Tag: John P. McConnell

Nationwide Arena

Columbus officials release arena lease proposal to help keep Blue Jackets in town


With the Columbus Blue Jackets reporting record financial losses over the past few seasons, totaling over $80 million in the last six years and $25 million last year, they’re an organization that’s in desperate need of help to get out of their money woes. With so much money bleeding from the Blue Jackets, owner John P. McConnell has said that if things aren’t turned around that he’ll have to move the team.

While wins haven’t been easy to come by and they’ve made the playoffs just once in franchise history, there’s a plan on the table to try and ensure that the Blue Jackets can stay in Columbus.

This afternoon, a proposal was announced that would see Nationwide, the insurance company that owns the naming rights to the Blue Jackets arena, as well as Franklin County, Ohio and the City of Columbus would team up together along with revenues from a proposed casino to buy the arena.

Doug Caruso of The Columbus Dispatch outlines the plans to help keep the team in Columbus.

Franklin County and Columbus would pledge up to a third of the tax revenue they collect from the Hollywood Casino on the West Side through 2039 to finance the $42.5 million purchase of the arena from Nationwide Realty Investors and pay to operate it, said John Rosenberger, a lawyer hired by Columbus and the county in 2009 to negotiate an arena deal. The Franklin County Convention Facilities Authority would own the arena.

Under the agreement, Nationwide would invest $52 million in the Blue Jackets and would take a 30 percent ownership interest in the team. It would have naming rights to the arena for 10 years.

It’s no secret that money is tight in America and using public money to finance the purchase of an arena, even split up over many groups, raises a giant red flag. While the arena would then belong to the county, the fact that it’s money from the people and not a private firm or even the Blue Jackets owners, is the part that makes this deal seem very curious.

We’ve seen proposals using public money land with a thud in Glendale and on Long Island and those were deals that would’ve secured the location of the Coyotes in Arizona and the Islanders on Long Island for years to come. Those matters were shot down either by government watchdogs or via public vote.

In Columbus, this deal would need to be approved by a vote of the Columbus City Council and Franklin County commissioners to make it work. As for what the deal will do to slow down the losses, Caruso breaks down the numbers.

The deal is expected to save the team $9.5 million a year. The team would agree to remain in Columbus through at least 2039.

The $42 million purchase price for the arena is slightly lower than the $44 million value Nationwide placed on it during court proceedings to set the taxable value of the building in 2006, a case in which it was in the company’s interest to set the price as low as possible. The county auditor had valued the arena at $129.7 million. It cost $147.1 million to build in 1999, Nationwide said at the time.

The state of Ohio would help out with the purchase through a $10 million loan, half of which can be forgiven by the state.

The part that makes the use of public money more irksome is the fact that people in the area voted against using public money to build the arena in the first place. Using it now to make sure the lead tenant can stick around seems like an end-around way of getting what they wanted in the first place.

We’re all for doing the right thing to keep a team in place, but the use of taxpayer money is what will always make us feel awkward. If it’s money that had no other destination for usage that’s fine, but burning public bucks during tough financial times makes the situation feel nervous. The Blue Jackets are the only major professional team in Columbus and letting the arena go vacant would be a tough blow to the city and the community so this move could be viewed as one meant to keep the economy rolling until 2039, it just feels a little bit uncomfortable going all in on supporting it.

Update (5:37 p.m.): Blue Jackets team president Mike Priest issued a statement about the deal on the team’s website.

“We are appreciative of the comprehensive work and due diligence delivered in this report. Mr. Dorrian, Bill Jennison and John Rosenberger each understand the issues and this report offers a solution that will provide a long term sustainable business model for the organization. We are encouraged by the report’s findings.”

Blue Jackets hope that casino money will help keep team in Columbus

Columbus Blue Jackets Press Conference Introducing New Players Jeff Carter and James Wisniewski

One thing we’ve gotten accustomed to being NHL fans is hearing about teams that could be in trouble. We’ve seen the Phoenix Coyotes come close to being moved multiple times, we’ve seen the Thrashers relocated to Winnipeg, and we’ve had the Islanders and their fight for a new, revenue generating arena.

Another team that’s dealing with major money-losing issues are the Columbus Blue Jackets. Earlier this summer we heard about how the Blue Jackets lost more $25 million last season and over $80 million the last six seasons. With that kind of situation and a team that’s made the playoffs just once in their history, that situation will quickly grow to be untenable if things don’t change fast for the Jackets.

While building a winning team will help things out, the Jackets are hoping for another revenue stream thanks to a casino coming to Columbus. Aaron Portzline of The Columbus Dispatch reports on how the Hollywood Casino Columbus could help save the Blue Jackets.

It is likely, sources toldThe Dispatch, that a portion of the revenues generated by the Hollywood Casino Columbus on the West Side will be used to help the Blue Jackets. No exact dollar figures have been decided.

