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CBC Ottawa

'Bonuses' for sports teams questioned

By Giacomo Panico, CBC Ottawa

Friends of Lansdowne lawyer Steven Shrybman is arguing the city's Lansdowne Partnership Plan (LPP) unlawfully "bonuses" OSEG.

A key part of his argument centers around the franchise fees for the CFL and OHL teams.

As the previous post shows, the "waterfall" payback system sets how much money the city and OSEG each get from any revenue generated at Lansdowne (rents, parking, events, etc..)

The pecking order is straighforward: Level 1 gets paid first. When that cookie jar is full, the revenue flows to Level 2. If there's still some after that, the revenue flows to Level 3, and so on.

How much each side gets is based on their equity in the LPP.

At level 2, once a maintenance fund is filled (level 1), each side gets an annual return (investment interest) worth 8% of their main equity. Under the proposed deal, the city's equity is about $13mil. OSEG's is a minimum of $30mil.

At Level 4, revenue is used to payback the actual equity.

How each amount of equity was calculated is tricky. But Shrybman will point out that of OSEG's $30mil equity, $19.2mil of it come from the franchise fees for the CFL team ($9.2 mil) and the OHL team ($10mil).

The allegation from FOL is that the city is subsidizing sports franchises by allowing OSEG to count the franchise fees as equity. FOL says OSEG will be paid back for bringing the teams into the plan.

In its factum, Ottawa Sports and Entertainment Group said Friends of Lansdowne has oversimplified the ownership of the franchises.

It said both the CFL team and the Ottawa 67's would be acquired and operated by a partnership that includes both the city and OSEG as a limited partner. OSEG said while the city is a partner, the cost of acquiring the teams has been borne entirely by OSEG.

If you're curious, here's the breakdown of who's investing how much:

The city is actually spending $172.8mil when you include:

  • $35mil for the urban park (although $6mil of that is to move the Horticulture building which is a big deal for the retail space to work)
  • $8.5mil for the new trade show and exhibition space near the airport.

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