mr. Melnyk or the Senators the status would be more appropriate than asking us.

“However, we believe there needs to be a solution for the long term.”

That’s a pretty oblique threat, admittedly — “vitally important” to the team’s “stability and competitiveness” could mean a lot of things, from the team leaving town to it just not making as much money as it might otherwise, I think? It’s a nice start, and why Bettman earns is salary, but really you want somebody to come right out and say — oh, hi, legendary hockey announcer Don Cherry:

“If they don’t put an arena downtown they’re gone,” Cherry said during Hockey Night in Canada on Saturday. “I think they’re just hanging on here in Ottawa, not drawing out, with a great team like that.”…

“If they’re not drawing out with that team… I say they’re gone, and I say they go to Quebec,” said Cherry.

The Senators are definitely not selling out despite a contending team, and the suburban location probably isn’t helping. Moving to Quebec, though, would require selling the team to Quebecor, the media giant that owns the management rights to Quebec’s arena and has said it wants to be the owner of any NHL team there. And Melnyk has been pretty adamant that the team is not for sale — even saying “the team is not for sale” and that he’s promised his daughter she can own it when he dies — so that doesn’t seem like a thing that is likely to happen.

More to the point, meanwhile, is that if the Senators need a new arena, they can build one right now: They have the land, and if a downtown venue would be so much more lucrative that it’d be worth the construction costs, then Melnyk can just go to a bank and borrow the money. Unless what Bettman et al are saying is that the only way it would pay off for the team is if Melnyk got public subsidies to help pay for it — either via a sweetheart lease or straight-up cash or tax breaks to pay for construction — in which case this isn’t actually “the Senators need a new downtown arena” so much as “the Senators owner is unhappy with how much money he’s making, and would appreciate it if someone would undo the previous owner’s mistake and build a new arena in a better location, please.”

As for how much money Melnyk is making, Forbes estimates the team turns a profit of a few million dollars a year, while the team is valued at $355 million, up from the $100 million that Melnyk paid for it in 2003 — an annualized return on investment of about 9.5%, thanks to the discounted sale price he got in part because of that whole bankruptcy thing and the lousy arena location.

Tl;dr version: Sports executives have a funny definition of “need.”

This week in boondoggle vivisection: Plenty of good seats available in SF, Cleveland, Ottawa

We’ll get to the weekly news roundup in a minute, but first, I need to mention this editorial from yesterday’s Globe and Mail, which makes several eminently reasonable points about how Calgary shouldn’t capitulate to the Flames owners’ extortion attempts for arena cash (“using past bad decisions to justify terrible future decisions does not qualify as logic,” “arena financing is a hamster wheel, and here is an opportunity to jump off”), and then says this:

Everyone involved should take note of a remark this week by Neil deMause, renowned stadium boondoggle vivisectionist and creator of the fieldofschemes.com website: “The number of mayors who’ve been voted out of office for standing up to sports team subsidy demands remains zero.”

That’s right, I am a major-newspaper-certified renowned boondoggle vivisectionist, y’all. Clearly it’s time to order some new business cards.

Okay, the rest of the week’s news:

