Post by wagner3 on May 28, 2009 20:42:45 GMT -5
Thursday, May 28, 2009, 2:00pm EDT | Modified: Thursday, May 28, 2009, 4:58pm
Nationwide Arena sale under discussionBusiness First of Columbus - by Jeff Bell
The Columbus Blue Jackets are leading discussions about the possible sale of Nationwide Arena to Franklin County, using higher taxes on alcohol and cigarettes to help fund the deal.
Preliminary talks have been held between Blue Jackets and Franklin County officials, state legislators and Nationwide Insurance executives over helping the National Hockey League club solve its economic problems, Columbus Business First has learned. One option under discussion calls for the county to buy the 18,000-seat arena from Nationwide so the team can work toward getting a better lease.
The issue is likely to come to a head in coming weeks as lawmakers decide whether to grant Franklin County the authority to impose or seek voter approval for an increase in alcohol and tobacco excise taxes. Such a provision could be added to the state budget bill that the General Assembly must pass by June 30.
Proceeds from a higher “sin tax” could provide a revenue stream for the county to tap to retire debt on bonds it would issue to finance an arena purchase, according to people involved in the discussions. Ohio’s beer and wine tax rates stand at 18 cents and 32 cents a gallon, respectively. There is also a $1.25 state tax on a pack of cigarettes.
Better deal for team?
Nationwide Arena is owned by a partnership of Nationwide Insurance and Dispatch Printing Co., with the insurer holding a 90 percent stake. The Blue Jackets lease the nine-year-old arena and operate it, but revenue from events isn’t covering operating costs, said Blue Jackets President Mike Priest. That’s forcing the club to take money from hockey operations to make up the difference, he said.
The formula worked in the early years of the franchise, when the team’s player payroll was lower and game attendance was higher, Priest said, but it has contributed to financial losses the Blue Jackets have suffered in recent years.
“We have a building financial issue,” Priest said. “That leads to a team financial issue. If we can fix the building problem, we can fix the team problem.”
Team officials are exploring whether county ownership of the arena could result in favorable changes to the Blue Jackets’ operating terms, Priest said. A county agency – the Convention Facilities Authority – owns the land under the arena and the nearby Greater Columbus Convention Center. The county also owns Huntington Park, the home of the Columbus Clippers in the Arena District.
“The county has not agreed to do anything,” Priest said. “Nothing has been concluded.”
Commissioners are aware of what the Blue Jackets are proposing but have not taken a position on buying the arena, said county Administrator Don Brown. The county could not afford to buy the building unless a revenue stream was guaranteed to retire bond debt that would go with a purchase, he said. Officials also would need to examine the Blue Jackets’ finances, lease terms and revenue from non-hockey events such as concerts.
The club likely would be asked to sign a long-term lease to ensure it remains in Columbus, Brown said.
“Without a covenant or guarantee like that,” he said, “I doubt the county would be interested. It would not make business sense to take on ownership without being assured of an anchor tenant.”
Avoiding doomsday scenario
Public-private partnerships involving professional sports arenas and stadiums are common, Priest said. For example, tax revenue from alcohol and tobacco sales was used in Cuyahoga County to help finance construction of a basketball arena for the Cleveland Cavaliers and a baseball stadium for the Indians in the 1990s.
Columbus went the opposite route in 1997 after voters defeated a tax proposal to fund construction of a downtown arena. Nationwide and Dispatch Printing, owner of the Columbus Dispatch and other media operations, stepped in to build the $150 million arena when Worthington Industries Inc. founder John H. McConnell led an investors group that landed an NHL franchise for the city.
The privately owned Blue Jackets, whose majority owner is Worthington Industries CEO John P. McConnell, haven’t disclosed details of the team’s finances. But media reports have put the team’s lease on Nationwide Arena at more than $3 million a year.
Priest said the Blue Jackets gave up several revenue sources to help get the arena built, including 15 of the arena’s 52 luxury suites that were sold for 25 years by Nationwide. The team gets revenue from the remaining luxury suites, but receives no revenue from parking or arena naming rights, he said.
Priest was asked if the Blue Jackets would consider leaving Columbus if the arena issue is not resolved.
“The very reason we are being so proactive,” he said, “is to avoid having to deal with that question and issue. I believe as a community we have the ability to find a solution.”
Nationwide has participated in discussions on “public-private opportunities” for the Blue Jackets, including a sale of the arena, said Eric Hardgrove, a spokesman for the Columbus-based insurer.
