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.
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.
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.
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.