It the arena had a viable business plan, it would not have to turn to government for financing and ownership. It would be built by the private sector (and financed by same). I have a very bad feeling about this. This could easily turn into a very big white elephant.
 
Would an NHL team in Markham actually be called the "Markham somethings" or would they be the "Toronto somethings"? Aren't professional sports teams in the suburbs of major cities always named after the alpha city?
 
alklay said:
It the arena had a viable business plan, it would not have to turn to government for financing and ownership. It would be built by the private sector (and financed by same). I have a very bad feeling about this. This could easily turn into a very big white elephant.
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Without an NHL team this absolutely will fail to deliver on the business plan and Markham will have to "re-work" the numbers later on. Even with an NHL team that is possible.

There are reasons why arenas like the ACC and The Staples Centre can and are built without any taxpayer contribution (ie. they have a clear viable business plan that makes profits and sense and the private sector doesn't need to share the risk nor want to share the upside) while rinks in places like Quebec City, Hamilton, Glendale and, yes, Markham absolutely need the cash and risk tolerance of the taxpayer.

As I said earlier, I am glad the thing is being built from a GTA perspective. I am also glad it is not the municipality that I pay taxes to that is borrowing that kind of money to build it.
 
Ramako said:
Would an NHL team in Markham actually be called the "Markham somethings" or would they be the "Toronto somethings"? Aren't professional sports teams in the suburbs of major cities always named after the alpha city?
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It would be Toronto "X".....or, remotely possible, Ontario "X". The NHL would not approve a name like Markham "X" simply because their broadcast partners and sponsors would be better able to understand "Toronto 2" than Markham.

Rare exceptions, of course, with small place names (Green Bay is historical thing....next year when the NJ Nets move they will likely be the Brooklyn Nets as opposed to the NY Nets....Anaheim isn't "LA"...but even their baseball team is never sure what to call themselves.) but for the most part the closest big city gets the recognition in the name.
 
This all seems like an insane ploy to put Markham on the map.

Perhaps when people come to their senses, the arena will be 5000 person capacity, suitable for an OHL team.

As much as I would love to see another NHL team in the GTA, I don't think this is going to go as planned.
 
TOareaFan said:
Without an NHL team this absolutely will fail to deliver on the business plan and Markham will have to "re-work" the numbers later on. Even with an NHL team that is possible.

There are reasons why arenas like the ACC and The Staples Centre can and are built without any taxpayer contribution (ie. they have a clear viable business plan that makes profits and sense and the private sector doesn't need to share the risk nor want to share the upside) while rinks in places like Quebec City, Hamilton, Glendale and, yes, Markham absolutely need the cash and risk tolerance of the taxpayer.

As I said earlier, I am glad the thing is being built from a GTA perspective. I am also glad it is not the municipality that I pay taxes to that is borrowing that kind of money to build it.
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I went back to look at some earlier articles and they claim that it would be in the black with 100 events a year (http://sports.nationalpost.com/2011/11/23/what-the-is-markham-trying-to-get-an-nhl-team/), so if Live Nation can really bring 130ish concerts a year, it should at least be breaking even, even if it wouldn't be highly profitable. The ACC is the 11th busiest arena in the world (according to wikipedia), so I'm not sure it's a fair benchmark.

The town is assuming 130 events and 780,000 attendees based on concerts alone. By comparison, the MTS Centre sold 385,427 tickets in 2008, making it the third-busiest venue in Canada. If anyone has more numbers for Canadian arenas, I'd love to see them.

My point is that as a taxpayer I don't really care if it's highly profitable; I'd be fine with it turning a small profit each year.
 
canarob said:
I went back to look at some earlier articles and they claim that it would be in the black with 100 events a year (http://sports.nationalpost.com/2011/11/23/what-the-is-markham-trying-to-get-an-nhl-team/), so if Live Nation can really bring 130ish concerts a year, it should at least be breaking even, even if it wouldn't be highly profitable. The ACC is the 11th busiest arena in the world (according to wikipedia), so I'm not sure it's a fair benchmark.

The town is assuming 130 events and 780,000 attendees based on concerts alone. By comparison, the MTS Centre sold 385,427 tickets in 2008, making it the third-busiest venue in Canada. If anyone has more numbers for Canadian arenas, I'd love to see them.

