City Funding Likely For New LeBreton Arena: STANKOVIC

NHL Commissioner Gary Bettman’s had some recent nuanced thoughts about the future of the proposed new Ottawa Senators arena at LeBreton Flats.

Bettman emphasized that the project’s success hinges on strong local business and community support as well as public-private partnerships involving municipal and provincial governments. He was also asked what this all means to Ottawa taxpayers. He gave a vague response stating that “people are going to speculate…what does it mean to taxpayers? Don’t go there yet. There are too many things that have to come together before anybody should draw any conclusions whatsoever” – foreboding advice indeed.

Rather than talking about possible public funding, Bettman instead described the new arena as more than just a hockey and sports venue portraying it as a centrepiece for the city’s urban and economic growth and in particular, for the revitalization of the downtown. Bettman referred to the City of Calgary where the new arena for the Flames as an example of such an investment to the its downtown revitalization efforts.

Making such positive statements often turn out to be just preludes to seeking out public funding support. We heard it all before at Lansdowne Park.

Bettman also tried to deflect the public-funding concern by stating that there are examples of Canadian NHL arenas were built primarily with private sector financing. He did not specifically identify which ones they were but he was likely referring to Toronto (Scotiabank Arena), Montreal (Bell Centre) and Vancouver (Rogers Arena). The other three arenas at Calgary, Bettman’s choice, Edmonton and Winnipeg all involved significant public funding amounts in their construction.

It is interesting to note also that the new Ottawa Senators owner, Michael Andlauer, cited the Edmonton deal as an example of a potential public-private partnership model that might work at LeBreton Flats. The City of Edmonton put in $343 million ($231 million from the City’s Community Revitalization Levy Program which allows the city to borrow against future property-tax revenues – a type of tax increment financing which is widely used by U.S. cities) towards the construction of Rogers Place at a total cost of $614 million. Rogers Place is owned privately by the Edmonton Arena Corporation with the city owning the land. In the case of Bettman’s pick, Calgary, the city contributed $537 million towards the total cost of $1.2 billion for the new Scotia Place arena and event centre with the Alberta throwing in another $330 million.

And it’s not totally accurate that the other arenas in the three largest cities did not involve public funding at least indirectly. For example, Maple Leaf Sports & Entertainment did secure an arrangement with the City of Toronto to cap property taxes for the Air Canada Centre (now ScotiaBank Arena) at a fixed rate from 1999 to 2019. In Montreal, the city also lowered the property-tax rate for the Molson Centre (now Bell Centre). In virtually all seven NHL Canadian arenas, cities also supported new developments by expediting planning approvals and investing in infrastructure improvements such as roads and public transit connections.

Ottawa also cannot use the larger NHL markets as benchmarks or best practices in terms new arena investments as Bettman suggested. Montreal, Vancouver and especially Toronto have a larger population/customer base to draw from as well as a corporate market which largely does not exist in Ottawa. As a result, the larger markets are more competitive compared to the smaller cities in terms of attracting other revenue streams. For example, the Toronto Raptors also play their home games at the Scotiabank Arena. It is also highly unlikely that Taylor Swift would be able to have 6 consecutive concert events anywhere else but Toronto in the former SkyDome. Scotiabank is reported to have paid a whopping $800 million for the naming rights compared to the then existing $4 million a year with Air Canada.

Ottawa’s history with the Palladium (then Corel Centre, Scotiabank Place and now Canadian Tire Centre) reflects the challenges of a small hockey market. Although the construction of the $188-million arena (completed in early 1996) did not involve municipal funding contributions, Terrace Corporation did receive a $6 million grant for the federal government and a loan guarantee from the province for the construction of Highway 417 interchange. Local Kanata residents also opposed the rezoning forcing public hearings into the proposal at the then Ontario Municipal Board.

The board imposed a scaling down of the arena’s seat count and placed a moratorium on future development outside the original 100-acre arena site. The Senators’ franchise also struggled to survive financially over the years with well below league average attendance and frequent rumours of relocation to other cities.

Back in September last year, Andlauer stated that a new arena at LeBreton Flats would be costly and that it has to make economic sense for everyone one involved – public and private. He added that “I don’t know what it’s going to take”.  It sure looks like the Senators owner knew what he was getting into before buying the team and before immediately asking for funding support. Based on the history of NHL arenas built in Canadian cities including Ottawa, it would be hard not to conclude that some level of financial assistance, direct or indirect, from the City of Ottawa and possibly (likely?) other levels of government will have a part of any future new arena at LeBreton Flats. After all, Mayor Mark Sutcliffe did indicate in March of 2023 that public funding for the new arena has not been ruled out but a lot has happened since then.

There is little argument, except maybe from some businesses and residents in Kanata, that a new Senators arena at LeBreton Flats will significantly contribute to the revitalization of the downtown and that it is a much better location than being left in suburbia. The more important issue is how any future public-partner partnership will be negotiated.

The concept is not exactly a popular one right now amongst many Ottawa residents because of the lack of transparency and accountability around Lansdowne Park not to mention other significant political decisions such as the procurement process for choosing the LRT builder. Anytime there is direct or indirect public funding involved in new sports arenas or stadiums, there has been controversy around subsidizing private sector real estate interests. The Calgary arena deal is filled with it and much of the public criticism resembles the concerns surrounding the Lansdowne Park redevelopment.

As Bettman put it, if all else fails, there is still the Canadian Tire Centre.

Dan Stankovic is an Ottawa consultant and former municipal public servant in economic development and housing.

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