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Opinion

Stadium deal good politically, dubious financially

Hey there, time traveller!
This article was published 14/12/2010 (3524 days ago), so information in it may no longer be current.

It's too early to call it madness. For now, we'll call it unbridled optimism with the potential for madness.

Following Premier Greg Selinger's annual state of the province address on Tuesday, he talked for the first time about a revised deal to build a new $190-million, 33,000-seat stadium for the Winnipeg Blue Bombers. Selinger didn't go into too much detail, other than to say that the time for deliberations was over. "It's going to get built," the premier said.

It's not immediately clear what Selinger's optimism is based on. This new deal would see the province contribute $22.5 million and lend the Winnipeg Blue Bombers $85 million, which will be paid back over 40 years. The remaining construction costs will be covered by the other levels of government and by property taxes generated by the redevelopment of the Polo Park property where the current stadium sits. The deal will proceed without the private-sector leadership of David Asper and Creswin Properties.

Why was Asper left out? It is quite clear that without him, there would be no stadium proposal to exclude him from. Over the last five years, Asper single-handedly brought the city, province and football club to the precipice of a new facility. Rumours abound but if you compare enough backroom chatter, some details are corroborated.

The previous stadium deal between Asper, the province, the city and the University of Manitoba would have seen Creswin borrow most of the money to build the stadium, with $75 million coming from the province in the form of repayable bridge financing. Asper would use revenues from the stadium and profits from the redeveloped Polo Park land to repay the provincial and private loans. This deal began falling apart when construction tenders came back, showing the total cost of the project was much more than the original $115-million estimate. But there was more going on behind the scenes.

The province and city were having trouble deciding when to move on certain parts of the deal. Asper needed ownership of the Polo Park land to sign retailers to leases. He also desperately needed bridge financing from the province to fine-tune the design and development of the stadium. Sources confirmed neither the city nor the province did any of that, which put the project into limbo. To date, sources close to the deliberations confirmed no agreement on the bridge financing, the transfer of ownership of the team, or the sale of the Polo Park land were ever signed.

When the tenders came back higher, and with the slump in the U.S. economy having weakened the retail sector considerably, Asper reapproached his government partners in early November with a deal that included the same borrowing, but on terms that allowed repayment of the bridge financing over a longer period. The sources said the province and city balked at that proposal, concerned that the public would lose faith in the deal, given the change in terms. They were also concerned the retail development would fail and drag down the stadium with it.

However, it's still not clear how Selinger et al think this new deal will offer greater security for the taxpayer. The Bomber business plan, to be unveiled today, requires the team to generate $4 million annually to cover debt costs in each of the next 40 years. The club believes increased revenue from season tickets, luxury suites, naming rights and facility surtaxes on tickets will help cover the mortgage and field a competitive team. This is a very optimistic plan, given that Winnipeg football fans, in particular, are chronic bandwagon jumpers and that football stadiums in general, even those of NFL teams, do not make money. That is why it usually falls to governments to build these behemoths.

As for increased ticket sales, surely the Bombers know that new stadiums eventually lose their lustre, and once this one is no longer seen as a shiny new penny, football fans will become stingy with their money. Increased ticket sales must not occur in only the first year; they must be sustained over four decades. And what happens if, as many people think, NHL hockey comes back to town? Every new sports and entertainment attraction steals from existing attractions, and NHL hockey in Winnipeg will cut into the Bomber season-ticket drive.

In the long term, this is a risky deal. In shorter political terms, it could be quite painless. The taxpayer contribution is spread over many years, and it may take a decade or more until we find out whether the football club can actually make a go of it. By that time, it seems reasonable to assume that Selinger will be out of politics.

All of which makes the premier's optimism a bit easier to understand.

dan.lett@freepress.mb.ca

Dan Lett

Dan Lett
Columnist

Born and raised in and around Toronto, Dan Lett came to Winnipeg in 1986, less than a year out of journalism school with a lifelong dream to be a newspaper reporter.

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