Payouts from existing Lansdowne Park deal shaved back yet again
Lansdowne 1.0 now expected to generate $55.4M less for city over 4 decades
Arthur White-Crummey · CBC News
Posted: Oct 26, 2023 4:00 AM EDT | Last Updated: 4 hours ago
The Lansdowne Park partnership has posted yet another year of losses, shaving $55.4 million off the payout expected to the city from the deal over its four-decade term.
Ottawa's city manager said the shortfall helps make the case for replacing the deal with the Lansdowne 2.0 plan councillors will vote on next month, but an opponent of that plan said it should make the city even more cautious to double down on a troubled enterprise.
The new forecast came this week in the 2023 Lansdowne annual report. It updates the best guess for how much money the partnership will pay in total distributions, placing the new number at $270.6 million.
That's less than the $326 million forecast in April, itself a steep drop from the $544.7 million expected a year before that. The latest estimate is also below the forecast from when the partnership began in 2012.
At that point, the city was expecting $93.6 million from the complex "waterfall" arrangement that sees money flow first to Ottawa Sports and Entertainment Group (OSEG) to recognize its investment.
It soon became clear that the city wouldn't get a cent and that remains the case in the latest forecast.
The new estimate takes account of current operating results, higher interest rates, inflationary costs and lower growth rates for business at Lansdowne.
It assumes that the partnership continues as is without the $419 million Lansdowne 2.0 redevelopment.
In pitching a new plan that would reform the partnership and rebuild much of the site, the city has argued that the current deal isn't viable and the city could face high costs if OSEG defaults. City staff said the new numbers back up that case.
"I think this just underpins the report that is going forward for Lansdowne with respect to what the future looks like and making something that is sustainable," city manager Wendy Stephanson said Wednesday.
"It really supports the new model that we're putting in front of council."
Capital Coun. Shawn Menard, who represents the area that includes Lansdowne Park, took exactly the opposite lesson from the report.
"One of the most important things that I'm pulling out from this is that the projections that city staff and OSEG have continuously made for Lansdowne since its inception have been incorrect," Menard said. "That continues to this day."
He said the best predictor of the future is the past and that gives him little optimism that Lansdowne 2.0 can succeed where Lansdowne 1.0 has failed.
"There's more financial risk here as a result of the poor performance we're seeing," he said.
The Lansdowne 2.0 plan has an estimated price tag of $419 million. The city would take on $312.7 million in new debt and pay it back through several revenue streams, including a ticket surcharge, a share of higher tax earning on the development and, importantly, waterfall distributions.
The waterfall hasn't flown over the course of the existing deal because the partnership has posted a loss every single year.
It did so again this past fiscal year, according to the annual report released this week, which found a net loss of $9.1 million.
Under the existing deal, OSEG is on the hook for that loss.
https://www.cbc.ca/news/canada/ottaw...cast-1.7008003
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