Markham city council rejected a financial framework that would see it lending $162.5 million to help fund construction of an NHL-sized arena. The dream may be dead unless the private sector now comes through.
The people and politicians of the Toronto suburb of Markham have spoken. And their message is they don’t want to assume an ounce of risk when it comes to building an NHL-sized arena in this town. And good on them for that. This corner has said from the start that if people here thought the deal for an arena was a bad one, they should reject it.
What happens now is a lot more confusing. Some are saying the deal, and any possibility of an NHL team that would come with it, is dead. Others think this is just the kind of kick-start this project needs.
This much we know. The city council in Markham rejected a financial framework which would have seen it lend $162.5 million to venture capitalist Graeme Roustan to build a rink. We also know now that it will be up to the private sector to raise all $325 million it will cost to build the rink. Does that mean the possibility of the rink is dead? Well, it all depends on perspective.
“We may have lost a wonderful opportunity tonight,” said Markham mayor Frank Scarpitti, who was in favor of the project. “There’s still a glimmer of hope, but we lost a lot of ground tonight. I heard some things (that are encouraging)…but I don’t know if it will be enough to attract $325 million in investment in this project.”
When asked whether Quebec City’s chances for an NHL franchise were enhanced by Markham’s decision, Scarpitti was even more blunt: “You can’t drive to work if you don’t have a car. The same thing applies to the NHL. You’re not going to get an NHL team without an NHL arena.”
The glimmer of hope comes from the feeling that even though the taxpayers of Markham will no longer be guaranteeing any financing, the private sector might still come through. The financial framework called for Roustan to raise $162.5 million, which he is confident he’ll be able to do. Most of the other half – the half the city was supposed to borrow – was to come from local developers. Roustan and the developers have put together separate memorandums of understanding that have been filed with the city of Markham. If Roustan can work with the developers to put up, guarantee and secure their half of the cost of the arena, it still has a chance of being built. The project needs $130 million from the developers, with $32.5 million coming from lease payments and revenues from the facility.
“For the past six months or so, I’ve had my $162.5 million lined up, I know where I’m getting mine,” Roustan said. “From Day 1, I’ve always said that the development community…has to come to the table with their side of the transaction. As far as the lease payment, the $32.5 million over 20 years, they’re going to want a guarantee on that, too, and I’m more than prepared to provide that guarantee.”
But when asked what would happen if the development community doesn’t come up with its half to build the rink, Roustan said, “It’s over. It’s always been that way, that hasn’t changed.”
So is the prospect of an NHL-sized arena in suburban Toronto dead? No, but it probably has an oxygen tube up its nose at the moment. The patient is in critical condition. Whether an infusion of private cash comes in time will determine whether or not the patient survives.
But at the very least, this has pushed things back at least six months, if not more. In the meantime, Quebec City is building an NHL rink of its own with $400 million of public money. That could mean Quebec City, if it already hadn’t been ahead in the queue, jumps up a spot.
Chances are, NHL commissioner Gary Bettman will take a dim view of what happened in Markham. And if the people of this town know that and stood on their principles anyway, good on them for doing so. Nobody with $325 million of his or her own money has come forward, ever, to build this rink. It remains to be seen whether a group of them will.
But make no mistake. The chances of a second NHL team in southern Ontario took a significant hit. The region hasn’t been this close to getting the team it deserves since Hamilton’s heydays. In fact, if this building had been built three years ago, there are those who believe the former Atlanta Thrashers would be playing out if it today, and not the MTS Centre in Winnipeg. And the biggest winner in all of this just might be those who have been waiting for the Quebec Nordiques to make their triumphant return.