The Mile One “Subsidy” has been brandished like an atlatl, i.e., awkwardly by most, through the recent election. For those of you, like me, who did not know what it really meant, this is a primer.
- It is not a subsidy. The city covers the basic operating and capital costs of Mile One stadium, minus any revenue the stadium generates.
- The city of St John’s does “give” this annual “Operating Grant” to St John’s Sports and Entertainment Ltd (SJSE); SJSE is a subsidiary of the city, set up to manage the operations of Mile One stadium and the St John’s Convention Centre (SJCC).Sheena McCrate is the current CEO, and she reports to its board. When a board seat opens up, it is the City that puts out a call for bodies. The City keeps in the loop by having two top level staff members (Deputy City Manager of Finance Derek Coffey, and City Manager Kevin Breen) and one councilor (currently Sandy Hickman) sit on the board and report back to council.
- This Operating Grant is about one million per building (Mile One and SJCC), plus 500 thousand for capital costs. There is another 300 thousand for capital costs that comes specifically from the accommodation tax on hotel rooms. Capital expenses cover things like the new roof units (ventilation and dehumidifiers), retrofitting for LED lighting, replacing broken seats, etc.
- Revenue: The current deal with the newest anchor tenant (pro basketball team, The Edge), according to Deputy City Manager Derek Coffey and Mayor Danny Breen, is that the city (via SJSE) will receive 100% of the first ~$850,000 made through seat sales, advertising, and corporate sponsorships (aka “the remittance”).
Anything above that is split, 60% for the tenant, 40% for the city. The team retains all ticket sales and 80% of net concession and merchandise sales. Compare that to the ~$627,000 remittance from the Ice Caps (Which only makes the current deal better if SJSE sells more than $627,000 in suites, ads, and sponsorships.)
According to McCrate, if the basketball games in 2017 attract an average of 1,500-2,000 attendees per game, the operating costs for Mile One, those not offset by this revenue, will remain at ~ 1million dollars.
If the budget is too optimistic, and less people attend and/or they spend less money while there, or the suites don’t get sold, then the city’s annual Operating Grant will be more.
The operating costs are covered by the city no matter what. SJSE budgets how much revenue will likely come in to offset those costs. That’s it. It is about as diabolical as a pudding.
So what is the point if, no matter who we have in there, hockey, basketball or no one, the stadium still costs more money than it makes? According to the mayor, Mile One “in its purest form” is really an “economic engine” for the downtown. It doesn’t make money for itself, but it brings money to the downtown.
The same with the Convention Centre. According to Mayor Breen the estimated spin-off from having the AHL here was 4-5 million a year for the city between players moving here, and local employees and fans spending money on nights out.