May 22, 2015

Dan Lett


Tax breaks for Jets a winning bet -- for now

Let's be clear: This is not a casino.

The gaming centre being constructed by True North Sports and Entertainment -- owners of our beloved Winnipeg Jets -- will have neither the size nor the ambience of a casino. Video-lottery terminals and a few poker and blackjack tables are definitely gambling, but a casino they do not make.

With millions of dollars in taxpayer support flowing into Jets coffers, leaders may find their political fortunes are tied to the ebb and flow of a professional hockey season.

With millions of dollars in taxpayer support flowing into Jets coffers, leaders may find their political fortunes are tied to the ebb and flow of a professional hockey season.

That said, there was intrigue created when it was learned True North was getting table games in addition to VLTs. While not a casino, it still seems to be further than the province first said it would go when this plan was first revealed by the Free Press nearly two years ago. At that time, the province said 90 underperforming VLTs would be relocated to a lounge above Tavern United in the Powerhouse building located immediately to the west of the MTS Centre. That lounge already featured 50 VLTs awarded to True North as part of the original deal to support construction of a new arena.

In May 2011, with rumours running rampant that True North was going to acquire an NHL franchise, the Free Press reported the VLTs would be relocated again to a bar in Cityplace, directly south of the arena. Not much came of the story because True North had to wait another year to get its shot at an NHL franchise.

Still, this story raised questions about how far the province was willing to go to support the return of NHL hockey. There had been rumours about True North seeking a full casino for downtown. This would have been problematic, given that First Nations seeking a downtown casino had been turned down.

At that time, provincial sources were adamant True North was only getting VLTs in the gaming centre. That was then, and this is now. How big a deal is this? Given the level of public support for True North, this does not represent a quantum leap forward in taxpayer assistance. And yet, it's all starting to add up.

These deals are a manifestation of the culture at True North, where prudence and diligence prevail. The NHL disappeared from Winnipeg in large part because the old Jets' business model was unable to cover the rising costs of the professional game. This version of the Jets comes with an ownership group dedicated to leaving no penny unsqueezed. From the price it charges for corporate interests that want to snuggle up to the Jets brand, to the long-term rebates, subsidies and tax forgiveness government has provided, this is a company that has shown fierce dedication to long-term financial stability. One should never say hockey will never again leave Winnipeg. But it appears True North is shored up against most of the likely threats to its viability.

Hockey fans likely don't care about all these fine details. But critics will ask if this is, in the end, good value.

Consider the support package. True North does not have to pay city business taxes. It gets to keep the 10 per cent amusement tax charged on tickets and only has to pay about 20 per cent of its total property tax bill. Along with the projected $4-million-per-year haul from its new non-casino gaming centre, it's estimated government will grant, waive or rebate about $11 million annually to support the hockey team. What does government get for its support?

There's no doubt tax revenue from NHL hockey is flowing into government coffers. How much is not clear. There are income taxes on the players and staff of the organization and all the hourly employees that support the operations of the team. Sales taxes are no doubt significant, even if you only count the seven per cent charged on the untold millions of dollars in Jets merchandise sold in Manitoba last year. Beyond those indicators, you'd have to use your imagination a bit to calculate the revenue generated from taxation on local businesses that, one way or the other, profited from NHL hockey being back in town.

Ultimately, government can justify its support for the team as long as two things happen. One, the business remains solid, viable and in no immediate need of direct government assistance. And two, that the team itself is successful on the ice.

An $11-million annual subsidy doesn't seem like much when fans are still in lust with the return of the NHL, the team is financially solid (the franchise increased in value by more than 20 per cent last year to $164 million, according to Forbes magazine) and no one is being particularly picky about whether they make the playoffs.

Taxpayer support is risky when the team is doing poorly. Winners get the benefit of the doubt. Losers, on the other hand, provoke skepticism and contempt, both for the team and their key political supporters.

Mayor Sam Katz and Premier Greg Selinger are both self-confessed hockey fans. With millions of dollars in taxpayer support flowing into Jets coffers, they may find their political fortunes are tied to the ebb and flow of a professional hockey season.

Republished from the Winnipeg Free Press print edition January 24, 2013 A5

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