Financially struggling even before sporting events and concerts were cancelled, the COVID-19 pandemic has widened the wound at Lansdowne Park.
Now, the Ottawa Sports and Entertainment Group (OSEG) that manages the retail space, runs the stadium at TD Place and owns the Ottawa REDBLACKS and 67s is asking the city, its partner in the Lansdowne Partnership Plan (LPP), for help to survive.
“We’re the sports and entertainment side of the business and that’s gone effectively to zero right now and zero for the foreseeable future and then we’re a retail operation and the retail operation is carrying on best it can with the restrictions that are in place,” said OSEG President and CEO Mark Goudie.
“We’re expecting it’s going to be about three or four years to get back to kind of where we were going in and over the next five years it’s going to cost about $40 million to operate the business, with the lion’s share of that or $15 million kind of in the next 12 months.”
The report says given those projections, urgent action is needed because “OSEG does not have the ability to absorb the full effects of the pandemic within the current parameters of the LPP Agreements, and is at real risk of default.”
A report from city staff to the Finance and Economic Development committee says if OSEG defaults, it would result in a loss of up to $407 million to the city.
By extending the lease and partnership for an additional 10 years, the report says the city would avoid costs between $4 million to $21 million because OSEG would still be operating and maintaining the assets it is now.
As a result, OSEG is asking for, and city staff is recommending changes to the agreement that would allow it to:
- Use $4.7 million from a reserve fund for operations this year
- Extend its 30-year lease by another 10 years so there’s more time for OSEG to recover some of what its lost
- Establish a working group
Right now, money in the capital replacement fund by OSEG can only be used for approved capital projects.
The report states the working group would look at ways to increase foot traffic on the site, “assess aging infrastructure and to increase the density in keeping with Council’s urban intensification principles including affordable housing.”
The working group would report on the options in the second quarter of 2021.
“I’m confident in the fairness and the fact that its not impacting the taxpayers of Ottawa at a really difficult time so I’m quite confident that this is a reasonable approach to doing what we need to do and making sure we have the strongest, most viable Lansdowne coming out of the other side of COVID,” said Goudie.
Goudie says the occupancy rate for its retail space at Lansdowne is more than 90 per cent with staples like the LCBO and Whole Foods. Still, there have been many visible closures over the last few months including Structube and South Street Burger.
The report that came out late Wednesday night is not sitting well with some councillors and critics of the project.
"COVID is really the straw that broke the camel’s back," said Ian Lee from the Sprott School of Business at Carleton University. Lee was critical of the business model from the start and says this was inevitable.
"The Lansdowne project is failing, clearly failing badly and either the city will have to agree to the restructuring and the bailout or their loss will be much much greater," said Lee.
Area councillor Shawn Menard says he was briefed two hours before the report was made public and is calling an emergency meeting on Tuesday night.
"I am concerned about a short-sighted stop-gap measure created out of panic and without sufficient reflection, which could turn into a long-term liability for Ottawa," Menard said in a statement.
"I know that Ottawa residents are going to be asking some really tough questions about the lengths to which we’re willing to go in order to save this partnership when people are sleeping on the streets and our housing crisis continues to get worse," said Ottawa councillor Jeff Leiper.
A report now live asking Council to support a $4.7M OSEG bailout forces us to make hard choices. It’s only a few minutes live, but I keep asking, why are we telling the housing sector no if we can tell OSEG yes. I’m willing to explore whether failure might mean opportunity.— Jeff Leiper (@JLeiper) November 5, 2020
I was only briefed late this afternoon on the situation at Lansdowne Park. There are complicated changes being requested here that stem from the original P3 deal. I will be taking the time to work through this and speak with surrounding community associations.— Shawn Menard (@ShawnMenard1) November 5, 2020
“There have been stores that have closed like the furniture store over here, some restaurants have been closing so it’s sad to see, we want to see this area come alive and be full of life and some things are just not happening,” said nearby resident Derek Allard. “This is a great part of Ottawa right by the canal and again you’ve got the 67s, and CFL so to have this place alive with some help from the city I think would be beneficial to everybody.”
The report will be discussed at the city’s Finance and Economic Development Committee on Nov. 12 before going to full council for a vote.