Does arena deal
give Fronts home-ice fiscal advantage?
By Rob
Tripp
Saturday, June 03, 2006 - 07:00
Local News - Nancy Diamond doesn’t live in
Kingston, but she has followed closely the city’s plan for a nearly $42-million
downtown entertainment centre.
The owner of a cottage in neighbouring Leeds and Thousand Islands, Diamond is
part of the target market for what the city touts as a regional sports and
entertainment centre.
She’s concerned that the centre is being built, in part, to ensure the success
of the city’s junior hockey team, the Kingston Frontenacs.
“When did the taxpayers of the municipalities become responsible for private
hockey clubs?” wonders Diamond, who brings considerable experience to the
debate.
She was the longest-serving mayor of Oshawa, holding the job for 12 years, and
she is now a vocal critic of spending by the current Oshawa council, where a
$50-million downtown entertainment centre is nearing completion.
It is expected to open this fall, a year ahead of Kingston’s facility.
The pact with the Springer family, owners of the Frontenacs, is a crucial part
of a civic plan to build the Kingston facility without hiking taxes.
City Hall says the new centre will spur economic growth, ensure sustained
development downtown, grow sport tourism and inject millions into existing
businesses.
“I do not buy the so-called economic benefits of these arenas,” Diamond said.
“The benefits accrue to the team, not the municipalities.”
She gives credit to Kingston for making public the full agreement with the
Frontenacs. In Oshawa, she and a group of concerned citizens are battling the
city through the freedom of information law to get a copy of the new deal with
the Oshawa Generals, the junior hockey team that is the primary tenant of that
city’s new centre.
The City of Kingston forced The Whig-Standard and citizens to use the same
access law last year to obtain the existing agreement between the city and the
Frontenacs for use of the Memorial Centre.
When the deal was released, key financial details were blacked out, making it
difficult to compare it to the new agreement.
The new deal has been touted by senior city staff as one of the best in Ontario
between a junior hockey club and a city.
“It’s a fair agreement and it’s well balanced and it works for both parties,”
Don Gedge, centre director, told Kingston politicians as they debated on Tuesday
night whether to build the facility.
Gedge said the $1.50 surcharge on every hockey game ticket is one of the largest
surcharges for hockey tickets among Ontario centres.
In London, he pointed out, there is no surcharge on hockey tickets.
The city pockets all of the surcharge, an amount it projects will total $240,000
the first year the centre is open.
This is less than what was projected in a business plan drafted last year. That
plan pegged the surcharge at $2 per hockey ticket, rising by 50 cents every five
years. The escalation survived in the final plan, but the initial rate was
reduced 50 cents.
The city explained this, pointing out that surcharges on OHL tickets in other
facilities range from zero in London’s John Labatt Centre to $1 per ticket in
the new rink being built in Oshawa.
A surcharge of 75 cents to $1 dollar already is in place on hockey tickets for
Frontenacs games at the Memorial Centre. An adult ticket to a regular season
game is $14.
Under the new deal, the city also keeps 10 per cent of ticket revenues, expected
to total $170,000 in the first year.
The city also pockets 90 per cent of food and beverage revenue from hockey
games, projected at $320,000 in the first year.
Some Kingston councillors weren’t convinced the pact is a good one for the city,
noting that:
The Frontenacs do not pay for two hours of practice time each day during the
season;
The club can refuse to allow any other hockey team or sports tenant to use the
facility as its home ice;
The club will be given one of the private suites;
The club will be provided 15 parking spaces “within a reasonable distance” from
the centre;
The club receives 15 per cent of the value of naming-rights payments if it
introduces the buyer of the rights to the city;
Frontenac games take priority over all other events.
The hockey priority in the agreement irked Councillor Sara Meers, who recalled
the longstanding claim of arena boosters who suggested it could attract big-name
performers who are travelling between major centres.
If hockey always takes priority, there will be little flexibility to book those
acts, she argued. Performers can stop in Kingston, but they’ll be shut out from
performing at the facility.
“I hope there’s a hotel room for Sheryl Crow,” Meers chided.
Gedge pointed out that the economic success of the centre is tied centrally to
the hockey team.
The city predicts $1.5 million annually in hockey-related revenue.
“If there is a scheduling conflict, we’re partners with the Frontenacs,” Gedge
said.
Revenue projections are based on the average attendance at hockey games being
4,000 spectators.
“I think we’re being way too optimistic,” Councillor Steve Garrison said.
The team had an average attendance of 2,738 over three home playoff games at the
end of this season, according to the club’s game reports.
The team reported an average attendance of 2,267 spectators over the final 10
home games of the regular season.
The Memorial Centre has a capacity of roughly 3,300.
Gedge said attendance has risen and stayed up in communities where a new
facility has been built.
It is in the interest of both parties to ensure attendance increases, he said.
“If the attendance were to drop down, both parties lose,” Gedge said.
A majority of councillors were comfortable with the attendance projections
despite Gedge’s caution.
“There are no guarantees,” he said.
Debate also focused on the fact that there is no guarantee the team will remain
in Kingston.
The deal gives the city 30 days to negotiate the purchase of the team, should
the owners decide to sell or move the team.
If the hockey club goes bankrupt or insolvent, the city can terminate the
agreement and take legal action to recover “lost revenues during the remaining
term of the agreement.”
The agreement is a 20-year contract, beginning Sept. 1, 2007.
The team can consent to four five-year renewals under the same terms.
Frontenacs president Doug Springer was not available for comment yesterday.
rtripp@thewhig.com