  • The Los Angeles Rams aren’t the only California team having trouble getting fans to turn out for games in the September heat: The San Francisco 49ers are seeing so many empty seats on the sunny side of their stadium that they’ve hired architects to see if it’d be possible to add a sun shade. One problem: The stadium can’t get any taller, as it’s in the flight path of San Jose’s airport. Until then, the 49ers are handing out free water bottles and sunscreen to fans on the hot side of the stadium, which is nice and all, but probably isn’t what you want for your big marketing push. This once again points up how smart the 49ers management was to stick fans with PSLs before the team got lousy and people noticed how crappy the new stadium was for actually watching football in.
  • And speaking of empty seats, the Cleveland Indians won their American League–record 22nd straight game yesterday, but they still can’t sell out their ballpark, which not that long ago saw a record sellout streak of 455 straight games. Indians GM Mike Chernoff blamed Cleveland’s small size, the start of the school year, and “weekdays,” three things that apparently didn’t exist in the ’90s. At least he didn’t blame the 23-year-old stadium or demand upgrades as a solution — yet, anyway.
  • And also speaking of empty seats, the Ottawa Senators have begun tarping over part of their upper deck for every game, because they can’t sell tickets there. The Senators owner is already blaming his 21-year-old arena for that one (apparently the last owner built it in the wrong place), so team president Tom Anselmi was left to say: “We just need more of us to come to more games more often.” Can’t argue with that!
  • And also also speaking of empty seats, the 2018 Pyeongchang Winter Olympics have only sold about 5% of available tickets so far to actual fans (ticket brokers have bought up another 18%), with less than five months to go before the games start. If you’re looking to snap up a bargain to watch curling, though, be forewarned: Not all the new hotels planned for the Olympics are finished yet.
  • And speaking of seats that a team hopes won’t be empty, the Oakland A’s will be letting in fans for free to a game next April against the White Sox. Make jokes all you want about how dismal an A’s-White Sox matchup will be, it’s still free baseball, and you never know what you might see that you’ve never seen before.
  • NHL commissioner Gary Bettman declared that that the scaled-down Nassau Coliseum is “not a viable option” for the New York Islanders, two weeks before the team is set to present plans to Nassau County for a new arena near Belmont Park. A total coincidence, I’m sure.
  • The Rhode Island state senate started hearings on a new Pawtucket Red Sox proposal yesterday, with the team owners and their allies noting that “the team’s 54-percent share of stadium costs is the highest portion of private investment in 14 AA and AAA ballparks built over the last decade,” according to the Providence Journal. What was that someone was just saying about using bad decisions to justify terrible future decisions?
  • Deadspin’s Drew Magary has come up with a new nickname for the Atlanta Falcons‘ new iris-roofed stadium: Megatron’s Butthole. Drew Magary needs to be put in charge of all stadium nicknames, starting immediately.

Ottawa mayor says he’ll consider public money for arena that’s supposed to use no public money

And meanwhile, in Ottawa, where Senators owner Eugene Melnyk promised last year that he’d build a new arena and surrounding development with “no government money” … you know where the rest of this sentence is going already, don’t you?

Mayor Jim Watson isn’t ruling out investing public money into a downtown NHL arena at LeBreton Flats.

“I don’t know if they’re going to come forward and ask for any of those dollars,” the mayor told reporters after Wednesday’s council meeting. “Certainly I want to make sure that whatever happens there is to the benefit of the taxpayers of Ottawa.”…

While the mayor repeated that he wasn’t going “to speculate on something that hasn’t been asked,” it is the first time he has seemed open to the possibility of putting taxpayers money into the arena.

“My bottom line is, whatever is being asked from us, does it make sense and is there a return on our investment whether it be through property or development charges or the increased market value assessment of the property,” Watson said.

Yeah, you know, if you don’t want to speculate about something that hasn’t been asked, maybe openly speculating about it isn’t the best way to go about it. To be fair, Watson was probably asked about this by a reporter, and felt like he had to say something, and so he improvised a line about “return on investment” based on something he vaguely remembered Naheed Nenshi saying, and it ended up as a headline. So cut Mayor Paralipsis a break, okay? This whole talking-while-governing thing is hard.

Senators owner wins right to develop downtown Ottawa site, cost still TBD

Ottawa Senators owner Eugene Melnyk has won his battle with a rival developer for the federally owned LeBreton Flats site, the National Capital Commission awarding him exclusive negotiating rights to develop the 21.6-hectare (that’s 53 acres — you double it and add 30, or something) downtown site. If talks go well, and the federal government approves, then Melnyk would build a whole buncha stuff on the site, including a new Senators hockey arena to replace their old one, which is 20 whole years old but also in the middle of nowhere because their old owner was crazy.

If you’re ready carefully, meanwhile, you noticed that that’s just the right to negotiate to develop the site — still up in the air is how the money would work out, including how much Melnyk would pay for the development rights and whether the project would require any public cash, as he’s previously indicated. (He’s since said there would be “no government money that is going to be granted,” but that doesn’t preclude tax breaks or a discounted price on the land.) This could end being a good deal for Ottawa — if you want to develop undeveloped land, you’re going to need a developer — or a lousy one, depending on how details like that go, and also details like the development timeline, which could stretch as long as 30 years. Win-win or land grab to get a site for a new arena? They still need to talk about it. Meanwhile, are there renderings with beams of light streaming into the night sky? You betcha!

