Is Columbus the NHL's next trouble spot?
By Stu Hackel
New York Islanders owner Charles Wang may have retreated from his veiled threats to move his team unless he gets a new arena, but another NHL owner has now played the relocation card in his effort to reverse the financial plight of his franchise.
It's been no secret that the Blue Jackets have lost lots of money in recent seasons -- reportedly a stunning $53 million over the previous three years with just under half of that amount, around $25 million, going down the drain last season alone. That's what can happen when fans are disappointed and become disaffected after seasons of losing or, at best, mediocrity. But another major contributor to the Jackets' red ink is their lease on Nationwide Arena, which they say makes up $10-$12 million of their losses annually.
The warning from Blue Jackets majority owner John P. McConnell is the most recent development in the team's ongoing quest to get some relief from its lease. The Jackets tried getting revenue from additional taxes on beer, wine, liquor and cigarettes and by having Franklin County buy Nationwide Arena so the lease could be eased. Both efforts failed. More recently, public officials and business types have met with ownership and NHL Commissioner Gary Bettman to discuss other options. They seem to be like-minded in their determination to help the club, largely because they believe the Blue Jacket have helped generate business growth in downtown Columbus.
Among the proposals being examined is tapping into tax revenues from the under-construction Hollywood Casino that broke ground in April. This alone would not solve the team's problems and the idea is not without opposition. That's probably why McConnell expressed both confidence and reservation when he spoke to Aaron Portzline of The Columbus Dispatch for a story that appeared last weekend.
Portzline noted that Matt Ferris, a Republican City Council candidate who describes himself as "a budget watchdog," said that city government cannot afford to help the Jackets with their lease issue. “The city already has plans for the casino money,” Ferris said. “It’s already spent. We don’t have enough money to fund the programs the mayor has given the city as it is.”
Ferris's opposition is reminiscent of the Goldwater Institute's objection to public money being used to fund the Phoenix Coyotes, and Nassau County voters' recent rejection of a plan to fund a new arena on Long Island.
Both McConnell and the mayor of Columbus have described the situation as "urgent," and while McConnell expressed optimism that a solution would be found, he also offered some ominous words clearly designed to push the process forward, words intended to make people uneasy.
“I am not looking to sell (the Blue Jackets),” he 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.”
The Blue Jackets, of course, want to take the next step competitively, having made the playoffs only once in their history. Trading for Jeff Carter and signing defenseman James Wisniewski gave Columbus fans some hope that the Jackets might realistically challenge for a playoff spot next season. Getting off to a good start will be critical in winning back fans and boosting revenue. Last season, the Jackets averaged 13,658 per game, or 75.3 percent capacity. Both figures were the fourth lowest in the NHL. The team still ranks third behind Ohio State football and basketball in this small market. A winning hockey team would do a great deal to turn some of the red ink to black, but the terms of the arena lease are not going to improve based on how well the Blue Jackets play.
Some background here: The arena was built and is owned largely by Nationwide Insurance. (The Dispatch Printing Company, the newspaper's publisher, owns 10 percent.) The Blue Jackets hold the lease and, according to Arena Digest, pay $5 million in rent and lose $4 million in running the arena. Nationwide has only the Jackets as a full-time tenant, having lost a National Lacrosse League team, an Arena Football League team, and a USHL team at various times over the last decade.
Until last year, Nationwide Arena competed with Ohio State's Schottenstein Center for concert and other entertainment bookings. The Blue Jackets had contracted arena management giant SMG to run the arena (the same people who manage the Islanders' Nassau Coliseum and the Panthers' BankAtlantic Center, among dozens of other facilities), but after losing millions on operations, the team asked Ohio State to handle things last year and that worked out better. The agreement has been renewed for another year. There's been some savings with consolidated operations, but not enough to climb out of the hole.
Michael Arace blogging for The Dispatch says Nationwide Insurance has eased the terms of the lease in the past and "may do even more on that front." Still, more arena dates need to be filled and no one is expecting the insurance giant to make the building rent-free. Relief from the terms of the lease will still be needed.
City and business leaders want the Jackets to stay because of how the franchise has energized downtown Columbus since 2000. “Our city has come too far to take major steps backward,” Mayor Michael B. Coleman told Portzline. “Losing the Blue Jackets would have a major negative impact on the entire city, not just Downtown. It’s the economic driver for the city, in a city that is the economic driver for the entire state. Twelve years ago, you could take a bowling ball and roll it down High Street at 6 p.m. and you’d hit nobody. All of that has changed so much now, and the Blue Jackets have played a substantial role.”
Arace quoted the mayor as saying, “If they leave, the consequences are as follows: The Arena District, which used to be an abandoned prison site, will see a rapid erosion of jobs, of opportunity and of vibrancy. You’d have one of the largest vacant buildings in the nation....When you begin falling, it’s hard to stop that fall until you hit bottom. I personally believe the Blue Jackets need to be in Columbus. There needs to be a solution to the arena lease issue because that is the problem.”
Last month, Bettman visited Columbus for a meeting with elected officials and business leaders to discuss the team's predicament. “The story has gotten a little stale," McConnell explained. "It’s been out there for two years, right? That’s one of the reasons we brought the commissioner to town. We felt like people needed to be refreshed on what the issues are, what the economic realities are. Hopefully we have some good thoughts going on, and I’m hoping this thing starts to break loose pretty quickly.”
As Bettman told Portzline,“The response I got from government and business leaders makes me feel optimistic....I remember quite well what that area looked like before there was an Arena District. When you realize what’s there because of the Blue Jackets and the arena, it’s a great lesson in civic growth. And everybody I met with recognized that the burden of what has benefitted so many people has fallen disproportionately on the Blue Jackets.”
While that may be true, a solution could be complicated, not just by opposition to using casino tax revenue, but also the current economic uncertainty that might inhibit corporations from doing what they can to aid the team, regardless of how much they and the city have benefitted from the Blue Jackets existence in Columbus. And until some resolution is found, the Blue Jackets' status in Columbus will be as uncertain as everything else.
Nothing plenty of money can't solve.