How Much Do Fury, Redblacks And 67’s Pay To Use Lansdowne?

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The city stadium taxpayers paid to refurbish at Lansdowne.

 

The City of Ottawa in its negotiations with the Ottawa Senators has made a point of saying that the municipality will not subsidize professional sports in this community.

Fair enough … so why has the City of Ottawa been subsidizing professional sports in this community?

For the use of the city-owned Lansdowne Park arena and stadium the city, the revenue accrued by Fury, 67’s and Redblacks is part of the so-called waterfall of funds that goes to the municipality.

The waterfall to the city recently is a meagre $1.47 million annually. Included in that is a part of the revenue made by the above sports teams, if any. Lansdowne over the next 30 years is expected to make about $508 million. Of that the city is expected to receive about $33 million.

This after the city poured $211 million into refurbishing the stadium and arena plus rented very valuable land to Ottawa Sports and Entertainment Group on the site for a nominal fee. Revenue generated from the city waterfall goes back to refurbishing the city properties at Lansdowne like the arena and stadium.

So The Bulldog asked the city if the three sports teams pay rent. The answer from Geoff Cantello, senior legal counsel, is as follows:

“The question is not consistent with the business model that was followed for the revitalization of Lansdowne Park. The agreements between The Ottawa Sports Entertainment Group and the City are not based on simple lease arrangements. They are based on a closed financial system with distribution of Net Cash Flows to each partner based on a waterfall of priorities structure.”

So what I take from this is that revenue from the three sports teams is part of the $1.47 million a year the city receives from OSEG in the waterfall. In other words for all the money the municipality has put into Lansdowne, it would have garnered more revenue by putting that $211 million into a bank savings account.

So three sports teams which don’t pay rent due send some amount of $1.47 million paid to the city. What that is? Who knows but it’s probably a fraction of it.

So do the sports teams pay rent? No. They might, if they make a profit, or they might not. Such is the clarity of Lansdowne.

But no matter … the $1.47 million the city accrues annually from Lansdowne goes to refurbish city properties in the park. So the net gain for taxpayers on some of the most valuable land in Ottawa and paying $211 million to refurbish properties on the site is … nothing.

So do the Redblacks, Fury and 67’s pay rent to use city-owned facilities at Lansdowne?

In a word … no.

And so much for the argument that the city does not subsidize professional sport in this community.

 

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5 thoughts on “How Much Do Fury, Redblacks And 67’s Pay To Use Lansdowne?

  1. To say the question of whether the sports teams pay rent “is not consistent with the business model” is not consistent with most people’s understanding of the English language.

    A “financial system” is the procedures for tracking financial activities between lenders and borrowers. This is bookkeeping. My chequebook is also a “closed financial system”. It is meaningless here and only serves to obfuscate.

    The “waterfall of priorities structure” is what was being asked. Who gets paid when and under what conditions? Do they even pay? What senior legal counsel confirmed is that some people may be paying back on their loans according to an agreement that prioritizes some lenders over others (the waterfall).

    Ken’s assessment that the sports might be paying anything at all is optimistic at best. Wouldn’t surprise me if the sports team, as the anchors of the project, are paid to use the space. Worse thing that could happen for the city in Lansdowne is for the stadium to sit empty.

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    1. K.A.

      Thank you for this.

      The answer to a question is that it is very complicated and that your question is inappropriate is not an answer … It’s a patronizing dodge.

      I’ll tell you, if I’d negotiated such a bad deal, I would at least have the good sense to be humble. But then these are people with a huge sense of entitlement and most have not worked in the real world for some time or at all. You get haughty when you don’t have to prove yourself every day.

      Then when they make a boo-boo, which is often, they just try to cover it up. What a sad existence. But the cheque still comes in at the end of the week.

      If there is a financial system to be had, then tell us what it is and how it operates in the example of the teams mentioned. Provide some numbers.

      And suddenly no one was available to answer my questions.

      If the city were making huge money from Lansdowne, they’d be quick to tell us how much it was.

      Now they just obfuscate and say nothing.

      Obviously no one is happy with the Lansdowne deal at the city and they’re doing their best to cover up the embarrassment.

      I can just here it. “I don’t want to talk to Gray.” “Neither do I.” “You talk to Gray.” “Not me.” “You want me to defend that?”

      Unfortunately I have an over-rated reputation for being a incisive interviewer. Former city manager Kent Kirkpatrick once held a meeting with his senior people on how to handle an interview with Gray. When LRT management learned I was on the Citizen editorial board, they cancelled a meeting they had planned. So it goes.

      Maybe they should learn I just want to find out what’s going on.

      Back to Lansdowne. The teams pay a fraction of $1.47 million a year. So it is a piddling return from the teams.

      Truly, if I negotiated such a deal, I would be embarrassed and I’m not much of a negotiator.

      cheers

      kgray

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  2. Well, in the city’s defence, and I’m going to play devil’s advocate a little bit on this one.

    Last I heard it was costing them around $4 million a year to maintain so technically it’s a $5.5-million-a-year turnaround. Even with the questionable accounting you’d have to do, at that rate it will only take 38.3 years to get our money back.

    Then again, the OSEG partners are all good friends of Mayor Jim Watson and I’m 100-per-cent sure there’s no shenanigans on that front. (On a side note, I’m looking for some swampland in Florida.)

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    1. Thank you for this, Nicholas.

      Let me play non-devil’s advocate with you to say that you go into business to make a lot of money. If you want to make a little money, put your funds in the bank.

      This return, even if you accept your math on the amount Lansdowne was costing prior to development, is ridiculously small.

      Maybe the non-business minds at city hall can brag about it.

      If so, they don’t know what they are talking about.

      cheers

      kgray

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  3. To say the question of whether the sports teams pay rent “is not consistent with the business model.”
    What I heard through the grapevine is, John Manconi redefined that comment as: “it’s a promissory note to maybe pay more at a later date”.

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