My point is that as a taxpayer I don't really care if it's highly profitable; I'd be fine with it turning a small profit each year.
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They can claim all they want about 100 events making it profitable....but it won't. It might make it "operationally" profitable but there is no way, no how, that a 100 event arena makes profit if you factor in that it has to pay back all/part of a $162.5 million municipal debt and produce a return on a private sector investment of an equal amount.

Sorry.
 
It might make it "operationally" profitable
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But that's my point. If development charges will pay for the town's share of the capital costs and it breaks even operationally, I'm fine with this as a taxpayer. If the private consortium loses money chasing their NHL dreams, so be it. Plus, the town will own the facility which it could always try to sell to a pension fund down the line.
 
If you own something, you own the debt and if its not making money, you are losing money (taxpayers' money). There are plenty of cities and towns across North America which are operating losing arenas at taxpayers' expense. I believe there was an article in this thread which mentioned just that.

And if its losing money, you will not be able to "sell it to a pension fund" for what you put into it. Heck, didn't Rogers buy the Skydome for only $20 million?
 
If the debt is being paid off through development charges as planned, you aren't losing money unless you are operating at a loss as you're paying down the principal over time.

Ok, selling it might be tough if it's losing money, but if you paid $162.5 for a $325 arena, and assuming you paid some of that off in the first five years (or whatever), you (the town) would still be in the black if you sold it for $150. I don't think you'd see a SkyDome-style fiasco here at any rate. If this truly is designed to have good acoustics for concerts (unlike the dome which is horrible for concerts when it's closed and too big for all but the largest acts) I really do think at worst it'll run at a small operating loss in its first few years of operation. If this was due to poor management, another operator might be able to make a better go at it.
 
There is far too much unknown about this to make "for sure" judgements. If, however, you assume the Town borrows their portion at prime....that is interest cost of $4.9 million per year. Double that if the investor return is only prime (unlikely for such risk capital).....so, just to pay the interest on the capital cost it has to generate an operating profit of almost $10 million.

Again, the Town is saying they will get a portion of their money back from those extra "voluntary" development charges. What if they don't? What if the developers refuse to pay? What if they agree to pay but the market does support the higher prices and the development moves to a neighbouring community? Not saying that happens but there are risks (and perhaps people in Markham are comfortable with those risks).

As an example....does anyone know what order funds get paid out? Once this thing is operational do the private investors get some return/payback before any money goes to the municipality? (that is important because if the investors have a preferred return or priority access to cash flow it pushes out from that $10 million the amount of operational profit there has to be to allow the Town to service their debt).

All questions (and I am sure there are more) that can't be answered from the publicly available information.
 
Well, the proponents are certainly confident, not that is any guarantee of success of course.

http://www.yorkregion.com/news/article/1344592--nhl-team-icing-on-cake-for-markham

“Emotions aside, reality is that the building has bills to pay and the building has to stand on its own with what’s real and that’s Live Nation and Global Spectrum,” Mr. Roustan said of the concert promoter and facility management company, respectively.
Live Nation has indicated they can book the proposed centre at least 139 nights a year, Mr. Roustan said.
“This building needs to make sense financially,” he explained. “You can’t go into a business venture where you are going to lose money. Live Nation and Global Spectrum made the case for me. They will be very busy with concerts and events.”
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canarob said:
I went back to look at some earlier articles and they claim that it would be in the black with 100 events a year (http://sports.nationalpost.com/2011/11/23/what-the-is-markham-trying-to-get-an-nhl-team/), so if Live Nation can really bring 130ish concerts a year, it should at least be breaking even, even if it wouldn't be highly profitable. The ACC is the 11th busiest arena in the world (according to wikipedia), so I'm not sure it's a fair benchmark.

The town is assuming 130 events and 780,000 attendees based on concerts alone. By comparison, the MTS Centre sold 385,427 tickets in 2008, making it the third-busiest venue in Canada. If anyone has more numbers for Canadian arenas, I'd love to see them.

My point is that as a taxpayer I don't really care if it's highly profitable; I'd be fine with it turning a small profit each year.
Click to expand...

2011 top 200 arenas (concerts...)
http://www.njsea.com/uploadedFiles/IZOD2011Pollstar.pdf
 
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