Public said no in 1997 and that answer should still stand.On thin ice (Could the Jackets leave town?)
Friday, May 29, 2009 3:11 AM
By Jim Siegel, Aaron Portzline and Bill Bush
THE COLUMBUS DISPATCH
Even though the Blue Jackets made the playoffs this year, the club still lost at least $10 million, team officials say.
How it would hit your wallet
The proposed "sin" taxes would increase the cost of a . . .
12-pack of beer -- 28 cents
Fifth of liquor -- 60 cents
Pack of cigarettes -- 4.5 cents
Bottle of wine -- 6.35 cents
After losing $80 million in the past seven years, Columbus Blue Jackets owners are hoping that selling Nationwide Arena to the county could stave off serious discussions about moving the team to another city.
The team has floated a proposal to local, state and Nationwide Insurance officials that would allow Franklin County commissioners to impose tax increases on beer, wine, liquor and cigarettes to fund the purchase of the 18,000-seat arena. The hope was to stick the plan in the upcoming two-year state budget, but that's not going to happen, at least in the near-term, a Senate GOP spokeswoman said.
Blue Jackets President Mike Priest said the club made a modest profit in its first two seasons, but in the past seven years lost $80 million, including more than $10 million this past year, despite the team making the playoffs for the first time.
Asked if failure to approve the plan would force the team to leave Columbus, 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 have found solutions."
Priest said he met with National Hockey League Commissioner Gary Bettman and Deputy Commissioner Bill Daly more than a year ago and presented the team's business plan, wondering how, despite decent ticket sales and corporate sponsorships, the team was still losing so much money. The league's response: The team isn't making as much money off the arena as other clubs.
Nationwide owns the 9-year-old building, so it doesn't pay naming rights. Plus, Priest said, the facility makes very little on parking, and 15 of the private luxury suites were sold in advance to help fund construction.
"Early on the club was subsidizing its losses on the building-operation side. It's not happening anymore," Priest said. "We're losing money, and it's snowballing."
Turning over the arena to the county would allow the Blue Jackets to rework their lease agreement. Brian Ellis, president of Nationwide Realty Investors, said the company is allowing the team to defer its rent payment for the 2008-09 season.
"Without a broader solution, I don't think anything we can do would be sufficient to fix the problem," Ellis 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."
The new plan, modeled after a tax plan used to build a baseball stadium and arena in Cleveland, comes 12 years after Franklin County voters rejected a temporary tax increase to pay for a new Downtown arena.
Sen. Jim Hughes, R-Columbus, said Matthew Kallner, a lobbyist for Worthington Industries -- whose CEO, John P. McConnell, also owns a majority stake in the Blue Jackets -- pitched the idea to him but has not provided any written language.
"I need to see something in black and white," Hughes said. "If this is going from a private to a public enterprise, what happens to funding for Columbus Public Schools?"
Nationwide Arena has a 99 percent property-tax abatement, but it provides at least $1 million a year to the school district from a surcharge on ticket sales and a portion of arena employees' city income tax.
If Franklin County became the arena's owner, it would be responsible for continuing to pay the Columbus district, according to Martin Hughes, a lawyer who represented the schools in a dispute over Nationwide's property value.
"It would appear to me that they have a deal with the schools," Hughes said. "This contract said that these revenues will be shared."
The Dispatch Printing Company owns 10 percent of the Blue Jackets, and Capitol Square Ltd., a subsidiary of The Dispatch Printing Company, owns 10 percent of the arena.
Under the plan currently under consideration, Nationwide would use whatever profits it gains from selling the arena to purchase a minority ownership of the team.
Ellis said Nationwide has not formally committed to the plan, but added, "We are in a position to be supportive of the proposal. Ultimately, we have a long way to go from a public-sector standpoint in terms of making sure that we're going to get the necessary support."
Blue Jackets representatives have approached top county officials with the proposal, but the commissioners have not taken a position on it, said Commissioner Paula Brooks.
The plan has drawn fire from Anheuser-Busch, which doesn't like the proposed tax hike on beer. Company President Dave Peacock met separately yesterday with Gov. Ted Strickland, the Senate president and House speaker to express opposition.
It also faces opposition from the Ohio Wholesale Beer & Wine Association, which has beaten back alcohol-tax increases before.
"At this point, there has been a lot of talk," said Maggie Ostrowski, spokeswoman for Senate President Bill M. Harris, R-Ashland. "He's hearing from a lot of different people about it. We're still listening to both sides of it."
When the Senate's budget bill is rolled out today, it will not include the arena provision, Ostrowski said.
Blue Jackets officials need the legislature to take action because last year lawmakers rescinded the law that allowed counties to institute taxes on alcohol and cigarettes to finance major-league sports facilities.
"There is no standing authority for any county to enact such taxes," said John Kohlstrand, spokesman for the Ohio Department of Taxation.
The plan would allow Franklin County commissioners to raise taxes by 28 cents on a 12-pack of beer, 6.4 cents on a bottle on wine, 60 cents on a fifth for spirits and 4.5 cents per pack of cigarettes. Either the county or the Convention Facility Authority could use the proceeds to purchase the arena, which would still be named Nationwide Arena, but the company would pay for naming rights.
In May 1997, Franklin County voters rejected by 56 to 44 percent a three-year, 0.5 percent sales tax to publicly fund a new arena. Nationwide eventually built the facility with private money.
"Back then, you were asking people to make an investment on something you couldn't touch and feel," Priest said. "But now you can see what this means to the public."
Dennis Knepley, who was part of an anti-tax group that opposed the arena in 1997, said last night: "It's another political scam, and we'll stop them again."
Priest stressed that the "sin" tax plan isn't the only option, but he also said, "We don't know of any other source of funds."