Can new Senators arena be built without public money? We're about to find out

When reporters asked Mayor Jim Watson early this week whether he was up for sinking city money into a new Senators arena at LeBreton Flats, they were expecting him to reply with a resounding, "No."

• Watson won't rule out public money for downtown NHL arena

After all, the mayor is proud of his reputation as fiscally cautious — he's brought in a modest two per cent tax hike for the last three years, and once boasted that our light rail transit was "going to be a great Chevy" as opposed to "a Cadillac system." So when he left the door open to tax dollars funding an NHL arena, it came as a surprise.

But maybe it shouldn't have.

"The reason he said that is because he lives in the real world," said Glen Hodgson, the former chief economist with the Conference Board of Canada, where he is currently a senior fellow.

"And in the real world, there's very few facilities built anywhere in North America without some public money involved."

Millions routinely poured into arenas

The city of Edmonton committed more than $300 million to partner with Oilers' owner Daryl Katz, who last year sold his Rexall chain for $3 billion, to fund a new arena and downtown development. 

But at least Edmonton has a scheme to recoup some of that money from increased property taxes. Quebec City split the $400-million cost of the Centre ​Vidéotron with the province in order to lure the Nordiques back to town. Instead, the latest NHL expansion team was awarded to Las Vegas.

There are a few instances where NHL arenas were funded privately, but they are in markets much larger — and more lucrative — than Ottawa's. Think New York City or Toronto — although even Air Canada Centre got millions worth of public infrastructure financing and federal land at well below market value.

"In a perfect world, we wouldn't put public money in at all. I agree with that," said Hodgson, who co-authored Power Play: The Business Economics of Pro Sports. 

"But this has been a distorted market for a very long time now. Once one city goes in there and is prepared to offer either tax-free bonds in the U.S., or a bit of city financing out of a city budget in Canada, that becomes the ticket for entry."

Is it a price that the people of Ottawa are willing to pay to have an arena downtown?

Mayor looking for direction on public spending

That's what Watson is about to find out. He's asking for a "clear mandate" from the public and from council to represent the city in the negotiations to redevelop the western part of LeBreton.

This is a good thing. Whatever happens at LeBreton will have a major impact on the city, whether it's operating public amenities or making changes to the LRT station, and we need senior city representatives at the table.

Watson said that through an online consultation, followed by a report to council's finance committee, the city will develop "some general principles at a high level." 

It sounds as if the mayor would like to gauge the public's willingness to put their money into this deal, and how much.

And who knows? Maybe the Senators won't ask for any public money. After all, during the competition to redevelop the flats, team owner Eugene Melnyk said no public would be involved in the Senators-backed RendezVous LeBreton Group's proposal.

But given the business of pro sports, purely private financing seems unlikely for an Ottawa arena that will cost more than $400 million.

Millions for millionaires?

It's sure to be a contentious debate.

There are those who will argue that LeBreton is an embarrassment and that something needs to be done. Others will argue that it is a prime piece of federal land that belongs to the whole country, and should have a more public use.

​'People always say, "Is this good for the Ottawa economy?" Eh, it's really hard to find the benefit for the most part.'- Glen Hodgson, economist and senior fellow at Conference Board

Most people, even if they aren't ardent Sens fans, understand why a downtown arena located on rapid transit makes sense for both the franchise's success and for city building. And yet, in the thousands of public comments made last year on RendezVous's proposal, many people expressed concern that the arena was the focus of the plan.

These are all valid points.

Underlying all the pros and cons of any proposal will be the hot-button issue of whether it's appropriate to use public money to help the lucrative NHL and its rich owners.

• From the Archives: No 'millions for millionaires'

Almost 20 years ago, then-Liberal industry minister John Manley proposed a plan to subsidize NHL teams to keep them in Canada. He had to backtrack within days as critics protested his plan, which they called giving "millions to millionaires."

More recently, the mayor of Calgary told the NHL that "99.999997 per cent" of residents were against funding a new arena for the Flames.

What is it worth?

Watson told reporters that his "bottom line is, whatever is being asked from us, does it make sense and is there a return on our investment whether it be through property or development charges or the increased market value assessment of the property."

While Watson talks about return on investment, virtually every report that looks at public investment in sports arenas finds it is not a good deal for taxpayers.

​"People always say, 'Is this good for the Ottawa economy?' Eh, it's really hard to find the benefit for the most part," said Hodgson. 

"The economic research on this shows there isn't an economic benefit from taxpayers investing in facilities. But what's the price of civic pride or being a community people want to live in?"