Tuesday 21 December 2010

Charge more: problem solved!

When it became known that the newest, revised, Blue Bomber stadium deal would plunge the Blue and Gold $85 million in debt, the obvious question was: how is a team that lost money four of the last five years* going to pay off $85 million??

The answer: playing well. Well, okay, that's just my solution. The official answer:
1. Facility fee of $6 a ticket.
2. Entertainment tax of 10 per cent on each ticket sold.
3. Increased ticket sales, corporate suites and parking revenue.
4. Naming rights.

Would I pay $6 more for a ticket? Ya, probably. Just having enough leg room is worth $6 to me. What's that? Oh right .. the entertainment tax ... Jeeze .. This is starting to feel like buying an airline ticket. Facility fee, entertainment tax, and whatever fees Ticketmaster screws you with when you buy through them. How much is a ticket? $40. Okay I'll take two. Kay, $120 please.

Alright: so new tax and new fee ..would I pay $10 more per ticket? Probably. I have good job and only go to a couple games a year anyhow. Would a single income family of 4 pay $10 more per ticket? That I can't answer. It might be a tough call.

I don't doubt that the first couple of years will see a boost in ticket sales, but after the novelty of the new stadium wears off the decision to buy tickets will once again come down to dollars and cents. The more dollars, the fewer tickets will be sold.

Which is why item #3: increased ticket sales, is a problem. You know how you increase ticket sales? Decrease the price. Selling more tickets while increasing the price is a dubious business plan. It might work out if this were a three year proposition, but this is a 44 year commitment here. There are going to be stretches in those 44 years when the Bombers fail to make the playoffs and struggle to get asses in the seats, and during those years the Bombers will get crushed under the weight of the $4.5 million annual mortgage payments. And what happens in that case? The province will have to bail them out. Or they go bankrupt, in which case the Bank of You and Me ends up holding the bag anyhow.

Not to mention that 44 years from now, if not earlier, this ball park won't be so "world class" anymore and will have increasing maintenance and repair costs. We may even be replacing this sucker before it's paid off.

So ultimately this isn't Bomber debt -- it's provincial debt. It is community debt. It is taxpayer debt. All of this stuff about paying off the stadium though increased revenues and TIFs and whatever is all just slight of hand. There is no private money going into this project because the powers that be committed to a specific partner with a specific project that turned out to be a dud, so however you slice it, this is a publicly-funded project.

And whatever .. so be it. I do think we need a new stadium: The seats in the current one make me feel like Andre the Giant, and investing more money into that dump would be a travesty. It's not unreasonable for a government to fund an entertainment facility like this every so often. (what is unreasonable is for a government to back a failing team to the tune of $200m over 6 years, but that's another story..) It would be nice if they were honest about it, though. (I know ... dreamland ... right ...)

Just out of curiosity ... point number 4: Naming rights. How is this new revenue? Is Canad Inns not paying for the naming rights to the current stadium? Or are they also selling naming rights for the goal posts, mascots and the touchdown canon? Oh look! Half Pints Buzz is driving the CentrePort airplane around the WRHA canon!

Anyhow... Go Bombers!

*For reference: Bomber revenues:
Bomber costs:


Scott MacNeil said...

"So ultimately this isn't Bomber debt -- it's provincial debt."

Truer words, save "It's the economy stupid", were never spoken.

One Man Committee said...

I think I'd have to consider myself an optimist on this one. Numbers always seem more daunting when you're looking years into the future.

Look at Edmonton's Commonwealth Stadium - the biggest and best outdoor stadium in Canada. It cost $20.9 million to build in 1978, and probably at least $10 million more to expand to 60,000 seats in 1982.

At the time, if the Eskimos had entered into a situation similar to the Bombers where they had committed to repaying half that - $15 million over 40 years, it would have seemed like a crushing amount of debt to be saddled with. But in hindsight, the amount of revenue the stadium has allowed them to generate in all likelihood probably makes the hypothetical $15 million seem like chump change in the long run.

On another note, higher ticket revenue doesn't necessarily mean stratospherically higher ticket prices either. With luxury boxes, a lot of companies that currently hold a few club seats might upgrade to a full box, driving up revenue for the Bombers that way. But ticket prices could stand to be increased - for years, we've had some of the lowest prices in the CFL. Look at a seating chart in Montreal, Saskatchewan or BC and you'll see what I mean.

cherenkov said...

Did they put the burden of the costs of the stadium on the team? If so, then good for them in managing it. This web site says it was "100% Publicly Financed": http://football.ballparks.com/CFL/Edmonton/index.htm

Anonymous said...

$10 more per ticket and increased parking costs (Transit is not an option)? NO frickin way! Sorry but I will just watch the game on my non blacked out East or West TSN feed (depending on the Blackout).

cherenkov said...

Transit is most certainly an option. Just take the bus downtown, hop onto the BRT. Get off the BRT at the Jubilee station, and transfer on to the LRT or monorail or maglev or whatever, then get off the LRT at the Bison Drive station and transfer on to the stadium shuttle, and then get off the stadium shuttle and walk to the gate. Piece of cake!!

One Man Committee said...

I do believe that Commonwealth Stadium was publicly financed as the article indicates. But if it had come down to whether or not the Eskimos could take on the burden of paying for half of the fully-built stadium ($15 million, let's say) over 40 years, in hindsight it's pretty clear that they would have been far better off taking the deal instead of continuing to play in the outdated and undersized Clarke Stadium.

Gustav Nelson said...

Why not just go back to Ledochowski and let him pay for building it? He was willing to fund his own stadium, was he not?

Cut the losses now.

Instead of an entertainment tax, there should be a 100% Asshole Tax, only inclusive of the Aspers and Greg Selinger for getting us into this mess.

Anonymous said...

Stadium is in the wrong location, as for amateur sport nonsense, it was pointed out in a blog , that very few attend current facility to take in amateur sport. Add to that, the UofM will now lose another stadium, as a blogger mentioned, , and we have a real fine piece of garbage handed to us on a platter...eat up, pay up, and shut up.

And we don't even know what its going to cost . But wait, soon you'll be able to purchase shares ( cheaper wall paper at WalMart ).

Anonymous said...

Toronto's Skydome is a great example of stadium financing. The private sector was going to build it for $125 million. The government was to have no part in it, except to guarantee the loans. Very disparaging remarks were made of the expense of government financed stadia, epitomised by the Big Owe of Montreal. By the time the Ontario government took it over, Skydome was $500 million in debt and needed 400 events a year to break even. As an anayst on CBC Radio pointed out, there are only so many Tractor Pulls a market can bear in a year.

The New York Times recently wrote about the debt legacy of long deceased stadii. (http://www.nytimes.com/2010/09/08/sports/08stadium.html?_r=1). Giants Stadium was demolished last year but the State of New Jersey still owes $110 million on it.

Back when the Jets were talking about the need for a new arena, the Oilers were discussing moving to Minneapolis. The differnce then in media coverage between Winnipeg and Minnesota was striking. With the exception of very few columnists, most Winnipeg media people were shrill shills for a new arena. In contrast, one weekend the St Paul paper had a full section just discussing the economics of arenas and professional sports teams.

cherenkov said...

Thanks for the comment, Anon.

It's hard to believe they once thought the Skydome could be built for $125m

/* Google Tracker Code