Arena Sweetheart Deal Not So Sweet For Taxpayers
Posted in the Columbus Forum
#1 Jun 8, 2014
Nationwide Arena still on financial thin ice
Narrow margins in second year of public ownership rooted in complex contract
While the Columbus Blue Jackets have turned their fortunes around on the ice, the same cannot be said for the public owners of Nationwide Arena.
The arena spent most of its second year under public ownership operating at a deficit.
A recent rally, thanks to special events that included Bruce Springsteen, Cher and Demi Lovato, has nudged the arena $426,000 into the black, according to the latest revenue report.
That is down from the $730,000 “profit” the arena posted in its first year of public ownership, money that helped the arena through lean months earlier this year.
The arena’s finances also include a $3.4 million public subsidy in casino tax revenue from the Franklin County Convention Facilities Authority, which oversees the arena for the city and county.
Columbus Arena Management, or CAM, the group that oversees the arena, will discuss the finances at its single annual public meeting at 9 a.m. on Tuesday at the arena.
The arena’s thin margins are a product of the complex purchase contract and the performance contracts arena managers sign with musicians and performers.
But put simply, the contracts allow everyone else to make money from the arena except taxpayers.
The Blue Jackets take all concession and parking revenue for all hockey-related events. Performers, such as Springsteen, demand a certain percentage of all ticket sales (usually 85 percent or more) before agreeing to come to Columbus.
The public also pays for improvements inside the arena, such as the nets on the hockey goals. More than $900,000 in public money was spent in the past year to replace and repair seats.
Xen Riggs, an associate vice president of Ohio State University, is the arena CEO. He also manages the Jerome Schottenstein Center at Ohio State.
Riggs has said the public’s take from the arena is moot because no matter how the arena performs financially, the public investment is capped at 32 percent of the city and Franklin County’s share of casino tax revenue.
The Blue Jackets’ owners and Nationwide are responsible for any costs that exceed that contribution.
The city, Franklin County and the state bought the arena from the Blue Jackets in 2011, pledging an estimated total of $250 million through 2039 to buy and maintain the arena.
Mayor Michael B. Coleman said through his spokesman that the purchase of the arena was more about protecting the viability of surrounding businesses than the arena itself.
“It’s succeeding in that measure,” his spokesman, Dan Williamson, said.
City Auditor Hugh J. Dorrian said surrounding businesses generate $30 million annually in state and local taxes.
The arena was never profitable when it was under private ownership. Owners pushed the local governments to buy the arena because they were running low on cash and a public purchase would save the Blue Jackets $9.5 million a year in expenses.
The Dispatch Printing Company, publisher of The Dispatch, holds a 10 percent stake in the Blue Jackets and held a 10 percent stake in the arena before it was sold.
Riggs said the arena has two income streams: the casino tax revenue and the rent from special events.
Bill Jennison, one of the CAM board members and executive director of the facilities authority, said Nationwide Arena “has performed much better financially since CAM has engaged OSU to manage the facility.”
#3 Jun 8, 2014
Cleveland passed sin tax to upkeep all the sports facilities yet they vote down school levies.
#4 Jun 8, 2014
Can Robert T. Greenbaum, a professor at OSU’s Glenn School of Public Policy explain "... the quality of life an arena provides." when "More than $900,000 in public money was spent in the past year to replace and repair seats."?
What The What?
#5 Jun 8, 2014
coleman failure again
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