Tit rejects suck: no taxpayer cash for hockey franchise after all

On Day One, sports minister Terry French was laughing and chuckling as he talked about the possibility he’d be forking over cash to help his former boss bring a hockey franchise to Mile One stadium.

French knew a fair bit about the request but – as this quote from CBC shows – he didn’t have anything concrete:

I haven’t seen what they are looking for yet. I know they’re obviously looking for something. They tell me they will need the province involved in some way, shape or form

You can find much more on the story, including quotes from Danny Williams in the Telegram coverage:

“People want hockey here in the province, and basically I was involved in it before, so you know the people have asked me to get involved to see if we can bring a team here,” Williams said.

“If, in fact, the city and the province want the team then, you know, I can get it for them. But if they don’t want it, then it’s not going to happen, “ Williams said.

He said a travel subsidy from the provincial government — in the range of $500,000 annually — could potentially be a deal breaker.

By Day Two, French looked a lot less smiley.  Based on no more concrete information than he’d had the day before, the new answer to the hockey subsidy was “no”:

"We decided that we wouldn't go down that road," said French outside the house of assembly in St. John's.

"[We decided] that committing money to a professional hockey team was not the right place to be. We had said no to people previously so the decision was easy."

Williams is reportedly “deeply disappointed”.

So what happened?  That’s a damn good question.

Both opposition parties rejected the idea flatly from the start, noting that the provincial government had turned down health-related requests claiming they didn’t have the cash. Public opinion hadn’t firmly settled on the issue  - as a CBC streeter suggests – but if any national trends are a good judge people aren’t too keen on giving cash to professional sports teams.  The Tories own polling shows that health care is a major issue for the public so perhaps that connection by the opposition was enough to frighten them off the subsidy idea.

The dramatic flip-flop suggests the provincial Tories are extremely jittery in an election year.

Now politically, there is usually no problem with flip-flopping on issues so long as you flip or flop in the same direction as the electorate.

The problem comes when flipping and flopping becomes a habit or when you say one thing one minute and something else the next.

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Show us the tit and we’ll suck it: AHL franchise edition

Tourism, culture and recreation minister Terry French told the House of Assembly on Tuesday that he expects to receive a request from the municipal corporation that runs Mile One stadium for cash to help lure an American Hockey League franchise to the city. Check the CBC online story here.

Former Premier Danny Williams – a multi-millionaire  - is reportedly part of a group that wants to bring the Manitoba Moose from its current home in Winnipeg to St. John’s. Update:  While CBC says Williams is keeping a low profile, the Telegram seems to be getting access to him.

French said he learned of the request from St. John’s city councilor Dan Breen. Interestingly enough Breen didn’t make any reference to looking for provincial tax cash when he spoke with CBC Radio’s St. John’s Morning Show.  In fact, Breen likely left the impression with listeners that the city wouldn’t be backing a franchise if it involved taxpayer cash.

"We want to have an anchor tenant," Breen said."We want to do it within the subsidy, and we're committed to doing it within the subsidy that we're offering to St. John's Sports and Entertainment at the current time."

The city gives Mile One Stadium a $1.25 million annual operating subsidy in addition to other financial support. 

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Keeping the Old Team Together

Deputy mayoral candidate Keith Coombs decided to build his campaign team around a trusted core.

The man who helped bring taxpayers the Wells-Coombs Memorial Money Pit -  a.k.a Mile One -  is using Lisa Neville as the media liaison for his election campaign.

Neville was unceremoniously turfed from her job as council and the Money Pit board tried to staunch the seemingly never-ending flow of red ink at St. John’s Sport and Entertainment. It remains mired in debt despite Neville’s commitment in 2006 to see the centre “debt free and subsidy free by 2010.”

In 2008, the Mile One crew claimed to have a surplus of $110,000.  However, when the increased taxpayer subsidy was taken into account, the red ink still totalled almost $2.0 million.

Since 2005, the city has increased its subsidy to the centre which has – nonetheless – continued to lose money each year. Way back then – when just by the purest of pure coincidences the stadium was a hot election issue -  there was even a claim the thing might make money in 2005. 

Of course, in the spirit of being responsible with taxpayers’ money,  at least one candidate has been known to endorse the red ink.  In December 2007, Ron Ellsworth apparently felt that bleeding taxpayers is okay since the centre pumps money into the pockets of local businesses:

"As a businessperson I certainly wouldn't take it on and run it as a business, because it wouldn't put money into my pocket as the owner," said Ellsworth, who represents the city on the board of St. John's Sports and Entertainment, which governs Mile One.

"Why the City of St. John's can do it, and why we are doing it, is that it's an economic development engine that's been created."

Talk about keeping the old team together.

Imagine Ron as mayor with Keith as his Number Two. 

