Matthew Pearson, Ottawa Citizen
Extra costs at Lansdowne Park have wiped out the possibility that the city will turn a profit on the project.
The Ottawa Sports and Entertainment Group — the city’s partner in the venture, which brought about the return of CFL football to the city and dramatically transformed the Bank Street site — also stands to make less money than initially expected, and suffered an operating loss of $10.9 million in Lansdowne’s start-up year.
The details, released late Tuesday in advance of next week’s finance and economic development committee meeting, are contained in the first-ever annual report on the Lansdowne Partnership Plan. The report provides council with an update on the first year of operations at the park, which was unwrapped in stages following the Ottawa Redblacks opening game on July 18, 2014.
Financial statements for 2014 were provided to the city at a meeting in June, as well as an updated picture of the profit-earning potential of Lansdowne Park.
OSEG operations are expected to generate $109.7 million more in net revenues over 30 years than projected in 2012 thanks to longer term retail leases (at higher rates), higher CFL revenues with broadcast agreements, and higher than expected revenues from naming rights and ticket fees.
However, the business organization has also had to shell out $53.6 million more in unexpected capital expenditures in 2014 and 2015. OSEG’s unanticipated costs included repairing rust in the arena roof, as well as additional work on the retail area; technology costs of $10 million – which are offset by increased revenue – and $20 million more in retail construction costs.
The impact of the revised figures is reduced profit for OSEG over the 30 years of the agreement. OSEG was expected to spend $56.3 million and get paid $69.7 million, for a net return of $13.4 million, in 2012 dollars. But now OSEG is expected to invest $110.5 million and earn $115.4 million, for a net profit of $4.9 million — a reduction of $8.5 million, in 2015 dollars.
The city’s anticipated profits of $22.6 million, meanwhile, will be wiped out in large measure because of the unanticipated costs of repairing the arena’s roof. Depending on how the city decides to settle its dispute with OSEG, it could recoup $6.8 million of the expected profits, according to the report.