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What you need to know about COVID-19: August 4, 2020
It’s boilerplate stuff, really.
There is nothing earth-shattering in the text of the lease agreement announced earlier this week between the City of St. John’s/St. John’s Sports and Entertainment and the owners of Newfoundland Growlers/St. John’s Edge regarding Mile One Centre, where the ECHL’s Growlers and National Basketball League of Canada’s Edge are primary tenants.
It outlines the lease rate for the teams on game days — $4,500 a night, about $1,000 less than the American Hockey League’s IceCaps — and details how advertising and concessions revenue will be divvied up.
Yes, there would have been dickering about the various splits, the teams’ takeover of operation of the Mile One suites and responsibility for the cost of the new LED advertising ring within the facility, but it’s still hard not to question why it took so long to clew up this deal, with the announcement coming after both teams had started their respective 2018-19 seasons.
Not that it makes much difference now, the agreement being finalized. Then again, other happenings indicate its drawn-out nature may become part of a pattern.
There has been, since March, a memorandum of understanding (MOU) between the City and the Edge/Growlers indicating the municipal government’s willingness to negotiate with the sports teams’ owners about their taking over complete operation of Mile One.
In fact, the MOU is brought up in an addendum to the lease agreement. But last month, the City also revealed it had engaged a consulting/auditing firm (KPMG) to, as Mayor Danny Breen stated, “assist us in looking at different management models.”
Those would include having the Growlers/Edge take over management of Mile One or the outright sale of the facility. It could also be maintaining the status quo, with the City continuing to own the soon-to-be 18-year-old building.
Which is all fine, but why would the City say it was interested in having someone else operate the facility and go so far as to put that interest in a document, then decide it needed advice as to what to do?
Shouldn’t it have been the other way around?
The MOU is something formalized, not the matter of the City simply saying to the Growlers/Edge, “That idea of you running the building? Yeah, we’re interested, but let us get back to you because we need to talk to someone else.”
But that’s what it has become.
And while we’re on the subject, does the City, which has operated Mile One for almost two decades through SJSE (an appointed board that includes councillors and senior city staff), which has seen to the building’s maintenance all that time, which has long operated within the market for rental of such facilities, which has its own extensive engineering, legal and finance departments, really need to be told by someone else what to do with the building?
(And let me say that as a voter/taxpayer, I see governments as being elected to make decisions, not to seek out someone else to advise them what they should do. It’s not the City of St. John’s that is alone in this practice. Bringing in consultants has become a maddening matter of course for provincial and federal governments, too.)
Off the soapbox now.
If anything, you would think the Edge and Growlers would be the ones interested in finding some outside entity to assess the rink, which let’s face it, is long past being a modern facility.
Mile One has held up pretty well since its construction was finished in 2001, but is fast approaching the halfway mark for the standard life expectancy of such constructions.
But that lease agreement with the Growlers/Edge would seem to be a set-up for the city turning over operations of the building to them. For example, it’s the teams paying the full cost of construction/re-construction of the dressing rooms and for acquisition of the $1 million LED ring.
Which would make perfect sense if the City didn’t figure it would be operating the building over the long term. Why would anyone want to cover extensive upfront capital costs that comes with upgrades/construction/installation/purchases for a building if there is a decent chance they wouldn’t own/run the building in the near future?
But now there is a consultant in the picture, which could indicate there is some second-guessing about what to do.
There are lots of interesting things to discover should it ever come to Mile One being turned over to the Growlers/Edge.
• If it’s sold, would the City set the selling price at the full depreciated value of the facility, or something less?
• If the City continued to own the building, but turned over its management to the teams, would it continue to cover all, or part of, the Mile One operating deficit, which probably comes in at around $1.5 million a year?
• Under what umbrella would the Edge/Growlers operate as potential Mile One owners/operators and what share of that umbrella company would each side own?
• If the Edge/Growlers took ownership of Mile One, would they manage it themselves, or turn it over to some firm that specializes in such things?
• And what would Mile One be called? The addendum to this week’s lease agreement says the teams came make up the capital costs of the LED ring by selling the naming rights to the arena. Those rights were originally purchased by Danny Williams, who decided against a corporate name and chose Mile One. But those rights have since expired.
But with a consultant’s report in the offing, expect to wait on answers as the City tries to make up its mind or to have its mind made up.
We may well be waiting by the time this lease agreement expires in June and a new one is required. At least they’ll be able to copy the present deal, put in new dates and re-sign it. It’s that straightforward.
But it might be the only thing in this process that can be described as such.