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Lansdowne Report: 2025-02

Submitted by Alexandra Gruca-Macaulay, Chair

Information Session on North Side Stands Site Plan

The City held two information sessions on the design plans for the North Side Stands at Lansdowne: in-person on Wednesday, January 15 and Virtual on Thursday, January 16, 2025.

OOECA members had forwarded questions and I had a few of my own as follows:

  • Transportation analysis is artificially limited to events, while ignoring the increased residential traffic and especially, ongoing food and shopping delivery traffic is entirely absent from the transportation analysis, how can the site be considered to be accessible when the impact of real world traffic events are not considered?
    • No answer
  • The City/OSEG raced have site plans in place before Ontario building code changes come into effect; what changes to accessibility will be left out by not adhering to updated new code requirements?
    • No answer
  • How will surface run-off from the site be handled so that it does not overwhelm City storm sewer systems?
    • Answer: There has been a comprehensive storm water analysis undertaken, there will be new storm water retention tanks, in addition to storm water retention tanks, all the changes have been incorporated into this design.
  • Artist renderings do not show the impact of additional vehicular traffic loading into the park’s pedestrian spaces pinch point (we only see small groups of people milling about), images do not show the traffic congestion, moreover, there will not be an increase in para-transpo service, how can a claim of accessibility be made when the design is not realistically represented?
    • No answer
  • What pedestrian paths will be closed off for construction?
    • No answer

Next Steps in design process

  • January to March 2025 – Finalize design details for building permit submission
  • March 2025 – Building permit submission
  • April to June 2025 – Finalize construction specifications & tender package
  • June 2025 – Post Request for Tender

Next steps in approval process

  • Council Vote – 4th quarter 2025
  • Construction expected to begin – 1st quarter 2026

2024 Lansdowne Annual Report

The 2024 Lansdowne Annual Report will be presented to the Finance and Corporate Services Committee on February 4 2025 (see agenda item 5.1 for 2024 annual report and associated documents) and to Council on February 12 2025.

Alexandra’s letter to the FCSC on the 2024 Annual Report is included in the appendix, and John Dance’s presentation to the committee can be downloaded at 2024-02-OOECA-presentation-to-City-2024-Lansdowne-report.

John was also quoted in a news article in the Ottawa Citizen, Lansdowne partnership records net loss for tenth straight year:

“John Dance, a member of the Old Ottawa East Community Association, said Lansdowne had been a financial failure for which no one had taken responsibility. Dance urged councillors to stop moving in the direction of Lansdowne 2.0 before understanding what went wrong with the first version of the project and considering alternatives. “You’re putting taxpayers and the whole city in jeopardy,” he charged.”

In addition to financial results, the 2024 annual report provided an update on the Urban Park (public space not part of the City/OSEG partnership); a few of note:

“A variety of site improvements were completed during the reporting period, including installation of handrails at the access point of the Skating Court, the purchase and installation of new park furniture including outdoor benches, tables and plants placed strategically in Aberdeen Plaza. The apple orchard has yielded a good crop harvested by park attendees and the balance picked by Harvest Ottawa to donate to eight local food agencies. In September 2023, 600 pounds were harvested compared to 400 pounds in year one. A tree study was completed for the Urban Park to better understand the viability and sustainability of onsite trees. A path leading to Holmwood Avenue was expanded on the northeast corner of the Horticulture Building to improve walking and biking accessibility. Planning and design work was completed for the soffit of the Horticulture Building, as well as and the final water connection to the refrigeration unit of the Thomas Ahearn Memorial Fountain.”

“The rehabilitation of the Aberdeen Pavilion roof is scheduled to begin in early 2025 and will last for 18 months.”

Video from Neil Saravanamuttoo: How much is Lansdowne 2.0 really going to cost?

Neil Saravanamuttoo has produced an explanatory video that shows how Lansdowne 2.0 is primed to increase property taxes:

Appendix – Submission to the Finance and Corporate Services Committee for February 4, 2025 meeting

Item 5.1 2024 Lansdowne Annual Report, File No. ACS2025-CRM-OCM-0001

Alexandra Gruca-Macaulay

The Lansdowne 2024 Annual Report discloses another year of disappointing financial results for the City/OSEG business partnership:

“…since inception the LLP has posted net financial losses for each fiscal year and has yet to generate net positive cashflows…”

p. 16, 2024 Lansdowne Annual Report, Report to Finance and Corporate Services Committee on 4 February 2025 and Council 12 February 2025 (ACS2025-CRM-OCM-0001)

Yet, while the normal business response to a report of chronically unsatisfactory financial results would be to assess the viability of the business model and, especially, management performance, the report avoids addressing the tough questions and instead on two occasions suggests that it has been and continues to be the state of the park that is at fault for the Partnership’s perpetual losses:

“These [poor] financial results support the need to improve Lansdowne Park and make the Lansdowne Partnership financially sustainable over the term of the partnership.”

p. 5,16, 2024 Lansdowne Annual Report, Report to Finance and Corporate Services Committee on 4 February 2025 and Council 12 February 2025 (ACS2025-CRM-OCM-0001)

Given the many years of poor financial results, is it possible that a claim about “the need to improve Lansdowne Park” simply functions as an emotionally charged scapegoat that effectively stops what otherwise could be a productive analysis of the financial factors at play? The type of self-aware analysis that could begin to unearth the actual problems that have been beleaguering Lansdowne, and perhaps lead to an action plan based on facts rather than an expensive and potentially ineffective solution?