“We are not actively looking to sell the arena,” he said. “It is one of the many options under consideration to help ensure the Blue Jackets remain a strong, viable presence here for years to come.”
columbus.bizjournals.com/columbus/stories/2009/05/25/daily25.html
Nationwide Arena sale under discussionBusiness First of Columbus - by Jeff Bell
The Columbus Blue Jackets are leading discussions about the possible sale of Nationwide Arena to Franklin County, using higher taxes on alcohol and cigarettes to help fund the deal.
Preliminary talks have been held between Blue Jackets and Franklin County officials, state legislators and Nationwide Insurance executives over helping the National Hockey League club solve its economic problems, Columbus Business First has learned. One option under discussion calls for the county to buy the 18,000-seat arena from Nationwide so the team can work toward getting a better lease.
The issue is likely to come to a head in coming weeks as lawmakers decide whether to grant Franklin County the authority to impose or seek voter approval for an increase in alcohol and tobacco excise taxes. Such a provision could be added to the state budget bill that the General Assembly must pass by June 30.
Proceeds from a higher “sin tax” could provide a revenue stream for the county to tap to retire debt on bonds it would issue to finance an arena purchase, according to people involved in the discussions. Ohio’s beer and wine tax rates stand at 18 cents and 32 cents a gallon, respectively. There is also a $1.25 state tax on a pack of cigarettes.
Better deal for team?
Nationwide Arena is owned by a partnership of Nationwide Insurance and Dispatch Printing Co., with the insurer holding a 90 percent stake. The Blue Jackets lease the nine-year-old arena and operate it, but revenue from events isn’t covering operating costs, said Blue Jackets President Mike Priest. That’s forcing the club to take money from hockey operations to make up the difference, he said.
The formula worked in the early years of the franchise, when the team’s player payroll was lower and game attendance was higher, Priest said, but it has contributed to financial losses the Blue Jackets have suffered in recent years.
“We have a building financial issue,” Priest said. “That leads to a team financial issue. If we can fix the building problem, we can fix the team problem.”
Team officials are exploring whether county ownership of the arena could result in favorable changes to the Blue Jackets’ operating terms, Priest said. A county agency – the Convention Facilities Authority – owns the land under the arena and the nearby Greater Columbus Convention Center. The county also owns Huntington Park, the home of the Columbus Clippers in the Arena District.
“The county has not agreed to do anything,” Priest said. “Nothing has been concluded.”
Commissioners are aware of what the Blue Jackets are proposing but have not taken a position on buying the arena, said county Administrator Don Brown. The county could not afford to buy the building unless a revenue stream was guaranteed to retire bond debt that would go with a purchase, he said. Officials also would need to examine the Blue Jackets’ finances, lease terms and revenue from non-hockey events such as concerts.
The club likely would be asked to sign a long-term lease to ensure it remains in Columbus, Brown said.
“Without a covenant or guarantee like that,” he said, “I doubt the county would be interested. It would not make business sense to take on ownership without being assured of an anchor tenant.”
Avoiding doomsday scenario
Public-private partnerships involving professional sports arenas and stadiums are common, Priest said. For example, tax revenue from alcohol and tobacco sales was used in Cuyahoga County to help finance construction of a basketball arena for the Cleveland Cavaliers and a baseball stadium for the Indians in the 1990s.
Columbus went the opposite route in 1997 after voters defeated a tax proposal to fund construction of a downtown arena. Nationwide and Dispatch Printing, owner of the Columbus Dispatch and other media operations, stepped in to build the $150 million arena when Worthington Industries Inc. founder John H. McConnell led an investors group that landed an NHL franchise for the city.
The privately owned Blue Jackets, whose majority owner is Worthington Industries CEO John P. McConnell, haven’t disclosed details of the team’s finances. But media reports have put the team’s lease on Nationwide Arena at more than $3 million a year.
Priest said the Blue Jackets gave up several revenue sources to help get the arena built, including 15 of the arena’s 52 luxury suites that were sold for 25 years by Nationwide. The team gets revenue from the remaining luxury suites, but receives no revenue from parking or arena naming rights, he said.
Priest was asked if the Blue Jackets would consider leaving Columbus if the arena issue is not resolved.
“The very reason we are being so proactive,” he said, “is to avoid having to deal with that question and issue. I believe as a community we have the ability to find a solution.”
Nationwide has participated in discussions on “public-private opportunities” for the Blue Jackets, including a sale of the arena, said Eric Hardgrove, a spokesman for the Columbus-based insurer.
“We are not actively looking to sell the arena,” he said. “It is one of the many options under consideration to help ensure the Blue Jackets remain a strong, viable presence here for years to come.”
columbus.bizjournals.com/columbus/stories/2009/05/25/daily25.html