Mayor Michael B. Coleman said he is “considering casino revenues. Having said that, there is no fix yet. That’s as far as I can go right now, but it’s high on my agenda to deal with it. There should be an urgency to this issue.”

City Council President Andrew Ginther agreed that “failure is not an option. We will figure this out. We will find a resolution.”

Offsetting the horrendous losses the Jackets have suffered by using casino money is a smart way to try and do things. It doesn’t dig into the public money through taxes nor is it trying to find loopholes otherwise to get access to such civic funds. If they can do this, then all is well and it’s on the team to also win to make sure the losses don’t continue to be as staggering as they’ve been.

Of course, if the plan to use casino money falls through, what’s the next step? Jackets owner John P. McConnell tells Portzline that the outlook won’t be so pretty for the franchise.

“I am not looking to sell (the Blue Jackets),” McConnell said. “If this doesn’t work … you know, I really don’t have any options other than staying the owner as the team is moved. I’m hopeful that’s not going to occur. We’re going forward as if it’s not.

“From the (Blue Jackets) front office down to everybody else (in the organization), they know that if this does not get solved, the team is likely to move. More and more doubt creeps in the longer this goes on. ‘Is it going to happen? Is it not going to happen?’ For us to continue building the organization we want, we’d like to get rid of that doubt.”

In other words, the Jackets are as good as gone if the casino plan doesn’t work. Welcome to the Quebec/Kansas City/Southern Ontario/Seattle discussion Blue Jackets fans.

Obviously losing as much money as the Jackets have lost over the last six years is a terrible situation for any team to be in, but unlike in Phoenix, at least McConnell isn’t looking to sneak out of town leaving the fans holding the bag the way Jerry Moyes did with the Coyotes. Still, this is a potentially ugly scenario in Ohio and one that puts the Blue Jackets squarely on the relocation radar.

As we’ve seen in the Islanders arena fight, these situations can get very political and Portzline notes that there’s Republican opposition to giving any of the casino monies to the Blue Jackets to keep them afloat. NHL Commissioner Gary Bettman says that they’ll do whatever they can to help out in Columbus but says that this scenario is unlike other situations and feels good about things in Ohio. We’ll see if that’s just lip service.

The last thing the league needs is more trouble with franchises, but while things about the Blue Jackets have been quiet about their financial woes, there are big problems that must be solved there and soon.

Report: Blue Jackets lost $25 million last season, $80 million over six years

Colorado Avalanche v Columbus Blue Jackets

The NHL has been a bit busy lately with handling things with the Phoenix Coyotes and their fight to stay in Glendale as well as keeping an eye on things with the Atlanta Thrashers and their ownership boondoggle but those two teams aren’t the only ones with major problems.

Another recent expansion team that’s having money woes are the Columbus Blue Jackets. Generally when fans start thinking of expansion teams that have a hard time fitting in and making money, they turn to the Coyotes, Thrashers, and Florida Panthers but the Blue Jackets are a different kind of mess unto themselves. In their ten years in the league, they’ve made the playoffs just once getting swept out in the first round by rival Detroit in 2008.

With that history of not winning in a new place it shouldn’t be a big surprise that the Blue Jackets are still losing money and it’s only getting worse. According to NHL sources, Columbus lost $25 million last season, a $14 million increase in losses from the previous season. The team has lost a total of $80 million since the 2004-2005 lockout.

The Columbus Dispatch’s Aaron Portzline has some reasons why the team has bled money.

There are four main reasons for the sharp increase in losses: rising player salaries, plummeting attendance, a 25 percent cut in the Blue Jackets’ revenue sharing check, and the ongoing (endless?) lease agreement issues between the Blue Jackets and Nationwide Arena.

Sounds like a familiar recipe for a team to be relocated. In this case, the Blue Jackets are under no serious threat to be moved. Owner John P. McConnell is doing his part to try to keep things straight in Columbus. The one solution to try and fix things there though is simple: Win.

Columbus making the playoffs just once in team history with other seasons being mostly miserable ones with no hope, the shine is off the team for being something new and fun. Now it’s time for results and unfortunately after years of poor management and personnel decisions it takes time to get things fixed up.

Rick Nash is the team’s one marketable superstar and while there’s some solid talent otherwise in Jakub Voracek and Derick Brassard, there’s not a whole lot else going on here. That much has proven to be true considering where the Jackets finished in the standings. The losses are staggering for the franchise but yet the answer to fixing it all up seems so simple. As if teams didn’t need more motivation to figure out the best ways to put a winner on the ice, they could look at the how things have gone financially for Columbus and realize that it makes all the difference.

While the NHL is going to worry about how to get things right with the Coyotes and Thrashers first, they’ll have to keep a stray eye on what the Blue Jackets are doing. Having a franchise, a new one especially, hemorrhage money like that is not good for the league and it’s push into new markets.  It certainly doesn’t help make the case for future expansion easier to make.