The City of St. John’s has tentatively agreed to subsidize the St. John’s IceCaps with $700,000 over the next two years.
City council, at its weekly private meeting to discuss personnel and legal issues, agreed to a request from the team to offset the cost to stay in St. John’s an extra year before it moves to Thunder Bay to be closer to its parent club, said Coun. Dave Lane.
“The Winnipeg Jets gave a year extension to the IceCaps, and part of the agreement to cover off the cost — because they were going to leave for financial reasons — they said, ‘It’s going to cost (IceCaps) $1.5 million more.’” The IceCaps then approached the city to ask for help offsetting that cost.
The suggested agreement, agreed to by councillors at Monday’s private meeting, was $350,000 a year for the next two years, said Lane. The issue has been debated at the last two private meetings, he said.
“The issues were, do we have to pay this? If we don’t, what does that mean?” said Lane.
Coun. Danny Breen, chairman of the city’s finance committee, said the city is looking at reducing the cost of the Mile One lease, “recognizing, of course, the significant economic and non-economic impact of AHL hockey in the city.”
Lane said the vote to explore the subsidy was not a unanimous one, but declined to reveal how the vote broke down. The big concern, he said, was effectively subsidizing a for-profit company.
“The rationale was basically that having hockey at Mile One is such an economic generator that it’s kind of the cost of doing business, in a sense,” said Lane.
He said he’d prefer to see more than just keeping the IceCaps at Mile One in return for the city’s subsidy, but added the IceCaps are increasing their investment as well.
“And we’re a partner with them, so that’s the rationale there.”
The city has also asked St. John’s Sports and Entertainment, which runs Mile One Centre, to explore ways to raise revenue to offset the subsidy.
The City of St. John’s subsidizes Mile One every year — in 2008, it was $2 million. The city had reduced the subsidy to $750,000 in 2013, but raised it again for 2014 to $1 million. The subsidy is variable and based on revenue and expenses in a given year.
“If we can get more concerts in — and it’s easier to get concerts when you have steady staff, which they’re able to keep when you have a hockey team — then at the end of year, if we’re fortunate and work hard, we can actually offset the cost just by having one major player come in and do three concerts in a row,” said Lane.
“We want to work with them to make sure that the lease arrangement allows us to have professional hockey here in the city, still keeping in mind that we have to pay the bills at Mile One,” said Breen.
Lane said it was a “tough decision” to agree to pursue the subsidy, and because it would be part of the city’s contract with St. John’s Sports and Entertainment.
“Because it’s part of a contract negotiation, it is considered a legal issue,” said Lane, who added the subsidy — as part of the St. John’s Sports and Entertainment budget — will still have to be approved by council at a public meeting.
“We will bring it to the public chamber when we approve the budget for St. John’s Sports and Entertainment,” he said. “My understanding when we voted was that we were basically giving approval for St. John’s Sports and Entertainment to accept the offer and look into ways to offset the cost.”
Breen said he’s also concerned that a confidential internal memo was leaked to the CBC, which broke the news of the subsidy Monday evening.
“We have to deal with issues in the private meeting — private meetings, we’re restricted in what we can discuss. They’re usually human resource matters, intergovernmental matters, legal matters. Contracts, leases, such as this,” Breen said. “So the information that we’re given, it’s important that it is confidential, because it’s information and recommendations from our staff on those issues. When that gets outside the council meeting, especially prior to a final decision being made by council, or announced by council, that’s very difficult.”
Meanwhile, the IceCaps consider it a done deal. A statement released by the team Monday night says the city has agreed to a reduced rate of rental for Mile One Centre.
“Previously, the IceCaps were paying one of the highest rental fees of any franchise in the AHL; a reduction in that rate was critical to offset the significant increase in costs to keep the Winnipeg Jets (the IceCaps’ parent club) in the city for an additional year,” says the statement. “In fact, the reduced rental fee was essential in order to keep the Jets’ AHL franchise in the province.”
The team also takes issue with use of the word “subsidy.”
“The reduced rate is not a ‘subsidy’ as has been reported, since the IceCaps will still pay a very substantial rental fee for the use of Mile One,” says the statement. “A subsidy implies the organization will receive money from the city to operate the team, which is simply not the case.”
In fact, a subsidy can be in the form of direct financial support, such as cash, or indirect support, such as a tax break or a reduced rent.