Lansdowne Park to generate far less money, updated projections say
Revised financial picture 'builds the case' for Lansdowne 2.0, deputy treasurer says
UPDATE: The two Lansdowne annual reports for 2021 and 2022 were received by the Finance and Corporate Services Committee on May 2.
Lansdowne Park could generate $218.7 million less over the next four decades than had been projected just one year ago, according to revised calculations by the Ottawa Sports and Entertainment Group and the City of Ottawa.
The municipality's arrangement with the Ottawa Sports and Entertainment Group (OSEG) should result in $326 million over 40 years, a "significant drop" from the $544.7 million figure presented to the same committee last May, according to a report headed to the city's finance and corporate services committee on May 2. Because of the way the Lansdowne partnership's complicated financial structure works, the city wasn't set to receive payments either way.
Both sets of figures assume no upgrades are made to the current aging arena and stadium, even though the last city council did set in motion a $330 million redevelopment plan dubbed "Lansdowne 2.0" in June of 2022.
- City council votes to move ahead with Lansdowne 2.0
- 'Lansdowne 2.0' includes new arena, stands, 1,200 more living units
OSEG presented the updated financial projections at the Jan. 13 annual meeting of the public and private partners, but the city also rigorously reviewed them, said Ottawa's deputy treasurer Isabel Jasmin.
They're a better reflection of how the pandemic had an impact on concerts and sports games at Lansdowne because the $544.7 million projection had been made after only one year of COVID-19 restrictions, she said.
The revised financial performance for Lansdowne also reflects the current higher interest rates, and OSEG refinanced a loan at higher rates, Jasmin said. A minor annual adjustment grows exponentially when spread out over 40 years, she pointed out.
"It actually confirmed the risk of continuing the way we are today and it actually builds the case for redevelopment," Jasmin said.
Last term's city council had a big debate in May 2022 and decided to start down the path of relocating and building a new arena, building new north-side stadium stands, and developing 1,200 residential units in high-rise towers.
The $330-million project was presented as being revenue-neutral.
The new arena and stadium stands would be paid for in part by selling "air rights" to a developer who could build real estate towering above Lansdowne. The City of Ottawa put out a call for expressions of interest from prospective developers last week.
The city is also counting on receiving a few hundred million dollars in payments long-term from a more successful, second redevelopment at the site, which would help pay the financing on the debt needed to build the new sports facilities.
The first Lansdowne redevelopment was also supposed to lead to payments for the city, however.
Instead, the partnership has posted a loss every year since it began a decade ago, and OSEG covers each one.
Under the complicated financial arrangement, which sees any cash distributed in a "waterfall" to six different levels, OSEG is paid back first and that leaves nothing to flow to the municipality.
Asked how the city could reassure the public the second round of Lansdowne upgrades would indeed be revenue neutral, given how greatly the calculations have shifted over the years on the first phase, Jasmin said the city was doing a sensitivity analysis.
"This time around, having gone through the pandemic, we will be looking at different scenarios, worst/best case scenarios," Jasmin said.
Many other aspects of Lansdowne 2.0, including its price tag, are being updated from the last report a year ago, but Jasmin couldn't say when that next report would go before the new Ottawa city council.