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What About Our Baseball Team?
We love our Sens, Toronto’s Raptors just made history in the NBA, but one sport that is not acknowledged as much in general; baseball! Of course, we have our national representative also in Toronto, who do their best every season to get closer to a World Series. But this week, in honour of Canada Day, we thought it would be nice to talk about Ottawa’s baseball team, Champions.
Based at the municipal baseball stadium on Coventry Road, the City Council just canceled their lease, but agreed a new kind of rent deal. The team owner says he plans to keep the team playing there for several more years.
The owner, Miles Wolff, said the club had been talking with the city for nearly two years about the terms of the stadium lease to find some way to make it more “livable.”
You see, real estate is not just about first time homebuyers and the stress test. Commercial real estate is not just for the everyday business, but also for sports team! “The rent is well over $400,000 a year, which is difficult to live with, and so we’ve been looking at is there another way to do it?” Wolff said Friday, shortly after the city published a memo revealing the end of the stadium lease.
The head of the city’s real estate office, Gordon MacNair, told council the Can-Am League baseball team was having a tough time meeting the financial obligations under the 10-year lease.
So, what are the present details, and why are they a problem?
The lease started on Feb. 1, 2015, and was set to expire Dec. 31, 2024. The lease included two five-year extensions, subject to city council approval.
Under the lease terms, the city would receive $108,000 in rent payments annually, plus $250,000 each year for recovering stadium operating costs. The city made $1 for every motorist who paid to park at the stadium and a 10% cut on concession sales over $1.2 million. If the baseball team made more than $200,000 annually on the stadium’s naming rights, it had to pay half to the city.
The Champions aren’t reaching the projections in the club’s business case, the city says, attributing financial setbacks to an entertainment product that’s highly weather dependent, the competition in the local entertainment market and the car-centric nature of stadium access.
The stadium has a direct connection via a footbridge over Highway 417 to the Tremblay LRT station. The Confederation LRT was supposed to open in mid-2018 and it still doesn’t have an opening date set.
That means the Champions will have two seasons without having that critical LRT link, where in 2015, at the start of the lease, it was expected the stadium would have LRT service in three years.
According to the city, because of the Champions’ money problems, the club asked the city to revisit the lease terms. The team was $418,942 in arrears.
To cover the owed money, the city is calling a $108,000 letter of credit ponied up by the Champions as security at the beginning of the lease. On top of that, the team will pay roughly $200,000 by Sept. 30. The city has agreed to receive the rest of the money in instalments between 2020 and Sept. 30, 2023.
As for the rest of the 2019 baseball season, the city has made a deal with the Champions so that the team pays a rental fee, just like any other league renting city ball fields.
“We expect that to run for the length of the lease, which is five more years,” Wolff said.
The city’s current rate for the stadium field rental is $128.25 per hour, with an additional $48.35-per-hour premium for use of the stadium lights for night games.
The city says the Champions will pay an additional $760 per game as a “recovery fee” for additional city support required for events. The Champions would still need to maintain areas of the stadium they use.
The new rental terms will allow the Champions to maintain control over the stadium naming rights and their exclusive rights to the concession areas. The city will collect $2 off each paid parking.
Wolff said he didn’t know if the deal still required the team to give a portion of the concession revenues to the city.
The city says the new arrangement means it will receive about $200,000 less in 2019 compared to what it would have received under the lease agreement.
To offset the budget hit, the city says it will set the maintenance standards to a level equalling all other municipal sports fields, rather than having special consideration for professional baseball.
The city is looking at ways to use the stadium for more community sports and special events, in addition to considering a rezoning of the parking lot to allow for more “business opportunities.”
Wolff said one thing that might have hurt the team this year was the city announcing that the stadium could be one of 20 properties transformed into affordable housing.
“We were the site that everyone focused on,” Wolff said, explaining that fans were approaching him asking about the future of the stadium property.
“In some people’s minds, that was a fait accompli, that we’re done.”
Asked if he had a message for Champions fans, Wolff said, “We’re still here.”
This news article obviously gives us a very detailed situation about commercial real estate rental costs for sports teams – and these problems apply to many others around the country and continent. Sports teams may appear wealthy through the media and with the talent they have, but finances are not always what they seem.
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