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Developer offers to sell imaginary arena to Senators for imaginary price

The private developer competing with Ottawa Senators owner Eugene Melnyk to build an arena (among other things) on the LeBreton Flats site now says it would consider allowing Melnyk to own the rink if that would make things easier:

“Our attitude is, if we win the bid – and we firmly believe that the Senators should be downtown – we’re there and we’re willing and able to have a variety of discussions,” said Daniel Peritz, Canderel senior vice-president and spokesman for the Devcore Canderel and DLS Group, in an interview.

When asked specifically if that included the Senators owning the arena, Peritz answered: “Under the right conditions, everything is on the table.”

Presumably Devcore wouldn’t build an arena and then just give it to Melnyk for free, so how much would he have to pay for it? And how much would he be willing to pay for it? There’s a hint of a hint elsewhere in the Ottawa Sun report:

Earlier in the day, Melnyk told Postmedia’s Bruce Garrioch that playing in a new downtown arena could mean as much as $10 million more for the Sens’ payroll, so the team “can spend more.”

Does that mean $10 million more after paying for arena construction? Because if not, a new arena sounds like a pretty crappy investment, since it would cost around $500 million to build and only produce $10 million a year in new revenue. And even if that’s net gain, it’s a pretty marginal return on that kind of investment — Melnyk would be better off just putting his money in a mutual fund. (Okay, not the past few months, but in the long term.)

The takeaway here, as always, is follow the money. Once somebody has any idea how to pay for all this, it’s worth taking seriously. Until then, it’s not even pretty pictures.

Senators owners on competing developer’s arena plan: “Whatsamatter with you?”

Ottawa Senators owner Eugene Melnyk is locked in a battle with a competing developer over the downtown LeBreton Flats site, and on Friday he responded to rumors that the other guys could include an arena for the Sens with some quotes for the ages:

“The long and short of it is, the team is not for sale. Never will be in my lifetime, for sure. Number two: you can’t come into my territory. What’s a matter with you? Like, who is going to play there?”…

“How in God’s name do they want to build an arena? I don’t get it because there’s no NHL team available. This team is mine for life. My daughter has already taken first dibs on it when I go to heaven,” he said.

Melnyk said if he doesn’t get development rights to LeBreton Flats, the Senators will continue to play in their current arena out in the boonies, which, um, isn’t much of a threat given that he’s the one complaining about that arena not being “built to last.” Any threat in a storm, I guess.

Senators owner says new arena needed because 18-year-old one “was not built to last”

Ottawa Senators owner Eugene Melnyk is moving ahead with a full-court press (I know, I know, mixed sports metaphor, but I don’t actually know if there’s a hockey term for this) for a new downtown arena for his team, which he says would be a “game-changer” that “impacts the city in a huge way; it impacts the organization in a huge way.” And for those  wondering about why anyone needs to replace an arena that was just opened in 1996, Melnyk has this to say:

“This building, believe it or not, was not built to last 30 to 40 years like people think. We spent a lot of money to keep this building looking the way it is, but … you have to build a new one eventually. I hope in my lifetime,” Melnyk said.

That’s right: The Senators owner (not Melnyk at the time, but his predecessor Rod Bryden) may have spent $188 million and gotten a controversial rezoning of farmland and collected federal money and loan guarantees for a highway interchange and then dumped all its debt through bankruptcy, but he didn’t do that because he wanted an arena that would last! Everybody knows that arenas don’t last 30 or 40 years these days. Or even 20, apparently.

The backstory, of course, is that Bryden wanted to use the arena as the anchor of a suburban retail district, and then that didn’t work so well (see: bankruptcy), so it makes some sense that they’d be interested in moving downtown. Why Ottawa itself would want to chip in to make that happen — and devote municipally publicly owned land to the project as well, instead of dedicating it to another development project that might not require subsidies — is less clear, but Melnyk is sure to keep saying “impacts the city in a huge way” over and over until somebody starts to believe it.

Ottawa Senators to “actively” pursue new arena on public land, with public dollars

And we have our answer to why the Ottawa Senators sponsored an economic impact study earlier this year showing that the team’s presence is worth kajillions of dollars (with the exchange rate, that’s basquillions of dollars) to the city:

The group that operates the NHL team — Senators Sports & Entertainment — has confirmed to the Citizen that it is “actively considering the opportunity” to build a new hockey arena on the grounds of LeBreton Flats.

