The Cost of the Facility – an Impact in Canada
In recent years the Canadian Curling Association has run some pretty successful championships that have turned a lot of money. And yes at the end of the day the association and its host committee partners have been able to take a sizable cheque to the bank but certainly not for an amount most people in the curling world have assumed.
One of the expenses for an event like the Brier that swallows up a huge amount of profits is the cost of facilities and one more time in our lives we are forced to deal with a made in Canada problem. I say made in Canada because in most countries in Europe local municipalities will provide the required facilities gratis with about $300,000 US to go with it just to have the right to host the Ford Worlds. Remember this is in countries where curling has a minuscule presence in comparison to Canada. But the European municipalities are more than aware that as small as an event like the Ford Worlds might be in a place like Garmisch-Partenkirchen it will still inject a few million dollars into the local economy.
But back here in Canada things are a little different and guess what? It all starts again with the politicians. In nearly every major city in Canada the city council and provincial government, somewhere along the line decide that without proper facilities, which consists of at least an arena and adjoining complex, major events will not be making a stop in their city. Certainly the councilors and mayor of every city who has ever made this decision are well aware that events making a stop in their town will drop millions of dollars into the local economy which will spin off into jobs, taxes and everything imaginable. But again whether or not the politicians feel John Q. Public can’t understand or might in some way block the construction of a new complex leads the city fathers to usually be a little less than forthwith in communicating the whole issue to the electorate. Rather than tell the voters that it is necessary to build the new facility so X number of thousand of dollars will be annually injected into the locally economy the politicians put forth the notion that the new facilities will quote, “make money for the city”.
So, what happens is the facility is built and in most cases the city turns it over almost immediately to an arm’s length organization whose number one mandate is to shape the arena into a money maker. The first move involves contracting out to an independent company the concessions and catering for the facility for a period of probably between three and five years. This means that all food services in that facility are the property of the caterer along with the choice of food served and the price. The second thing that goes down is the sponsor signage in the building and various rights to different products and services. In most cases these deals are made exclusively with little room for negotiation for most tenants of the building.
Now along comes a potential tenant and the first item of the day is rent for the building. This can vary on the length of stay and type of activity but for the most part the tenant must also pay the facility a royalty on anything sold in the building and as previously mentioned with no chance of any revenue from catering. But we aren’t finished yet. Most of these facilities in Canada have also established a staff that deals with everything from electrical installations to ushers and in many cases is unionized. This means the tenant is often forced to use these employees, like it or not, and pay full union scale for their wages during the time of the event.
From the facilities point of view it’s a great deal if you can swing it. Not only does a particular event or act bring a large amount of money into the local economy, without financial support from the community, it also leaves another bag of coin at the exit of the arena for the rental of the facility.
Championships like The Scotties Tournament of Hearts and the Tim Hortons Brier are 10 day events which do in fact provide us some leverage with these facilities but it never comes easy. Yes, at the end of the day we are usually able to negotiate a rental agreement that is as good as anyone in the country will get. We are usually able to acquire or buy the right for a certain number of our key sponsors to be protected from previously sold signage and rights deals. However, there are some scared areas and the catering aspect is one. Never in my history of dealing with arenas and associated facilities have I ever been aware of any outside organization gaining any portion or rights to the concessions. The only exception to this iron fist policy has been in the area of the entertainment centre where we have been able to gain the right to sell alcohol and retain the profit but again at a price.
So, while our brothers in the World Curling Federation are not accustom to facing these type of costs to host events they are in fact learning that facilities play by a different set of rules in Canada when it comes to hosting major championships.
Written by Warren Hansen
Monday, 28 July 2008 05:30
About Warren Hansen
Warren Hansen is the director of event operations and media for the Canadian Curling Association and managing editor of Extra End magazines