CANTLON’S CORNER: CONNECTICUT HOCKEY RINKS FATE TO BE DECIDED
BY: Gerry Cantlon, Howlings
HARTFORD, CT – The past week has been a stressful one. Events have gone down that will likely determine the future direction of the state’s two major multi-purpose hockey arenas, The XL Center in Hartford and Webster Bank Arena in Bridgeport.
One shoe dropped last Wednesday night in Bridgeport.
A bidding process found the nationally renowned concert promotion agency, Live Nation, paired with local developer and the former president of the Sound Tigers, Howard Saffan, put forth the winning bid to convert the Ballpark at Harbor Yard baseball stadium into a three-season outdoor concert amphitheatre in the mode of The Meadows/XFinity facility in Hartford. The 5.500 seat facility would open in May 2019.
The awarding of the deal to Saffan/Live Nation was ratified by the Bridgeport City Contracts committee council to be sent to the full council to vote to either approve or reject the deal on November 6th. If that date seems familiar, it should. It’s just 24 hours before Election Day.
The Sound Tigers and their parent club, the New York Islanders, created the current building operating company, Harbor Yard Arena Management. They feel that a concert facility going up across the parking lot from them violates their present lease, currently on the 17th of a 20-year term, in the non-compete clause. They are threatening to file a Breach-of Contract lawsuit.
An even bigger shoe dropped Thursday morning.
The legislature in Hartford passed a bipartisan $41 billion dollar budget. The Senate and the House only allocated $40 million to be bonded for XL Center over the next two years. The money will be spent on needed repairs and to purchase the Atrium that is still owned by Northland Corporation.
The legislative finance committee took the original request of $125 million, which was half of the publicly stated cost of the project, and recommended only $75 million. In one of the failed budgets over the past few months, Tom Fonfara (D-Hartford), who has the XL Center in his district, had a plan to bond $115 million. That budget went down to defeat as three Democrats defected to pass the Republican proposal that the governor vetoed and the legislature sustained.
Another kiss of death came in a provision that should a private investor not be found, the XL Center will go up for sale in 2019. Not good news. Last year’s RFP for investors, XL Center reboot project, yielded just one investor submitting a bid.
The being “sold” was a polite way to say, “We’re closing the building because nobody will buy a 44-year-old building.” Few people will want to be forever known as the bad guy who said to issue the order to close. They’re going to leave it to whoever is elected to be the new governor and legislature to make that decision.
Northland Corporation will now likely seek more money for the Atrium’s title and deed. Northland could choose to wait until the building closes and rebuild it. This strategy is a long-term strategic objective told to Canlton’s Corner when they took over as a co-managers of the XL Center. The feeling was at the time that a new building would be built elsewhere in Hartford.
A similar situation existed over 17 years ago with the since-demolished New Haven Coliseum and then rising Webster Bank Arena then known as the Arena at Harbor Yard.
The state’s current dire finances, expiring contracts, and shifts in the sports building and entertainment landscape in Connecticut and the region will clearly spur on a major shift to the next generation. Given the financial dynamics in the state, somebody is likely going to lose here.
A look at the history and how it relates to current events will light the way to understand how things arrived at this moment.
XL CENTER
The disintegrating building on Asylum, Ann and Uccello Street, now 42-years-old, has been a soap opera for ten years. The last five years, especially with a new state governing body, the CRDA (Capital Regional Development Authority) and a fourth management company in the past ten years.
Spectra Group (now Global Spectrum) and CRDA have been dancing on a tightrope to keep the building open and functioning while dodging some real potential problems using most of their nine lives in the process.
A $250 million reboot with unspecified atrium title acquisition and demolition costs are on the table. The plan was released 18 months ago and only a $35 million cosmetic and interior re-design plus a $3.5 million rink operating overhaul (minus the chillers) this past summer were done to maintain the XL Center as a modern facility as could be done.
Nothing was simple or easy. This chapter, however, has progressed incredibly slowly with more twists and turns than a Spirograph.
The state’s sinking financial fortunes which includes a $5 billion dollar deficit, a downgrade in bond rating, which affects the cost of borrowing, the increasing interest rates that increase the cost of borrowing over the length of the project, has made it a Pandora’s box politically.
Then throw in 118 days where Connecticut was the only state in the nation operating without a budget and let’s not forget it’s capital city flirting with filing Chapter 9 bankruptcy, there’s a potpourri of problems impeding the hopes of a new building as the resources and bonding ability diminished by the month while the plan and design was being pushed forward.
