PRIDE OVER PROFIT
Mosaic Stadium is an intangible asset that won't make money
Mosaic Stadium is expected to sell out each of its 33,000 seats for the Labour Day Classic, as Saskatchewan Roughriders fans flock to Regina’s new stadium to catch the home team play against the rival Winnipeg Blue Bombers.
For the first time at a Labour Day Classic, fans sitting in the stadium will see on their tickets a $12 stadium fee attached to it.
Of course, $12 isn’t much more than the price of a beer at the stadium, but that fee for each of the 33,000 patrons could go a long way in determining whether Saskatchewan taxpayers end up having a bit of buyer’s remorse over the decision to build a new, $278-million stadium.
When that decision was made, there was much debate in the province over whether or not it was a worthwhile investment.
And like any major purchase — the money has been spent and the stadium is built — there is the lingering question: Was it money well spent? Will taxpayers be happy
about the purchase 20 years from now?
How the Riders perform on the field in the new stadium will likely play some sort of role in answering those questions.
The $12 stadium fee paid by everyone with a home Riders game ticket goes toward paying off a $100-million loan the city took out from the province to build the new Mosaic.
The thinking behind the $12 was that each of the Riders’ nine regular-season home games would be attended by at least 30,000 people — or, that the stadium will have 91 per cent of its seats filled for every Riders game over the next 30 years.
Through the stadium fees, Rider Nation is expected to pay $3.33 million each year toward the $100-million loan for the next 30 football seasons, in which time $99.9 million will be paid off.
But what happens if the Riders become basement dwellers in the standings and people stop going to the games?
It could be the realist test of the famed Rider Pride, and there is reason to believe it’s one Roughriders fans will pass: Since 2000, according to CFLdb Statistics, about 93 per cent of the seats, on average, have been full for Riders games. Over that same period, the team has won 47 per cent of its games.
Historically, though, Riders fans are more likely to attend games if the team is doing well.
In 1999, when the team had only three wins, the stadium was about 70 per cent full. In 2013, when the Riders were Grey Cup champions, they won 61 per cent of their regular season games. The stadium, over the course of the season, was 86 per cent full.
If the team is able to bring the amount of people needed to make the stadium fee work, the plan only accounts for the principal amount of the $100-million loan.
To build the stadium, the province provided an $80-million grant. The Roughriders put up $25 million and the city put in an additional $73 million that will be paid for by a 0.45-per-cent mill-rate increase every year for 10 years.
In total, Regina taxpayers will be on the hook for $76.5 million in interest for loans taken out to build
the stadium. Proponents of the stadium — found easily any time a debate about the stadium’s merits breaks out — will oft say that won’t be a problem, because the stadium will generate enough revenue to cover any of those remaining costs.
According to Regina Mayor Michael Fougere, though, that is not the case.
He says, “When you model and talk about what is a return, what’s the investment and what is the economic potential of the stadium, we’re not going to make money on this one.”
Those who want to pump up the value of the stadium would instead focus on the intangibles the stadium offers and keep an eye out for how much private investment the new facility draws to the area around it.
Topping the intangible list is the fact the province’s legions of Roughriders fans now have a brand new facility to enjoy football games.
Fougere says the return on taxpayer money spent for the new Mosaic Stadium is “not strictly an economic return in the sense that you have a return on investment in the classical business sense.”
That is to say, the new Mosaic will not generate revenue for the city. Instead, it will continue to cost taxpayers money.
How much is still unknown, and will also hang largely on the success of the city’s continued efforts to revitalize the rest of Regina’s downtown.
Fougere characterizes the stadium as a “public investment” to revitalize the downtown and says there will be spinoffs created as a result.
If everything works out, the new stadium, coupled with continued public investment downtown, will draw private interests to the area. Those private interests will build new facilities and, riding a wave of optimism, open new businesses.
“It really is the private sector making that decision, taking that risk, making that development and ultimately deciding what actually goes there. We’ll tell them the kinds of things we want to see in there, but we can’t dictate exactly what goes in there,” says Fougere, noting that, in essence, this is a focus of the city’s ongoing Regina Revitalization Initiative.
In turn, the city’s tax base will expand — meaning there will be more people sharing the burden of paying for the ongoing costs of the stadium.
“If people are actually going
out and getting permits for new developments, if it’s new and incremental, that should excite (the taxpayer),” says senior fellow of the Conference Board of Canada Glen Hodgson. “Any improvement on the property would improve the overall tax base on the property.”
That, basically, is the best-case scenario because it is one in which the taxpayers, as an investor, can come out ahead.
But, Hodgson says, “Whether that’s the case in Regina is yet to be seen.” What is known now is that, typically, that’s not how investments such as this go.
“The normal circumstance is that cities and provinces invest in things like this because it makes people feel good. So you have to think of the social return as well as the financial return,” says Hodgson, pointing out the intangible benefit of making such a costly investment.
Fougere’s point that “we won’t make any money on this one” is made clear when looking at the plan to operate Mosaic. Over the next 30 years, it is estimated to cost between $120 million to $150 million to operate, and the Regina Exhibition Association Limited (REAL) is tasked with doing that.
Outgoing REAL CEO Mark Allan says there are a few basic revenue streams at Mosaic Stadium.
Any revenue generated from the stadium will go back to REAL, which will use that money to continue operating Mosaic.
There is a revenue sharing model for food and beverages. The city — taxpayer money — provides some money to allow vendors to operate, although how much has not yet been made public. Then there is money from major events, such as concerts, and smaller events, like minor football games.
“The profits we make are generally reinvested in the business of REAL and the facilities we look after,” says Allan. “Those big events actually have big potential for us when we get them, because the revenue stays with the Regina Exhibition Association.”
So far, profits have not really been the name of the game for REAL: The city spent money to bring in Bryan Adams for Mosaic’s first non-football test event and did not make money. How much it cost the city is not yet being made public, but city officials are quick to point out that was a test event not designed to generate profit.
The recent Guns N’ Roses concert was characterized by REAL as a sellout — and looked like a full crowd — but those in attendance could still find empty seats. There is really no way of knowing if the empty seats were from people who didn’t make it, or found other places to watch the show, but it is the unofficial entertainment industry norm to call an event a sellout, even if there are single tickets still left for sale. And, it is fairly standard for REAL not to release attendance figures for such events.
Despite the stadium already being built, the debate over the merits of new Mosaic rages on.
For those engaged in that debate — perhaps even while watching the Labour Day Classic — it’s worth remembering there are many factors — oft dictated by future events — that will determine whether or not Regina taxpayers end up feeling remorseful over the building of the new stadium.