Moncton council to cover $333K of basketball team's losses at events centre
City councillor doesn't consider payment of up to $333K a subsidy
The City of Moncton has agreed to cover up to $333,000 in financial losses by the Moncton Magic in the basketball team's first season playing in the city's new events centre.
Council voted 9-2 in favour of the agreement with the National Basketball League of Canada team.
The agreement will see the city compensate the Magic for every dollar below what it originally projected to earn in revenue if it was allowed to play its next season at the Moncton Coliseum.
The potential payment is capped at $333,785.29 and would be paid at the end of the season after the city reviews the team's financial records.
The team replaced the Moncton Miracles at the Coliseum last year.
Mike Storey, the Magic's vice-president of operations, said the team hoped it could spend another year at the Coliseum to ensure stable revenue and fan base.
But a council vote in June meant the team couldn't stay.
The city never planned for sports teams to continue playing at the Coliseum once the 8,800-seat events centre opens in September, though Storey says the organization wasn't aware of that until earlier this year.
The Magic forecast revenue of $644,682.59 for the upcoming season if it remained at the Coliseum.
That revenue projection has been slashed in half to $310,897 when playing at the events centre, according to figures released by the city.
Revenue projected to drop
The figures show declines in ticket, sponsorship, concessions and merchandise revenue.
The subsidy will cover each dollar below its projected revenue at the Coliseum, to the maximum of $333,785.29.
If the team makes the playoffs, the subsidy will be cut by $6,300 per home game.
The city will also compensate the team if it needs to change the date or location of a game because the Magic do not have first right of refusal in the building.
Moncton Mayor Dawn Arnold called it an "extremely difficult decision" for council that was discussed in private meetings over several months.
Arnold said staff had initially recommended not going ahead with the agreement.
Coun. Blair Lawrence told reporters he doesn't see the potential payment as a subsidy.
"It's a risk mitigation. We may be on for nothing. It's really just support there," he said. "In the end what we're looking at is a way to mitigate some of the issue that they have."
Couns. Bryan Butler and Paul Pellerin voted against the motion.
Pellerin questioned whether the agreement opened the city to payments to the team in future years if that team doesn't make enough money.
Storey hopes the team won't need the money and doesn't plan to seek a similar agreement beyond its first year.
"We want to make this sustainable on our own and have full intentions of doing so, but this early transition — we would've liked to stay one more year to get some stability in fan base and operations."
The city previously subsidized the Moncton Wildcats to play at the Coliseum.
The agreement is a departure from how the city planned to operate the centre.
The facility was approved by council in 2015 with the understanding SMG Canada, a private venue management firm, would handle the day-to-day operations of the facility and handle negotiations with tenants.
The city's contract with SMG states SMG is "solely responsible for all arrangements" related to the event centre's major tenants.
The major tenants include the Irving-owned Moncton Wildcats hockey team and — at the time the SMG agreement was signed — the Moncton Miracles.
Arnold, as a city councillor in 2015, said one benefit of the city's plans for the venue would be separating the city from talks with potential tenants.
But she said Monday night that there were "mitigating circumstances."
"A brand new team with a local owner," she said. "We came up with this risk mitigation approach which is based exclusively on revenue. We feel strongly that we believe in this team and we want them to succeed."
The Magic saw attendance grow from about 800 to 1,500 over its first season.
"It's a challenge," Storey said about filling seats at the events centre. "We have to quickly find a way to get more people in that building."
He said the team projects it will need about 2,000 attending its games to "poke its head above water," adding the owners don't expect the team to be a profitable enterprise, rather an important part of the community.
The owners are Jeremy Milburn, David Booth and Jon Manship.
Manship, who founded Spielo Gaming International and sold the company for hundreds of millions in 2003, donated $1.1 million to the city for the skating oval in the plaza outside the events centre.
The public will get the chance to tour the events centre during an open house Sept. 8 and 9, the mayor announced Monday.