Now that would be a dream team for someone.

But that someone wouldn’t be the average debt-burdened taxpayer.

 

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Mile One runs huge deficit

St. John's Sport and Entertainment, the municipally-owned corporation that runs Mile One Stadium, known to some as the Wells-Coombs Memorial Money Pit is reported to have posted a surplus or even a profit.

Read a bit more closely and you'll see the devil in the details.

Taxpayers of St. John's are pumping almost $2.0 million into the thing as a subsidy.

That supposed surplus of $110,000 is actually a deficit of almost $2.0 million.

There'll be no right-sizing Mile One until the subsidy is down-sized, rather than up-sized as Council has done since 2006.

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It must be a good idea.

Andy Wells opposes it.

Councilor Frank Galgay suggested selling the Mile One money pit at a council meeting last night. he was attacked immediately by Mayor Andy Wells. The boorish mayor demanded that Galgay tell him how much someone in the private sector might pay for the facility. Then His Boorishness proceeded to lament the sorry state of the province's educational system.

The start of the conversation was tabling of the financial reports for the Money Pit.

A loss of $640,000 in the last fiscal year.

Bear in mind that council deliberately increased the subsidy to the Pit last year claiming that somehow a financially successful money pit actually needed more free cash.

But here's the thing.

If one considers the $500,000 added subsidy as part of the shortfall, then the Money Pit's operating shortfall in Fiscal Year 2006 is...

wait for it...$1.14 million.

The deficit from the previous year? Why one tenth of that figure.

It's not reported in the story linked above but other reports have the shortfall from the previous year at around $130,000.

Wow.

The $640,000 shortfall is bad enough, but the real shortfall is staggering. It becomes stupefying when one considers that the annual subsidy before the boost was about $1.0 million.

In other words, the stadium lost as much money in 2006 as the taxpayers of St. John's pumped into it in subsidy.

But really that subsidy is an operating loss as well.

The taxpayers of St. John's don't make any money on this venture. They get the privilege of paying - this number will shock you - $1.5 million in subsidy plus the $640,000 shortfall for a total loss of $2.14 million.

Holy crap.

And what does the mayor think?

"It's well in the mix, so this is not — contrary to what some people are saying — this is not a major drain on the taxpayers of St. John's. It's working pretty well."

Working pretty well, huh.

At least no one will need to ask the mayor the same question he posed to Galgay at last night's meeting.

Suggesting that Mile One is working pretty well makes the answer plain.

Sell the Money Pit.

No matter what cash we'd get for it, the taxpayers will be better off in the long run.

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Update: Andy Wells is proud of Mile One, so proud he claims the stadium has a per-user subsidy like the Mews Centre or the Wedgewood Park Centre.

Apples? Meet Oranges.

For those who don't know, the latter are community recreation centres operated by the city for the benefit of residents. It's fair to talk about a per-user subsidy for those facilities which are, by definition, used by citizens individually for their own personal fitness. If my family goes to the place, we get the direct benefit of it in the way of improving our fitness and health. We should expect the place to break even but, in the event there is a shortfall in operating expenses, it's reasonable for council to provide a small subsidy of some kind.

Mile One is completely different.

It's a facility built as a commercial venue for concerts, ice hockey and a variety of similar large events. Using some kind of "per-user" comparison for subsidies is more than a bit misleading.

For the purposes of determining cost and benefit, it would be more useful to look at Mile One as a commercial venture and look at how much money it loses. It should be making a profit. Breaking even, the goal we should set for all taxpayer-owned facilities, would be acceptable but profit would be nicer.

$1.5 million in operating subsidy, plus covering the $640,000 shortfall on the last fiscal year.

More than $2.0 million.

Hmmm.

Not good.

Then we look at the general trend.

Definitely bad, since the loss to the taxpayers resulting from operating the facility seems to be going up. It's pretty bad when losses go up in an otherwise good year economically in the region. To see losses climb by 10 times (the inflated subsidy is really a mask for the deeper operating problem) and you've got a pretty - obviously - significant problem on your hands.

To make matters worse, the mayor expects that expenses for the stadium will always exceed revenue. In that environment, the residents of the city can only expect things to get worse. The mayor not only tries to find excuses for the loses, he actually thinks they will go on and on as some sort of natural occurence. City officials have no incentive to make things better and officials at the stadium/conference centre have no incentive to improve. The mayor has the excuses already written out.

Where else but St. John's would this sorry excuse for municipal government be allowed to continue?

A good start, the City Hall version

The City of St. John's is short on its budget for next year.

$6.0 million short.

So councilors are considering axing funding for community groups and skimping on New Year's celebrations.

Here's a simpler idea that would save at least $3.0 million a year:

Sell the Mile One sinkhole.

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