Winnipeg Free Press - PRINT EDITION

Teaming up for public money

Jets to receive bulk of $14.4M

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True North's Jim Ludlow announces the grand opening of Shark Club in June.

MIKE DEAL / WINNIPEG FREE PRESS FILES Enlarge Image

True North's Jim Ludlow announces the grand opening of Shark Club in June. Photo Store

Winnipeg's three professional sports franchises will benefit from an estimated $14.4 million worth of tax breaks and government-funding mechanisms this year, with the NHL Jets in line for the bulk of the cash.

The city and province are projected to provide True North Sports & Entertainment with $12.8 million worth of subsidies in 2014, according to city budget documents and a review of the revenue-sharing deal struck between the province and Shark Club, a gaming centre run by True North.

The largest government-enabled source of cash for the Winnipeg Jets is a $6.192-million projected rebate of the 10 per cent city tax levied on events held at the MTS Centre. True North is also in line to receive a city business-tax refund worth $258,300 and an $888,647 break on city and municipal property taxes. Provincial legislation allows the city and province to treat the MTS Centre as a public space, as opposed to commercial land.

True North is also expected to receive an estimated $5.49 million worth of revenue from 140 gaming machines at Shark Club. Privacy legislation prevents Manitoba Liquor and Lotteries from disclosing the precise amount of the gaming revenue that will be shared with True North, said Andrea Kowal, a spokeswoman for the Crown corporation.

The Shark Club revenue-sharing formula, which True North agreed to release last year, suggests that figure will average around $5.49 million. Under the terms of the deal, if the gaming centre generates less than $6.1 million a year, True North gets to keep 90 per cent of the house, which works out to a maximum of $5.49 million.

If the revenue is somewhere between $6.1 million and $7.3 million, True North will receive a flat payout of $5.5 million. And if the machines generate more than $7.3 million, True North gets to keep 75 per cent of that first $7.3 million -- $5.48 million -- plus 20 per cent of any revenue beyond the $7.3-million threshold.

Manitoba Liquor and Lotteries takes the rest of the cash under all three of these scenarios. The province says there is no expectation of any revenue from the gaming tables at Shark Club, which one provincial official described last year as being "there for flash."

True North Sports & Entertainment declined to comment on the public subsidies for the NHL club, which reported a small profit on operations during the 2011-12 NHL season but has not stated whether it made or lost money during the lockout-shortened 2013 season.

The tax breaks for True North were arranged in 2001, when former mayor Glen Murray and former premier Gary Doer reached a deal to build the MTS Centre. Current Premier Greg Selinger completed the gaming-revenue agreement in 2011 as part of an effort to ensure the long-term sustainability of the NHL in Winnipeg, the smallest market in the league.

"As part of the deal to bring the Jets back to Winnipeg, the province committed to continue its support of the MTS Centre with gaming revenue to pay down the mortgage. The agreement expires in 2031, when the MTS mortgage is paid off," Selinger spokesman Matt Williamson said in a statement.

He also cited the contribution of the Jets to Winnipeg's economy, charities and downtown revitalization. "The community benefits of having the Jets back are substantial," Williamson said.

The Winnipeg Blue Bombers and Winnipeg Goldeyes also receive operating subsidies. The Winnipeg Football Club pays no business or property taxes and is in line to receive a $1.25-million entertainment-tax rebate this year.

The Goldeyes are exempt from the municipal portion of their property taxes -- $41,000 -- and are in line to receive a $250,000 entertainment-tax rebate this year.

Government subsidies, of course, are not restricted to professional sports. And entertainment-tax rebates represent the return of revenues that would not exist without events being held at the MTS Centre, Investors Group Field and Shaw Park.

Colin Craig of the Canadian Taxpayers Federation, however, said he does not believe pro-sport subsidies offer any significant benefits.

"We've said for years, taxpayers shouldn't subsidize professional sports teams," he said. "Leave money in their pockets and they'll decide if they want to support the teams."

bartley.kives@freepress.mb.ca

Republished from the Winnipeg Free Press print edition January 10, 2014 B1

History

Updated on Friday, January 10, 2014 at 6:47 AM CST: Replaces photo

10:22 AM: Corrects Andrea Kowal's name

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