Saving the Jackets The Columbus Dispatch Saving the JacketsDon't fall for this Columbus.
Unless relief can be provided from a problematic lease and other financial burdens, Columbus eventually could lose its NHL team, consultant's report says
First off, here is a great opportunity to fix this city held hostage by sports team demand made through a hired conultant.
The fix for the ages for Columbus -- as well as for all sports cities in the major leagues in North America is one word. "R E L E G A T I O N!"
The big leagues in Europe do it. And, the swim league in the eastern burbs did it too. Lots of sense, and it would help our Pittsburgh Pirates in Major League Baseball as well.
If a city wants to own a NHL team, a NFL team, a NBA team or a MLB team -- then that city should build a team that is successful in the minor-leagues. Then they can play their way into the big leagues.
The league rules should change so as to move the worst team OUT of the top tier and relegate that team to the minor leagues. Furthermore, the best team in the minor leagues would get to move into the majors.
The Pittsburgh Pirates, a last place team in the National League, might make a great team for the AAA League. Let's have the Pirates play against Peoria.
With relegation in effect, a team can't be purchased and moved into a slot that is not earned.
A discussion of whether a move to another city is possible "to us, is not fruitful," he said. "We're just trying to educate that (public support) is what a sustainable model looks like." The relegation solution is sustainable for the overall model. Often, a team has to stretch its finances with its big-league payroll to get the players to compete with the Yankees. In a lesser league, the costs are lower in terms of how much is paid to the players.
Big time ticket prices might not fly in a smaller city. Big time sponsors might not come when you play Peoria and not Chicago. Fine. Teams and organizations will better fit their sustainable model on how much to invest based upon the market conditions.
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Saving the Jackets
Unless relief can be provided from a problematic lease and other financial burdens, Columbus eventually could lose its NHL team, consultant's report says
Thursday, November 5, 2009 6:00 AM
By Bill Bush and Barbara Carmen
THE COLUMBUS DISPATCH
Doral Chenoweth III | DISPATCH
Peter Quint, a cannon sentry in Nationwide Arena, waves the flag at the Columbus Blue Jackets' game against the San Jose Sharks last night.
Michael Arace commentary: Casino could cast cloud over Arena District
The Columbus Blue Jackets could leave central Ohio if the team can't fix an economic model that is causing losses of $12 million a year, according to a report issued today by the Columbus Chamber. But a deal to keep the hockey team here and the Arena District alive -- the team and the district generated $30 million in taxes last year -- probably will include asking for public dollars, and soon.
"We believe there is a sense of urgency here," said Ty D. Marsh, chamber president and CEO. "We're looking for a solution or progress by the end of the year."
Marsh said the goal would be a financial package that would relieve the Blue Jackets of significant costs, potentially including $5 million a year in arena rent and $4 million in operational losses.
"The current ownership group is not in a position to continue to deal with the arena's structural (financial) problem," said Mike Priest, president of the Blue Jackets.
"Time is of the essence," he said. "This process was started a long time ago."
Priest declined to answer whether the team could leave Columbus absent bankruptcy, given its long-term lease with Nationwide Arena.
A discussion of whether a move to another city is possible "to us, is not fruitful," he said. "We're just trying to educate that (public support) is what a sustainable model looks like."
Marsh said he will take the report to the community, including elected officials. "Our goal is to have a community-wide discussion. We want to keep the team here."
But the timeline would not leave time for a community vote -- the decision would be made by elected officials at the local and possibly state level, Marsh said. Two of three county commissioners said in May that they would oppose any measure that didn't go before voters.
Mayor Michael B. Coleman said today that he agrees that the public and private sectors should look for ways to keep the Blue Jackets in Columbus.
However, "we will not use city tax dollars from our general operating fund that are dedicated for basic city services," Coleman said in a statement.
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The chamber in August commissioned a study of how to make the Blue Jackets financially viable. The author, finance expert Stephen A. Buser, outlined options but didn't make a recommendation.
The professor emeritus from Ohio State University concluded, though, that the current ownership structure likely can't continue to work.
"A bunch of (other professional hockey) teams started out similar to this in other cities," Buser said. But those deals, within years, began "dying by the wayside."
Voters had repeatedly rejected using tax dollars to build an arena when a local business partnership stepped up to build Nationwide Arena.
Nationwide owns 90 percent of the arena, and The Dispatch Printing Company, owner of The Dispatch, 10 percent. JMAC/Worthington Industries owns about 80 percent of the team, with the remainder owned by a Dispatch Printing Company subsidiary, real-estate developer Ron Pizzuti, Crane Plastics and former Columbus Chill owner Horn Chen.
The Blue Jackets pay rent to the owners of the arena. Under the lease, the Jackets can rent the arena for concerts and events, but that business is losing money, Buser's report said. If the Blue Jackets had free rent and arena-naming rights, the hockey operations would basically be breaking even, but the other business of booking concerts and events would still lose about $4 million a year.
Nationwide Arena competes for concerts and other events with venues run by OSU, Franklin County and the Convention Facilities Authority.
Even if Nationwide Arena attracted every concert, the central Ohio market is not big enough to cover expenses, Buser said.
An attempt to get Franklin County to buy the arena stalled last summer. The team had tried to persuade Ohio lawmakers to amend the state budget bill to allow a countywide "sin tax" on alcohol and cigarettes.
The proposed deal called for Franklin County to pay $65 million for the facility, Buser's report said. In 2003, Nationwide argued before the Franklin County Board of Revision in a property-tax case that the arena was worth no more than $46.5 million.
"I don't believe that anybody agreed on a valuation" to pay $65 million, Priest said, but he added that the sale price would be up to Nationwide. About $10 million of any sale would go to the team to compensate for the adjacent practice facility and concessions improvements, he said.
Buser focused on the economic benefit that the arena and team are now providing to the central Ohio economy. Using conservative figures -- just 10 of the 170 businesses located near the arena -- he found that the tax contributions from team and spinoff development could grow to $43.8 million by 2013. By 2018, the number could be $60.7 million.
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If the team left town, those taxes would not go to zero, Buser acknowledged. He noted that a possible casino could be "a huge factor," but its effect was not part of his report.
One of the alternatives Buser lays out is to ask the state, which is projected to get nearly $30 million a year in taxes by 2018, to share some of that wealth by providing capital-improvement dollars to operate the arena. He also outlines refinancing options, including issuing tax-exempt bonds or asking for federal stimulus dollars. Other options include increasing taxes on alcohol and tobacco products, car leasing or hotel stays.
Each has pluses and minuses, the report said.
Marsh said asking for public support this time is different because taxpayers would be protecting an economic engine -- the team and the businesses it attracts -- that other cities envy.
Other cities are also interested in teams. This year, a businessman tried to buy the Phoenix Coyotes to relocate them to Hamilton, Ontario. In the end, the league bought the team.
Buser said that his job wasn't to make a recommendation, but his would be to strike some sort of public-private partnership.
"I was not here in 1997," he said, speaking of the last vote that rejected using tax dollars to build an arena. "But I might have voted against it, too. It was pie in the sky. The big conclusion for me is that it's now a moneymaker. And that's very different."
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