tank: saskatoon scores big in private partnership for arena district
a prominent private company in the sports and entertainment field willing to invest millions in a saskatoon arena district drastically reduces the risk.
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an artist's rendering of the area around a proposed new arena and convention centre expansion in downtown saskatoon. (city of saskatoon)
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you need not support the proposed arena district planned for downtown saskatoon.
but you’d face a formidable task to convince reasonable people that a better deal can be struck with a private partner to manage the district and help pay for it than the one announced last week by city hall.
last week, city bureaucrats announced a tentative agreement with denver-based ovg360, also known as the oak view group, to manage the arena district and help pay for its construction.
ovg might not resonate as an instantly recognizable name, but within the arena and entertainment venue field it’s a multinational monster.
the company’s website boasts of 400 global venues it helps manage, more than 50,000 employees and more than $5 billion invested in developing new arena projects over the next three years alone.
one of its most prominent projects is the $1.15-billion renovation of climate pledge arena, where the nhl’s seattle kraken play. ovg managed the construction, which grew so wildly expensive because the arena’s historic roof had to be preserved, and it now operates the facility.
it’s also managing the $280-million revamp of first ontario centre in hamilton, ont., where it has struck a longterm pact with the city of hamilton to manage that arena.
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in saskatoon, ovg has pledged to put up $20 million for the construction of the district, which would include a new downtown arena and a renovated tcu place. and city hall and the company predict an additional $150 million generated over the 25-year term of the proposed agreement.
that’s a commitment of potentially $170 million toward the district, which, admittedly, is expected to cost hundreds of millions more. we expect a more comprehensive cost estimate later this month.
but if you can cite an example of a better arena deal with a private partner than this one, let’s hear it. this is likely as good as it gets.
the fact that a private partner wants to invest in what some have depicted as a terrible idea speaks volumes. no company wants to be associated with a big failure. and this particular corporation seems to occupy a position in this industry to aptly judge future success.
ovg has grown to its monster status in less than a decade. it was founded in late 2015 by tim leiweke and irving azoff.
prior to ovg, leiweke served as the president and ceo of maple leaf sports and entertainment, which manages the nhl’s toronto maple leafs (insert your own leafs joke here) and the nba’s toronto raptors.
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azoff was previously the chairman and ceo of ticketmaster and live nation entertainment. those might not be the most beloved brands, but you can’t deny their financial success.
city hall’s technical director dan willems described “intense” negotiations at a news conference last week and revealed the potential deal with saskatoon would mark ovg’s largest investment yet in canada.
“my resting heart rate was above 110 for about three weeks,” willems told reporters.
saskatoon city council will meet this week to approve or reject the tentative deal, but it’s difficult to imagine anything other than unanimous backing for an essential component of a project that has received much criticism.
however, it remains just one element. mayor charlie clark has stressed that an arena district will not proceed without federal and provincial financial contributions.
yet it’s doubtful clark envisioned an agreement as potentially lucrative as the one with ovg. and the idea of an arena district proceeding without property tax increases now seems more realistic.
certainly, a private company brings more than altruistic motives to a venture like this. the profit for the company increases along with the revenue from events.
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so the city gets 90 per cent of profits from events that generate $2 million or less, 80 per cent for events with profit between $2 million to $3 million, 70 per cent for events between $3 million and $4 million and 60 per cent for events generating $4 million or more.
ovg gets the other slice, furnishing it with a serious motive to make the downtown district a smashing success.
some critics will never be swayed, and no decision prior to november’s election will ensure the district proceeds.
but the involvement of such a prominent private partner willing to invest millions drastically reduces the risk.
phil tank is the digital opinion editor at the saskatoon starphoenix.
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