The Senators’ current home, the Canadian Tire Centre, is only 18 years old, but it’s also in the middle of nowhere thanks to an ill-conceived plan to make it the centerpiece of a suburban shopping district. (Now where have I heard that before…) LeBreton Flats is public property, and is likely to be the site of a bidding war for the right to develop it, so presumably at least the Sens owners wouldn’t have the gall to ask for public subsidies on top of

Of course, any plans for a new arena will require support not just from private investors but community support as well. Tax dollars at work, so to speak.

Oh, Canada.

Another day, another rosy sports team economic impact study (Ottawa Senators edition)

The University of Ottawa released a study yesterday on the economic impact of the Ottawa Senators on the Ottawa metro area, and you can probably predict what it said, especially if I tell you that it was mostly drawn from figures provided by the team. But, sure, here’s the study’s nut graf:

As reported in Table 2.4, the estimated annual economic impact of SSE on the Ottawa-Gatineau CMA is $204 million (direct and indirect) based on a direct financial impact of an estimated $100 million. An extensive list of intangible benefits for the CMA was also measured and provides evidence of the importance of SSE to the local market.

As in most team-supported economic studies, there’s a lot to question here — for starters, more than half that direct financial impact ($55 million) is supposed to come from spending by visitors from outside the city, but given the team sells around 800,000 tickets a year, 25% of them to out-of-town visitors, that would mean non-Ottawans are averaging $275 in spending apiece on going to hockey games, which seems more than a little steep. Not to mention that it would require all those ticket buyers to be in Ottawa solely to see hockey, which also seems like a reach.

But rather than picking apart this report in detail (you’re welcome to do that yourself; PDF is here), I’m more interested in why on earth it’s being issued now in the first place. The Senators aren’t looking for a new arena or threatening to skip town — their arena is just 18 years old and they own it, so it’s not like they could easily up and leave even if they wanted to. (If the Senators left, their arena operations arm would just be left with a bunch of empty dates to fill.) There was a flurry of complaint from team owner Eugene Melnyk last summer about the city allowing a new casino at a nearby racetrack and not allowing him to build one, so maybe this is part of a late-breaking plan to get his own self one of them casino licenses, too? Or maybe he’s out to get one of those Florida Panthers-style “give us money to subsidize our operations for no real reason other than that we want it” deals? Or maybe, given that the U of Ottawa report says it was delayed because last season’s NHL lockout left it without enough good data, this was just meant as ammunition for last year’s casino fight, but arrived too late to make a difference. Guess we’ll find out soon enough.

New book by Harvard prof details $10b in hidden stadium and arena subsidies

Hallelujah! After years of waiting, Harvard stadium researcher Judith Grant Long’s book is finally out, and while I haven’t seen a copy yet, Bloomberg News has and provides some highlights of her findings:

  • The 121 sports facilities in use during 2010 cost taxpayers about $10 billion more than is commonly reported, thanks to hidden subsidies for things like land, infrastructure, operations, and lost property taxes.
  • Once hidden costs are taken into account, the average sports facility split is 78% public, 22% private.
  • The worst deals for the public include stadiums for the Indianapolis Colts, Cincinnati Bengals, and Milwaukee Brewers, each of which managed to rack up more in subsidies than the stadiums themselves cost to build. Best deals include venues for the Columbus Crew, Toronto Maple Leafs, and Ottawa Senators.
  • Arenas are generally better deals than stadiums, because they cost less to build. And  small cities tend to get get worse deals than larger ones, since they have less leverage to keep a team in town without large payoffs.

If you’re not familiar with Long, she’s been a favorite reference of FoS ever since she first started publishing her “Full Count” data on the true costs of sports facilities close to a decade ago. (At one point her book was also going to be called “Full Count,” I believe, but it ended up with the slightly less pithy title “Public/Private Partnerships for Major League Sports Facilities.”) Until Long came along, for example, it wasn’t clear that the Minneapolis Metrodome was actually one of the best deals for the public, thanks to a lease that forced the teams to actually share revenues; you can read more about her work in a profile I wrote of her for Baseball Prospectus back in 2005.

Needless to say, I’ll have much more to say about this once I’ve actually gotten my hands on a copy. (Which will have to wait until Routledge starts sending out either review copies or e-books, because $125 isn’t in my research budget.) But suffice to say that this is big, big news, and will be a huge boon to anyone trying to suss out the true public costs of stadium and arena deals after all the parts have stopped moving.