The 2024 Annual Report highlights a number of areas of deep concern such as: the inherent uncertainty of sporting revenues, the questionable refusal to do needed modest less-expensive facility upgrades, the contradictory claims that new facilities are needed while the traffic consultants’ model assumes no additional event attendance, the lack of transparency into the amount of incentives that are provided to retail tenants, and the complete absence of commentary about the competence of a management team that consistently has overpromised and underperformed since the inception of the partnership.

Sporting team revenue uncertainty

In 2015, OSEG revised their 2012 projections and increased projected operating income for the Redblacks by a staggering 185% with no credible supporting analysis (p. 36 ACS2015-CMR-OCM-0015). Not only did the performance of the Redblacks not meet these projections over the ensuing years, their poor performance has contributed to the overall poor financial results of the partnership over time where it has been up to the Retail component to subsidize the losses of the sporting operations.

The 2024 Annual report makes a statement that has been found similarly in past reports:

“The financial result was negatively affected by the performance of the Ottawa REDBLACKS as the club missed the playoffs for the fourth consecutive season. The corresponding net contribution from home games that was $1.9 million unfavourable to their Budget on account of attendance lower than Budget.”

  • p. 11, 2024 Lansdowne Annual Report, Report to Finance and Corporate Services Committee on 4 February 2025 and Council 12 February 2025 (ACS2025-CRM-OCM-0001)

It is important to note that despite the claim in the 2024 Lansdowne Annual Report that it will be park improvements that will lead to good financial performance, the Ernst & Young due diligence report stressed that in order for the RedBlacks to meet their targeted waterfall payments they will have to produce and consistently maintain improved team performance:

“Despite new management efforts to improve team performance, EY underscores the model’s sensitivity to attendance and playoff appearances, viewing improved team performance as critical for achieving the projected profitability.”

  • p. 13, Ernst & Young Lansdowne 2.0 Financial Due Diligence Summary Report, September 13 2023

In other words, although the pro-formas have been vetted, the professionals have concluded that profitability rests upon consistent “improved team performance” – a factor that is highly unpredictable due to the very nature of sports.

E&Y stated that “[OSEG] is confident that the team will improve its performance in 2023 and over the next 3 years.” 

  • p. 24, Ernst & Young Lansdowne 2.0 Financial Due Diligence City of Ottawa Reliance Restricted Report, September 13 2023

Sadly, the 2023 Annual Report, and now the 2024 Annual Report have again shown how confident projections have not been borne out by actual results.

One of the tough facts that arguably needs to be discussed with more vigor is the fact that a great deal of taxpayers’ money rests on assumptions that differ little from those that are found on sports betting platforms. Even with the occasional “good year” for the RedBlacks, it is difficult to understand how the repayment of 40-year City debt can rest, in part, on the hope of “improved team performance.” Particularly, since as noted in the November 2023 report to Council, Lansdowne is classified as a “legacy” project and therefore there is no limit to the amount that property taxes can be raised to cover Lansdowne debt servicing (p.123-124). Ottawa taxpayers face a disproportionate risk as a result.

Projections are not open to less expensive upgrades

The 2024 Annual report states that a key assumption underlying the financial projections is that needed upgrades to keep the facilities functionally operational will not be done:

“Note, the 2023/24 Proforma considers an arena and stadium that is at the end of its useful life and will not be replaced or materially upgraded during the remaining term of the partnership. This assumption is consistent with how previously updates have been provided and is separate from Lansdowne 2.0 projections which consider the impact of the new Lansdowne 2.0 facilities.”

  • p. 12, 2024 Lansdowne Annual Report, Report to Finance and Corporate Services Committee on 4 February 2025 and Council 12 February 2025 (ACS2025-CRM-OCM-0001)

Why is it a given that the arena and stadium will not be materially upgraded, particularly since such an option is substantially less expensive than the proposed demolition and rebuild of the sporting facilities:

“Current estimates from Morrison Hershfield based on a 40-year capital repair and replacement plan for the facility and to keep the old building operational and demolish it at the end, would require an investment in the order of $40 million.”

  • p. 79, Lansdowne Partnership Plan – Authorization to Proceed to the Next Steps in the Redevelopment Report, Report to Joint Finance and Corporate Services Committee & Planning and Housing Committee on 2 November 2023 and Council 10 November 2023 (ACS2023-PRE-GEN-0009)

Surely in the interests of sound financial decision making, Council should be provided with pro-formas that reflect the necessary upgrades and also show the cost savings of not demolishing and rebuilding the facilities.

Traffic projections assume no new visitors to Lansdowne

The 2024 Annual report claims that new facilities are needed to achieve financial sustainability, presumably, as has been stated elsewhere, because new facilities are projected to bring in many more new visitors to the site.

