Hockey contracts in Saint John, Bathurst differ in approach
Moncton refuses to provide contract with Wildcats under Right to Information Act request
It’s a tale of two hockey cities – and in this subsidy shoot-out, Saint John wins.
A CBC News examination of two arena contracts with two different Quebec Major Junior Hockey League teams in New Brunswick shows that Saint John’s Harbour Station is making money from its agreement with the Saint John Seadogs.
Under the terms of the deal, the team has been handing over $500,000 to $700,000 per year to the Harbour Station Commission – meaning the facility’s overall deficit is far below the $1.2 million annual loss projected when it was built.
One of the key differences between the two contracts is rent: the Seadogs pay $95,000 per season, but that is increased to $125,000 if there are more than 166,000 tickets sold.
"When any of our tenants does well, the building does well,” says Harbour Station general manager Mike Caddell, “so we're on a sliding scale with most of our tenants: a little bit of protection on the downside and everybody wins on the upside."
The Titan, meanwhile, pay no rent at all. The city also covers the cost of all box office staff for the team.
“Running a business like a hockey franchise is very expensive and very difficult,” says Bathurst Mayor Stephen Brunet. “When you're in a small community like Bathurst, with a small population, we can't draw to the rink what they can draw in Saint John or Moncton or Halifax. So we have to pitch in to make it work, and that's what we've done."
CBC News requested the three New Brunswick-based QMJHL team contracts with their respective arenas under the Right to Information Act, which has covered municipalities since last year.
Bathurst provided its contract without hesitation. In Saint John, the Harbour Station Commission – with representatives from Saint John, Rothesay, Quispamsis and Grand – Bay-Westfield also complied with the request.
"Transparency is best,” says Seadogs president Wayne Long. “We've got nothing to hide. Our lease is our lease.”
In Moncton, however, City Hall was persuaded by the Moncton Wildcats, the third QMJHL team in the province, to reject the CBC request.
The Wildcats organization “had very serious reservations about the disclosure of the documents, and provided us with rationale that we agreed was very sound so we agreed to not disclose the documents."
CBC News has asked New Brunswick’s Information Commissioner to review whether Moncton’s decision complies with the law.
While nothing in the contract itself requires it be kept confidential, Moncton city manager Jacques Dubé says in the future, contracts the city signs will state that the city could be required to release them under the act.
In Saint John, the Seadogs and the Harbour Station Commission agreed in 2005 to add executive suites to the contract. It happened after the Quebec league unexpectedly increased its franchise fee – what owners must pay to bring a team into the league – from $2 million to $3 million.
In the first three years of the contract, the team got 90 per cent of the executive suite rent, a share that has dropped gradually over the term of the contract. The team and the commission now split the suites revenue.
The commission also pays the team a “marketing incentive” of $35,000 if the team spends more than $100,000 on marketing and advertising in a given year.
"This was just another way to help the team out to ensure they were here for the long term,” Caddell said.
Both Long and Caddell said those concessions are more than balanced out by the rent payments. Long said with the Seadogs’ success in recent years, fans have packed into Harbour Station and the team has paid the higher rent amount of $125,000.
He admits he’s a bit envious of Bathurst’s zero-rent contract.
"I think it's the nature of the communities. They really want that team there. Call it a loss leader, if you will. They may have to sacrifice to bring that team in, but there's all kinds of positive economic spin-offs to having a team in the community."
Long said generally, large-market teams such as the London Knights of Ontario Hockey League enjoy huge crowds and don’t need to extract as many concessions in their arena leases. In smaller communities, where there’s no guarantee of large crowds, municipalities often have to offer subsidies.
Brunet said because of job losses in Bathurst and a decline in attendance at Titan games, the city had even less leverage than it did when it signed its initial deal with Morrissette in 1998.
Steven White, one of the new owners, says “at the end of the day the city knew that it was important to keep the team in Bathurst. There were no other avenues to have a major tenant. They see the opportunities the team brings to the community with regards to the revenues it can generate."
Bathurst gets a percentage of the food and drink concessions at the Titan game. It keeps 85 per cent if there are fewer than a thousand fans, 80 per cent if there are between one thousand and two thousand fans, and 75 per cent if there are more than two thousand fans.
Brunet and White also argued there are economic spin-offs to having a team, though neither man could put a dollar figure on that.
“It creates a sense of belonging for the community, people love to go to the games and it creates great, positive atmosphere for the region,” White said, “so there's more to this deal than just the monies that are involved."
"They do buy gas when they come in, they go to restaurants, they stay overnight,” Brunet said. “We do notice more people coming in from away, and the hockey players, their families are coming in. The other thing is people across Canada know that Bathurst is alive and well because we have a team in our city … That's a real feel-good."
White said he and the other Titan owners bought the team not to make money but because they love hockey. He said he’ll be happy if he breaks even on his investment.
Long, a minority owner of the Seadogs, says he and other investors in the team have yet to recoup their initial investment.
“These franchises can bring in so much revenue and these franchises have so many expenditures … And you're always a little up, a little down,” he says.
“You’re always one step away from losing money in major junior hockey. Anyone who thinks they're getting into major junior hockey to make a lot of money, we've certainly learned that's not the case."