But that’s not all that is a factor in all of this.
Coming in May 2018 will be the new MGM casino a mere twenty miles up the road in Springfield, MA (as of now). Combine that with the MGM operating the Mass Mutual Center and the possibility that it might get expanded in the near future. All of it paints a bleak future for the XL Center to operate in the marketplace.
The question now before the CRDA, the Governor, and Spectra is this, can they start the rebuilding project and keep the XL Center budget with sustained $600K? Can the XL Center stay alive and operate on those numbers and actually start their reboot plan in buying the atrium with no state bonds?
The answer right now seems to be no.
A veteran lobbyist and a longtime Cantlon’s Corner source with knowledge of sports entities and building operations said before the budget announcement, they think it can be done, but with a caveat.
“I don’t they can close the building now because of contractual obligations with UConn and the Wolf Pack. That being said, it will be a rough go and they will limp along for maybe another two years before that would happen.”
UConn sports men’s and women’s basketball plus hockey and the Wolf Pack deals expire June 30, 2018.
Cantlon’s Corner learned and wrote six months ago that a two-year extension has been offered to MSG at $1.55 and $1.6 million (their annual affiliation fee paid by Spectra) to continue having the AHL Wolf Pack operate at the XL Center. Contractually, MSG is required to inform the CRDA of their intentions by December 31, 2017.
UConn hockey is also under intense contractural pressure from Hockey East, their conference, to build an arena on campus. UConn’s argument is the opening of their Hartford campus, makes the XL Center qualify as their on-campus rink, but according to several sources, that explanation is not flying with conference members of or its executive committee.
The CRDA believes a two-year extension for them can be worked out.
There are precedents to the present day situation that date back 21 years ago when the Whalers left.
FLASHBACK ONE: In the aftermath of Whalers exit from Hartford, a source with first-hand knowledge, was at a meeting where talks focused on using money allocated under the Rowland administration, to put seed money away in an interest bearing account so when they were ready to build a new arena it would be the capital fund to begin the project. A very wise and sound idea that never happened.
FLASHBACK TWO: When the new management contract was bid on ten years ago, MSG was summarily thrown to the curb after ten very successful years on-and-off the ice. The CDA (Connecticut Development Authority) the predecessor of the CRDA, made a highly unwise move in voting to go with Northland/AEG as the building operator.
Northland, run by Larry Gottesdeiner, made many promises and fulfilled none of them. They told some big untruths to acquire the bid. In particular, they dangled the return of the NHL claiming to have made a bid to buy the Nashville Predators.
A former Predators high-ranking Hockey Operations person told Cantlon’s Corner then that Gottesdeiner made no such bid. The only person Predators owner Craig Leopold spoke to was former Blackberry CEO, Jim Balsillie.
AEG/Northland was in a fratricidal relationship that ended in a divorce three years afterward. Then, AEG, after the bankrupt team management deal with Whalers Sports, LLC., to their shock was deposed by Global almost five years ago when the new operator contract was bidded upon.
A former MSG front office person, also with direct first-hand knowledge told Cantlon’s Corner, “If the CDA had approached MSG in say Year 8 of the ten-year lease about moving toward in getting a new building, they would have been receptive to being involved in that project. However, they didn’t do any of that and brought Northland’s pitch hook, line, and sinker. Now, look where you are today.”
Finally, one last reason that the XL Center is on life support, was the decision by former Hartford Mayor, Pedro Segarra. His decision to build a baseball stadium on what was then known as, “Lot 12 D” instead of a new XL Center. That location was the CRDA’s preferred site.
Had the governor made it a priority, which it wasn’t, then all that was written above would be moot. We would either be in a new XL Center or talking about entering a new one in 2018 rather than this endless soap opera scenario that could see the building closed in two years and possibly even being eventually demolished.
WEBSTER BANK ARENA
What happens in the Park City may indeed have an affect on the XL’s future and where some of its current tenants operate out of.
As the home of the AHL Bridgeport Sound Tigers open their 17th season, their building was also conceived and operated under much controversy and intrigue.
The building’s arena and baseball stadium was a payback to Bridgeport for having lost a bid for a casino back in the late 1990’s combined with the City of New Haven’s desire to close the New Haven Coliseum in exchange for funding for a mall along the Long Wharf of New Haven.
