CANTLON: SPORTS BETTING OPS UNVEILED Part 1 

BY: Gerry Cantlon, Howlings

HARTFORD, CT – The long, awaited XL Center sports betting and e-sports operations were unveiled and are under review by the CRDA. In addition, negotiations with the CT Lottery, the governing body of the state’s infant dip into sports betting, have begun.

“It’s underway and so far, it’s going well. It’s far better and constructive than the Northland ones,” CRDA Executive Director Michael W. Freimuth said, affording himself a rare chuckle in a complicated, lengthy process.

The Venue committee of the CRDA started the review process last month. However, nothing has been approved, nor have any finalized contract with the CT Lottery Commission, which is the legal authority and private agency that oversees the state’s sports betting operations.

The entire matter is very complicated. As Freimuth mentioned, there are several issues to get through, including the Atrium negotiations. The Atrium is owned by Northland Corporation of Newton, MA, and is run by its CEO Larry Gottesdeiner. It’s the building space and property directly adjacent to the plan being worked on. Other issues include dealing with the Indian tribal nations who believe that sports betting is covered under their covenant/charter agreed to with the State of Connecticut when they first opened. They contend that they should be the all-encompassing gambling entity in Connecticut. That aspect is currently in litigation.

ATRIUM ISSUE

“It’s a variety of things. We’ve talked for a long time about opening up the building space as part of our overall strategy for the building and property long term. We only own a piece of the property, so it made more sense for us to have a sports betting operation in the area we control for now, rather than the Trumbull Street side. The rent or acquisition would have been cost prohibitive,” said Freimuth.

How the sports betting revenues will be used by the CRDA is the question. Will it fund the long-promised renovations to modernize the XL Center is at the heart of the new deal?

“The use of that side (Trumbull Street side) is pending an acquisition,” Freimuth said assiduously, avoiding the subject, which has been a three-year-long morass with Northland that is still unresolved.

The proposal entails the other factor in the long-running saga, how to develop a site that doesn’t run afoul of the XL Center Atrium. The CRDA has been unable to acquire the title for The Atrium. In addition, Northland and the CRDA remain at an impasse over the proposed Trumbull Block.

Eminent domain has been contemplated by the CRDA but never executed as it was blocked by the governorship of two administrations and legislatures.

RFP

A recently quietly issued Request for Proposal (RFP) for a Construction Manager (CM) were formally put out on December 16th of last year. Recently an addendum was added to allow extra time for prospective bidders to submit their proposals. The number of submissions received was roughly seven.

The new CM would handle all of the renovations of the bunker suites, Level 31, Level 61, and the building’s electrical,  mechanical, and plumbing systems. These are all long overdue maintenance repairs. Even with fewer XL Center games on the horizon for UCONN next year when their new on-campus hockey arena comes online, they are looking to EXPAND the UCONN hockey locker rooms as part of the overhaul project. It’s all part of the $15 million price tag that comes from the original $40 million in funds approved by the state legislature and State Bond Commission five years ago under former Governor Dannel Malloy.

The selected company will work with Construction Manager Bob Saint, the CRDA construction guru.

“The contract is being worked on as we speak (with Dimeo of Boston, MA). They went through the procurement process and they were selected.”

TIME TABLE FOR WORK

A late spring timetable is expected for the beginning of the construction work.

The capital funds are not subject to time limits, constraints, or annual appropriations. However, it is part of the overall figure downgraded from $250 to $100 million given for renovation, which is now known as the “Lower Bowl Strategy.”

“A lot of the work scope is on the sports betting part. The seating has worn out, and the other workpiece gets subcontracted, like electrical and plumbing. It’s based on the fee we put out the work, and the level of work is pretty straightforward. That’s the limit. If we get to the loges, special premium seating if all goes well, we’ll address that later when it’s needed to, and funds are freed up.

“We’re working our way through it. We put in the dasher boards, the new flooring, the ice chiller system, escalators and elevators the last three or four years. So we’re doing the best that we can, as continuing saga goes on with the rest of the funding.”

STATE BOND COMMISSION

The recent state bond commission meetings have come-and-gone over the past year. Governor Lamont, who has the authority of what goes on the bond list and the XL Center funding, again was nowhere in sight and has shown no inclination to add to the Bond Commission bucket list. So, the legislature’s approved $64 million, done a week before the pandemic shut everything down over two years ago, and which has a time clock on the legislation, languishes as the building grows older with every day it’s not acted on.

