Riley O’Connor, chair of Live Nation Canada, told the Star on Monday that the arena will need an NHL franchise, other pro hockey or basketball team, because concerts won’t be able to generate enough revenue for a successful business.
“You really need a major tenant to make that happen,” he said. “In almost all major Canadian arenas, that’s an NHL team, an AHL team, a major junior hockey team. You can’t do it on concerts alone.”
Other industry insiders and some taxpayers have questioned continuing assertions from arena promoter Graeme Roustan, chair and chief executive officer of GTA Sports and Entertainment, that the Markham facility can work well without an NHL franchise.
Philadelphia-based Global Spectrum, another partner in the project, has estimated the 20,000-seat Markham arena could attract 133 events annually. Roustan, a former rink operator in the U.S., has noted the arena doesn’t even need to reach that target to remain a strong business.
However O’Connor said big arenas around the country need about 200 event days a year to flourish, and the only way to reach that level is with a sports club that uses it for 40 or more dates a year. The Air Canada Centre in downtown Toronto attracts more than 200 event days a year, with the hockey Maple Leafs and basketball Raptors filling about half of the dates.
In April, Markham council voted overwhelmingly to support a financial plan for an NHL-sized arena near Warden Ave. and Highway 407 in a public-private partnership. Markham would borrow $ 325 million and half of it will be repaid by GTA Centre LP, the entity that will lease the arena.
“How can Riley say that?” said a surprised Roustan, who is also chairman of Bauer Performance Sports. “He won’t be operating the building. He doesn’t know the costs. That’s what Global Spectrum is doing for us.”
Frank Russo, Global Spectrum’s senior vice president for business development and client relations, said his firm provided the estimate of event days and described it as a “conservative realistic number” for financial projections.
“I have to believe Live Nation when they tell me there is pent-up demand within the GTA for Sports and Entertainment,” Scarpitti said. “They are in the business. When they tell us, on a conservative basis, that they will have over 100 events there at that facility — that’s something happening there every third night and to me, that’s something that is viable.”
“We have gone through this with Live Nation; we have gone through this with the private sector, and I don’t think the private sector would be putting in $ 162.5 million if they didn’t feel it was going to work with any kind of major sports franchise in there,” Scarpitti said.
“A lot of people are basing their decisions on what Graeme is telling them,” said Jones. “But it’s still not clear to me if, based on those numbers alone, the arena can work.”
But Russo added that Global Spectrum is not a partner with GTA Sports and will be a “fee-based contractor” responsible for managing the arena, booking events and working with, but not limited to, promoters such as Live Nation.
O’Connor also said there is no formal agreement with Live Nation and there have been no talks since April.
But O’Connor said he has no problem with GTA Sports describing Live Nation as a “partner” as long as it’s not in a “derogatory manner.”