The brutal irony is that New Haven’s Mayor, John DeStefano, and State Senator Martin Looney, never got the funding for the mall they coveted. They lost their building saw it demolished in 2006, and still paid $3 million for three years after imploding it. Those payments were on the original construction bonds issued in – wait for it – 1968! Then they lost the development promised on the Coliseum site by Northland Corporation and Gottesdeiner, during the market crash of 2008.
A surface parking lot is still all that sits there to this day.
The Bridgeport arena was originally set to be the home of an ECHL franchise, but the AHL quietly positioned itself to relocate the Beast of New Haven franchise to the new building. Paragon Sports, the parent company who leased the Beast franchise from the Carolina Hurricanes, submitted a bid of 11 years for $11 million dollars, a bid competitive in the marketplace at the turn of the century.
The late Roy Boe, who was seeking to get an AHL franchise, had been blocked in the mid-1990’s in building an arena in Stamford. He submitted a 20-year $20 million bid to put a yet to be purchased team in the new facility. The terms and length were unheard of in the building management business.
The manager of the building at the time was a novice in the business called Center Plate. They were strictly a food and beverage company who had the contract at the building. Center Plate wanted to dip its toes in arena management and had no idea of Boe’s long-time background of “questionable” economics.
Boe won the bid and Paragon Sports would not buy the Beast of New Haven outright from Carolina, who wanted to sell the franchise. Paragon wanted to continue to lease the franchise.
The Beast with their affiliation ended. It saw the AHL suspend the franchise in June of 1999. A mere month after that happened, Boe purchased the franchise from Carolina for $2 million dollars, the same figure they wanted from Paragon.
The backbreaking provision in the lease agreement Boe signed has held up to this day. The only exit clause written into the lease stated that the Sound Tigers would be required to find either an AHL or ECHL team to assume the lease as is. If not, they would be forced to pay a penalty of $250K for every year the lease was broken.
Fast forward to the present day. The City of Bridgeport is $20 million in the red. They were owed large sums of money from the floundering, independent, minor- league baseball team, the Atlantic League’s Bridgeport Bluefish. Their lease was not renewed at the baseball stadium located next door to Webster Bank Arena.
The Sound Tigers are owned by the Islanders. Boe was forced by the AHL to relinquish the franchise after their failure to pay their affiliation fee, the rent on the building, and many vendors/sponsors. Also, they failed to pay some of their employees just three years into the franchise’s existence. The team was nearly folded by the league. They insisted that Boe agreed to sell the team to then Islanders owner Charles Wang, who, of course, had to assume the lease as is.
Five years ago, when the management contract expired, Center Plate made no bid to renew their contract. Only two entities were left to consider running the building. A group created by the Islanders called Harbor Yard Arena Management headed by Saffan, the President/GM of the Sound Tigers.
The other group was Global Spectrum (nee Spectra), who according to a first-hand source, was part of the five-person team that examined the books. They declined to make a bid citing the enormous financial losses the building was incurring.
Harbor Yard management won the contract by default.
At the end of the 2015-16 season, with losses mounting and a souring relationship, Saffan was terminated. The team and the city are already embroiled in a lawsuit regarding rent payments and other claims of contractual failures under the terms of the lease.
The case is presently being litigated before Judge Barbara Bellis in Bridgeport Superior Court.
The Sound Tigers, with new Islanders majority owners Jon Ledecky and Scott Malkin, have threatened that bringing in the proposed concert venue right next door to the Webster Bank Arena is a violation of their non-compete clause of their lease. They contend that it takes away the building’s ability to recruit concert acts in the non-hockey season. They will seek to have the lease made null and void. They have a breach of contract lawsuit ongoing.
This will likely begin a tension-filled negotiation that likely will see the Sound Tigers eventually exit Bridgeport.
Here’s some educated speculation on the entire scenario provided that the Islanders actually follow through on their threats.
If they follow through and it happens that they leave, this would leave the city with three years remaining on the lease of the building and would need either an AHL or ECHL franchise to reside in the building and perhaps even operate it.
The only entity capable of providing both is MSG. With an expiring contract in Hartford, and with MSG owning the Wolf Pack, and with ample building management experience and the cash to do it, they would be the logical choice.
The next several months will clearly be important to the future of these two buildings. Like the New Haven-Bridgeport scenario almost 20 years ago, at that time, one building stayed and one didn’t.
The question is will history repeat itself or does another scenario await?
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