“We haven’t heard a yes or no. Right now, we’re having discussions with the Governor’s office and OVG (Oak View Group) regarding this. OVG is, by far a larger enterprise and just entered into an approved merger with Spectra, who is running the facility. OVG is about investing in the facility. OVG is national in scope and investing in the physical plant, but also are involved in investing and owning sports teams in the NBA and NHL across the country. So, it’s a much more aggressive business model. So we’re proposing how they can invest in the overall facility at the XL Center.”

In its heyday, the building was an A-level building in the industry. Now it’s unable to handle current shows because they say the rigging features and other amenities are outdated or lacking. As a result, it has seen a dip, a product of the aging nearly 48-year-old structure.

The new operator, OVG, is scheduled to assume operating control of the XL Center from Spectra in the first quarter as part of their multi-million-dollar purchase.

The transaction, which has received the necessary federal approval for the buying of Spectra properties run by Atrios, for Spectra the last two years of the pandemic-related extension contract, ends in June. It is being given a public-private partnership option to invest in the restoration project idea and has a non-specified time to review the proposal.

“They’ve been presented with our proposal and they’re  doing their due diligence right now,” said Freimuth.

LUUKKO FAMILY AND HOCKEY

The Co-Chairman of OVG Facilities is very well-known in the building industry, and he’s a very familiar name in political and legal circles here in Connecticut and a resident of Essex, Peter Luukko.

Luukko is a former Global Spectrum upper management professional. He was the right-hand man to the late Chairman, Ed Snider back when Spectra was known as Global Spectrum when it was awarded the XL Center contract.

“I’ve seen many shows and events in Hartford over the years. I remember the mall and the building and I think there is an opportunity to bring some of that back. It’s the largest arena between New York City and Boston. We think there could be some more big-time events there if it is renovated.”

Hockey is a family affair in the Luukko household. His sons, Nick and Max, both played prep school hockey in Connecticut. They played at The Gunn School (formerly the Gunnery in Washington, CT). Max went on to play for four years at Sacred Heart University-AHA (Fairfield) where he was under the tutelage of North Haven’s, C.J. Marrotolo.

UPDATE ON LUUKKO FAMILY

Max is now working in Arizona. He is involved with and will be part of the new Aizona State University hockey arena that is currently being built. It will eventually house both the ASU Sun Devils team and the NHL Coyotes.

Nick is the head coach and Director of Hockey Operation for the Jacksonville IceMen (ECHL), the Rangers Double AA farm team.

Peter, a minority owner of two junior teams, has an unspecified interest in the Dubuque Fighting Saints (USHL) and the Portland Winter Hawks (WHL). He is also the chairman of the NHL’s Florida Panthers.

PUBLIC/PRIVATE PROPOSAL

Remember, the last public-private proposal? It yielded one bidder from a Chicago business whose terms were so onerous it was never seriously considered. Now, OVG is giving a sales pitch to invest in the rebuild of the near 48-year-old XL Center.

“They’re in the process right now,” said Luukko. “They have to review it to see how it fits their market strategy after the merger. They’re in that process right now as we speak reviewing the proposal. There are no firm agreements or strategies at this point as they assess what they can do in this market relative to what they can do in other similar size markets like Baltimore or Hamilton, Ontario. So, to go forward, they have to understand that before making a commitment.”

Luukko trod lightly when discussing what OVG was in the process of reviewing.

LUUKKO REACTION

“We’re working off the last proposal of SCI Architects and we’re looking at updating that study. Nobody has made a proposal. We have to see what it would cost to renovate the facility? We’re seeing what we can do as far future revenue streams in terms of events, sponsorships and premium seating.

“Then we need to work together on a plan on how that will work. There’s no formal thing with the CRDA. We’re working very closely, hand-in-hand with the CRDA to see what we can do if there are options for the facility.

“We don’t have any window (timeframe) to study this. We have some ideas but we’re just starting this thing out,” Luukko stated.

No percentage or dollar figures have been bandied about in terms of length?

“We’re looking right now at can the facility be renovated, and where revenue streams can be generated first. The first and most important thing is to handle this study and look at the costs and potential revenue and then we can work together on a plan.”

THE OVG AND SPECTRA MERGER

The merger process between OVG and Spectra is complete. However, the process of implementation is still underway.

“The transition has been seamless so far. (GM) Ben (Weiss) has done a fantastic job, as has the staff running the building’s day-to-day operations and has kept us aware.

“Any changes will be positive, and I think there’s a bright future at the arena. There is a tremendous amount of upside. It has some problems, but it has been very successful in the past, so there can be a successful future as an arena.”

Freimuth is equally enthused with the transition.

“They have indicated staff will stay on (at the XL Center business operation) the building, and the hockey side per-se, and that’s what we’ve been told. Will people bounce between Bridgeport and Hartford? Who knows, but at this point I have no forecast on this.”

