The Canadian Tire Centre hockey arena is seen in Kanata, Ont., in 2022.Spencer Colby/The Globe and Mail
Scott Stinson is a writer based in suburban Toronto and author of the Unobstructed Views newsletter.
Attempts to get a downtown arena built for the Ottawa Senators have so far fallen apart even before getting to the thorny question of who will pay for it.
Now the push to move the Senators downtown from their suburban home is back, and it is still unclear who will pay for it. There should at least be one clear answer: not the public.
The National Capital Commission, which owns the planned LeBreton Flats site in downtown Ottawa, signed an agreement late September over a parcel of land with billionaire businessman Michael Andlauer, who bought the Senators just over a year ago. The deal was characterized as an important first step in the process to relocate the team from Kanata, just outside Ottawa, where they have played since 1996.
Senators executive Cyril Leeder said the project, which includes an entertainment district of bars and restaurants that is now standard practice with a new arena, should be privately funded. Ottawa Mayor Mark Sutcliffe has said he didn’t think there would be public support for having taxpayer money back the development, which could easily pass $1-billion in total costs.
But despite what proponents and governments say in the beginning, these projects often end up being not-so-privately-funded, benefiting the owners of the sports franchise above all else. Tax breaks are sought, development charges are waived, environmental assessments are carried out with municipal funds, all to speed up the process that all sides want to see to completion.
Municipal officials often incorrectly see a new arena as a shiny new toy and moneymaker for a city, bringing promises of concerts and festivals alongside the hockey games. History suggests that if an NHL ownership group holds out long enough, eventually public money comes to the table, making the project that much more of a winner for the hockey club. It’s one of the great scandals of modern sports, repeated in countless cities.
Consider the case of Calgary. Efforts to replace the Saddledome, the creaky home of the Flames, had failed repeatedly at the funding hurdle. A 2015 proposal, which also included a football stadium among other big-ticket items in a plan initially pegged at over $1-billion, died when it turned out that environmental cleanup at the proposed site would have at least doubled the total cost. A scaled-down $550-million arena plan also collapsed four years later when the city and the Flames couldn’t agree on who would cover cost overruns.
And then suddenly amid a provincial election campaign, Alberta Premier Danielle Smith was committing $300-million of public money to a new arena, which will be backed by an even larger contribution, more than $500-million, from municipal funds. The Flames ownership group, comprising wealthy businessmen, will contribute a little over a third of the estimated total $1.2-billion project cost in the form of a long-term arena lease.
The provincial funding is technically earmarked for roadwork around the new arena site and the construction of a community-use arena, but this is just semantics: Taxpayers from Edmonton to Red Deer are helping pay for the Flames’ new home, whether it’s for off-ramps or luxury suites.
And taxpayers do not get their money back. Sports teams repeatedly pull off this trick by emphasizing how the whole community will benefit once the arena is completed – think of the bars and restaurants! – and there will inevitably be a favourable study of the economic impacts. But these forecasts reliably ignore that the money spent in and around the new arena is mostly just money that would have been spent at other local bars, restaurants and events.
Another popular move in such public-private arrangements is for governments to shoulder the upfront building costs because it’s easier for them to acquire funding, while paying off the resulting debt over time with tax revenues from the new development. But this process puts all the risk on the taxpayer, which is left in a financial hole if the promised booming district doesn’t materialize. Ask the residents of Glendale, Ariz., – the former home of the Coyotes – how that can work out.
Mr. Andlauer is at least unlikely to claim, as often happens when arena funding is being sought, that the Senators aren’t viable without a new home. He did just buy the team. Caveat emptor, and all that.
But it is also true that between now and the time when the financing breakdown for the LeBreton Flats is fully determined, there could be election campaigns at all three levels of government in the Ottawa area. That is a lot of opportunity for some politician, or would-be politician, to pull on a Senators jersey and promise the arena plan a timely taxpayer assist.