Yet, the consultants hired by OSEG to assess the traffic impact of Lansdowne 2.0 have concluded that since the new facilities will be smaller and since current programming will simply be replaced, there will be no increase in visitor traffic to Lansdowne:

“The overall Lansdowne 2.0 proposed plan includes the following phases of development:

Development Phase 1 (Anticipated completion of 2028)

Phase 1 consists of building a new 5,500 seat (up to 6,500 spectators) multipurpose event centre that will be home to the OHL’s Ottawa 67’s, the CEBL’s Ottawa BlackJacks, the PWHL Ottawa, and other indoor events such as shows and concerts.

As this phase of Lansdowne 2.0 replaces the programming provided at the existing 9,800 seat TD Place Arena, it is not expected to generate additional transportation demands to Lansdowne.

Development Phase 2 (Anticipated completion between 2030 and 2031)

Phase 2 consists of replacing the existing functionally obsolete north stadium stands and arena complex at TD Place Stadium with a new 11,200 seat (12,100 spectator) north stand structure. This new facility replaces the existing north stadium stands, which currently has a capacity of 14,028 spectators, and would result in a reduction of approximately 2,000 spectator capacity at TD Place Stadium. This venue will continue to be the home of the CFL’s Ottawa RedBlacks and the CPL’s Ottawa Atlético.

As this phase of Lansdowne 2.0 replaces existing programming currently provided at TD Place Stadium, it is not expected to generate additional transportation demands to Lansdowne.

  • p.  5-6, Lansdowne 2.0 Event Centre (Phase 1) Transportation Impact Assessment Report Step 4 – Strategy Report, Momentum, August 23 2024. Emphasis original.

How can a decision to spend half-a-billion taxpayer dollars rest on claims that are made in some reports but then are refuted in modelling?

Non-disclosure of Retail Lease Inducements

The 2024 Annual Report boasts of 100% retail lease occupancy, yet is silent on whether this level of occupancy has been induced by offering financial incentives to the tenants, and if so, to what extent:

“…Lansdowne’s approximate 350,000 square feet of rentable retail and office space ended the 2023/24 fiscal year at 100 per cent leased, compared to 96 per cent in the previous fiscal year and parking revenues were back to pre-pandemic levels with a 27 per cent increase from the previous year.”

  • p. 4-5 2024 Lansdowne Annual Report, Report to Finance and Corporate Services Committee on 4 February 2025 and Council 12 February 2025 (ACS2025-CRM-OCM-0001)

While a high tenant occupancy level seems a good thing, what is left undisclosed is the level of cost that has been needed to achieve this occupancy result.

Illustrative is a recent media report on a new tenant at Lansdowne:

“Mahmoud says that despite the enormous expenses involved in opening Med, he did not take out any loans. “The place is completely paid off,” he says. It helped that the landlords at Lansdowne gave Mahmoud a huge break on the rent. “Or (else) we wouldn’t be here,” he says.

“Lansdowne is pretty dead,” Moghadam says. “It really needs to be revived.”

Peter Hum, “Can Med Supper Club, Ottawa’s most luxurious and pricey new restaurant, buck the affordability crisis?”

  • Ottawa Citizen Online (Published Dec 13, 2023, updated Dec 14, 2023, retrieved Jan 28, 2025)

So, when OSEG reports 100% occupancy numbers, it is important to ask who receives a “huge break on rent,” for how long, and especially for how much. It is relatively simple for a landlord to get 100% occupancy rates if tenants are getting a “huge break on rent.”

But the projections for Lansdowne, vetted by E &Y, assume market rate rents, not deeply discounted rents. How valid are the retail projections for a site that has had to offer rent subsidies in order to fill its space?

Questions about tenant inducements and discounts are critical in the case of Lansdowne where it has been the retail component that has been subsidizing the others:

“Our analysis indicates that if current performance levels are maintained, the Redblacks, 67s, and Stadium operations are unlikely to achieve profitability. In such a scenario, the retail operating unit will continue to subsidize the sports teams and Stadium, with any downturn in retail operations making the overall Lansdowne partnership operations unsustainable.”

  • p. 8, Ernst & Young Lansdowne 2.0 Financial Due Diligence City of Ottawa Reliance Restricted Report, September 13 2023

In other words, partnership sustainability rests on the Retail component’s shoulders yet to date, the Retail component has been unable to bear the financial burden of the other operations.

To the extent that the Retail component, while profitable, has not managed to operate at market rates, what are the implications of this reality for the overall operations going forward?

What are the actual reasons for the continued poor financial performance at Lansdowne?

While the 2024 Annual report presents a claim that “chronically poor financial performance means we need new facilities,” the underlying logic of this claim needs careful examination.

Other questions need to be asked: “by what criteria would management performance to date be considered to be satisfactory?” or, “with over ten years of poor financial results despite churning out projections that promise the opposite, is it time to start asking whether OSEG management should take some responsibility for the unsatisfactory financial performance to date?”

Is it really the case that the problem rests with the facilities, or have the facilities been made a convenient scapegoat for a dismally executed business plan?

The taxpayers of Ottawa have at least a half-a-billion dollar ($500 Million) interest in the answer.