OVG investing in the building is not as far-fetched as it may seem with a last-ditch effort being made by the CRDA.

BALTIMORE

In November, OVG was awarded a 30-year renovation and management deal by the Baltimore Development Corporation (BDC) to do a complete reconstruction of the Wells Farm Arena. That building has had many names including the Baltimore Arena, Baltimore Civic Center, and the First Mariner Arena. OVG beat out other bidders ASM and Spectra.

In business parlance, there were given a Right of Entry (ROE) and an Exclusive Negotiating Priority (ENP) provided by the Baltimore Board of Estimates (BOE) as per business practice until a final agreement is rendered with the city-owned building. It was built in 1961.

The ROE and ENP agreements were approved by the BOE.

The arena over the years has housed the NBA (originally in the ABA and BAA before the NBA) Baltimore Bullets (1949-1954) before they were moved to Washington D.C. from Chicago from (1963-1997) and changed their name to Washington Wizards in 1997.

The current seating configuration is 14,000 for concerts, 12,281 seats for sporting events. In it’s initial design phase, the seating has been upgraded to 13,527 for basketball events and 14,132 for hockey, indoor soccer, and indoor lacrosse.

OTHER HOLDINGS

OVG has other buildings as well. They include the Climate Pledge Arena for the NHL’s Seattle Kraken. The recently opened UBS Arena for the NHL’s New York Islanders, as well as the First Mortgage Arena (formerly know as the Webster Bank Arena) which is the home of the AHL’s Bridgeport Islanders. They have a building in Austin, Texas. There is another under construction. The Coachella Arena is being built in the desert of Southern California just outside of Palm Springs. That building will become the home to Seattle’s farm team, the AHL’s Coachella Valley Firebirds. The Firebirds will become the 32nd team in the AHL in the late fall. Internationally they’re working on a building in Manchester, England.

One of their investors, ironically, is MSG, who helped them with loans in Seattle, and the UBS Arena. MSG is the owner of the AHL’s Hartford Wolf Pack, one of the central tenants at the XL Center.

For the project in Baltimore, they will have Maryland resident, and Brooklyn Nets forward, Kevin Durant and the private equity firm he started, Thirty-Five Ventures as partners. They will be involved in the $150-million project at 201 West Baltimore Street, just up the from the city’s famed Inner Harbor area. That building at one time housed the AHL’s Baltimore Skipjacks and the ill-fated AHL Baltimore Blast.

The building is being designed to have a maritime motif on the exterior of the new building.

The Washington Wizards and Washington Capitals owner, Ted Leonsis has said if they replaced the arena, he would seek to have more NBA or NHL games in Baltimore – likely exhibitions since the arena, even after reconstructed, will still fail to meet the NHL or NBA building standards as negotiated in their respective CBAs.

The work is expected to start next month as they have held the last of their events, the men’s and women’s basketball tournaments of the NCAA Division II CIAA (Central Intercollegiate Athletic Association) conference at the end of February.

SIMILARITIES BETWEEN BALTIMORE AND HARTFORD

“They’re both older buildings, but Baltimore is a different structure and set-up. We’re gonna start a rebuild and re-purpose of the facility and make it valuable in the future and we’re excited to be working on this with the CRDA.”

Any discussions with city of Hartford?

“Not yet. We still have to see where this branches out too. We’ll wait to see what we find with the SCI report. We’ll then see what direction we’ll be moving in.”

In addition, Howlings has learned they are among the bidders for the new ten-year proposed management deal to run the Springfield, MA building, the MassMutual Center, which is presently run by the casino, MGM Springfield.

OVG, AMS, Spectra, and MGM are the finalists. The decision is expected to be made by late March or early Aprilby the Massachusetts Visitors and Convention Bureau. Final bids are due by next week.

OLD FRIENDS

Luukko started his career at the New Haven Coliseum in 1981. He has an old friend and colleague from his Spectra days, and who was the original GM of the XL Center over 40 years ago when it was known as the Hartford Civic Center Coliseum. The two were paired together when Spectra won the XL Center contract eight years ago, and is now working on a consulting basis with OVG, Frank Russo.

Russo has intimate knowledge of the building, its finances and relationship with the city and the state.

The future construction timetable of sports betting is a significant part of the XL renovations. It will likely get impacted with upcoming considerable revenue generating house shows and may present a problem for the primary tenant, the Hartford Wolf Pack, should they make the AHL Calder Cup playoffs in May. In whatever form they may be in, they could face arena availability problems.

UCONN Hockey East playoffs appear safe, but the negotiations with Stafford Sports and UCONN for hockey plus a new men’s and women’s hoops deals have been a tough slog.

HARTFORD WOLF PACK

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