A Crack In The Ice

The Blue Jackets Drop A Bombshell

By Rick Gethin

The Hockey Writers

     With the NHL Draft just twenty-seven short days away, Columbus fans were hit (some might say blindsided) by the revelation that the Blue Jackets want to take Nationwide Arena from a private to public entity and sell it to Franklin County. After losing an average of approximately $11.5 million a year for the last seven years, the Blue Jackets see this as the best way to stop the bleeding. The proposal floated to fund this sale? A tax on alcohol and cigarettes in Franklin County; otherwise known as a “sin tax”.

     How did Columbus come to be in this financial situation nine years after coming into the league? The first two years were modestly profitable; then came the lock-out. Since then the crowds dwindled each and every season until the resurgance was seen this past winter as the Blue Jackets made their push to make the playoffs for the first time. The main contributing factor to this seemingly dire predicament is the arena lease.

     In May 1997, Franklin County residents voted no on funding an arena with taxpayer money. John H. McConnell had guaranteed NHL Commissioner Gary Bettman that an arena would be built; either with public funds or privately. Nationwide Insurance then announced on May 31st, 1997 that it would finance the arena.

     With Nationwide owning the building that the Blue Jackets call home they don’t pay naming rights; potentially, a very lucrative revenue stream that many pro sports teams tap into. Add to this the fact that Nationwide also owns most of the parking surrounding the arena and 15 luxury suites were sold in advance to help fund the construction. These three together equals zero dollars coming into the business side of the Blue Jackets.

     Blue Jackets management met with NHL officials more than a year ago to have their business plan evaluated. The main issue uncovered by league officials was the arena and the fact that Columbus wasn’t making as much as other hockey teams.

     Brian Ellis, who is the president of Nationwide Realty Investors was quoted as saying “Without a broader solution, I don’t think anything we can do would be sufficient to fix the problem”. He also said, “There’s no way that just an adjustment to the lease, as it’s currently configured, would be sufficient to maintain the long-term viability of the Blue Jackets”. Ellis also stated that the company is allowing the team to defer it’s rent payment for the 2008-09 season.

     With many Blue Jacket fans panicking at the thought of losing their hometown team, these seem to be doomsday predictions for the club. It’s really a knee-jerk reaction to what amounts to a logical first step in turning the Blue Jackets into a profitable enterprise. Not one team official has mentioned moving the franchise as anything other than a very last resort. Blue Jackets President Mike Priest said, “the reason we’re being proactive and working and talking is to find a solution so that we don’t have to go down that road or have those types of discussions. The whole purpose of this is to avoid that. Other teams have been through this and found solutions”.

     The “sin tax” amounts to 28 cents more for a six-pack of beer and 4.5 cents more on a pack of cigarettes. While this is not popular with the residents of Franklin County, it is a pittance for what the Arena District in downtown Columbus has turned into. The creation of jobs and a once again vibrant downtown that amounts to roughly $700 million in investments. Is this really too high a price to pay to help keep the Blue Jackets in town?

     With the Blue Jackets exploring this option, many tempers have started to flare. The main difference between now and 1997 is that this doesn’t have to go in front of voters and some feel that Blue Jackets management is trying to sneak in the backdoor. I put it to you this way; are people really willing to jeopardize jobs in this economic climate? Talk of moving the team seems to be extremely premature. Bob Hunter (Columbus Dispatch columnist) said this, “I voted to raise taxes to pay for an arena when the issue was put before the voters in 1997. It wasn’t because I worked for the Dispatch, which now owns both a 10% stake in the arena and the team, or because I was a sports columnist. I didn’t want to pay more taxes, but to me this was a no-brainer. It would be a lie to say that I envisioned the Arena District blossoming the way it did; I did think that both a civic arena and the NHL hockey team it brought would help Columbus realize its’ potential as a city.”

     The bottom line is this; the arena issue needs to be solved or the team moving would become a self-fulfilling prophecy. You don’t believe me? Just take a look at the headache that Phoenix is going through at this very moment. The Blue Jackets are not even remotely close to this scenario, but what if it comes to pass?

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