Published on April 16, 2009 10:13 PM by dbo.

Note: This is the fourth and final article in a series.  Be sure to get the background by reading the articles on the introduction, the stadiums and funding projects.

In the first article in this series I briefly mentioned a stadium fund CFLdb is proposing to help contribute to the upkeep of existing stadiums and construction of new stadiums across the country.  More details on the plan behind such a fund and how it will operate are explained below.  These are my initial thoughts on the fund with potential options and ideas about its operation that may not all be feasible.  I hope it opens up a conversation around the country, especially with CFL and local leaders, that allows the idea to be considered seriously and hopefully a fund established quickly.  After the CFL and municipalities neglected their infrastructure the past 30 years, the establishment of this fund could ensure that never happens again in the future.

Why is a stadium fund needed at all?

The CFL and its member franchises have never been in a position to fund capital projects fully or even partially through most of its history.  When publicly owned stadiums have deteriorated to point of needing repairs or replacement, franchises have needed to rely on the three levels of government to fund the projects.  This leads to public criticism and opposition over funding large facilities for the benefit of private owners and football fans.  Though the teams’ contribution to the economy can be used to back their value, it is not the same as a monetary contribution to the costs of these public stadiums.

Recently, CFL franchise owners have displayed a willingness to contribute a share to the costs of projects for their stadiums, with Bob Wetenhall in Montreal and Bob Young in Hamilton contributing significantly to the upgrade and upkeep of their stadiums.  In Winnipeg, the newly entering private owner David Asper is financing almost 100% of the cost of a new sports complex, which will be recouped through a deal for Mr. Asper to redevelop the existing stadium site.  However, not all owners have the means or arrangement to fund complete stadiums.  This has hurt the CFL in terms of expansion opportunities and continues to face them today in Ottawa, Quebec City and Moncton and other areas of the Maritimes.  A stadium fund provides a way for money to be directed to these projects that does not come from the taxpayers or private owners.  In essence, football fans across this country will be funding the infrastructure that supports their teams in the league they love.

This funding by the fans seems appropriate for the CFL and its grassroots position in our culture.  In the 1950’s, the Co-operators Insurance Association, the precursor to the today’s Co-operators Group, asked their policy holders for a voluntary $2 contribution (PDF) to rebuild the companies surplus fund that had been decimated by a rise of claims due to an explosion of cars on the road.  By the end of the year almost $50,000 in gifts had been received, helping the company recover.  This type of idea may seem antiquated today, but a $2 donation is lost change today compared to the 1950’s.  Reaching out to fans actually provides them, the users of the product, an opportunity to contribute on a small scale, make a big difference and end up with a sense of pride for the facilities across the country.

What is the purpose of the fund?

The fund’s mandate will be to raise money in the form of donations, payments from the CFL and member clubs which will be invested until needed.  Franchises and cities will then have the opportunity to submit requests for disbursements to help pay for stadium upgrades or new stadiums when current stadiums have reached their end of life.

How will the fund raise money?

There are a number of opportunities and methods available to raise money and populate the fund:

• From the general revenues of the CFL, before disbursements to the franchises, an amount, perhaps $100,000 to start, would be contributed to the fund annually.
• Franchises could add a per-ticket surcharge that would be directed to the fund.  A $1 ticket surcharge could add $200,000 to $300,000 in revenue per franchise to the fund on an annual basis.
• Donations could be accepted directly from fans at games or special events, with calls to assist expansion by contributing to the fund.  If 50% of the fans gave an average donation of $2 at one game for each team, over $200,000 per year could be raised.
• Existing licensing revenue from Lottery Corporations across Canada could be directed to the stadium fund.  If no licensing agreements exist for SportSelect gaming, this is an opportunity to do so.  I would expect licensing to contribute $80,000 to $100,000 per year.  With contributions going to a capital fund and not team owner pockets, the funneling of lottery money to the CFL may be more palatable.
• If player, executive and team fines are not directed somewhere other than general coffers, the fund could be an appropriate place for these penalties.  If these fines already are directed to minor football or other non-league funds then it would not be appropriate to switch them to the stadium fund.
• Revenue from special events, like an All-Star Skills Competition perhaps held at a potential expansion site, could go to the fund.
• Grey Cups could be required to contribute an amount, say $100,000 to the fund as part of their legacy if they did not fund any stadium improvements of the host site.
• Revenue from merchandise like t-shirts with “Building a Future” or other such slogans, could help assist the fund.
• Annual memberships (at $20/year) in a Friends of the CFL club could be directed to the fund, with the club providing no benefits and therefore having minimal costs.
• The majority of fund money will be held in low-risk investments, with the hope of eventually being able to pay out from the annual interest and dividends of the holdings.

With an optimistic view, $1  to $2 million annually in contributions seems achievable.  While it is unknown how fans will react to ticket surcharges and calls for donations, I believe when framed in the context for the good of football across the country for less than the cost of a cup of coffee fans will embrace it.  It may take some time to establish the fund, but it will have a great benefit on the CFL in the long term that fans will be able to see for themselves.

How will the fund disburse its monies?

A board or committee of the fund will accept project funding proposals from cities across Canada for existing or new football stadium projects.  Based on a set of criteria defined with the establishment of the fund, proposals will be evaluated and if they meet all criteria they will be eligible for funds up to a certain percentage of the project.  In years where multiple projects are competing for funds, the amount paid to each project will be a percentage of the total funds available that year.  A requirement may also be established where the franchise or owners in question need to match the fund’s disbursement to the project.

Will the fund return dividends or will contributors have an ownership stake in stadium projects?

No.  All contributions to the fund will be gifts.  All disbursements from the fund will also be gifts and will not be tied to any contributor.  Contributors will not receive any share in the fund or projects nor be entitled to any dividends from the fund or projects.  A plaque or other marker may be enshrined in stadiums receiving funds as recognition of the CFL’s and fans’ contributions through the fund.

Who will control and manage the fund?

The fund will be controlled by the CFL with management supervised by a board of directors with representatives from the CFL, the business community and elected officials from across the country.

Why establish a central fund instead of each franchise having their own capital project fund?

A central fund provides two things: a larger pool for disbursements and an ability to help non-franchise cities without stadiums but with franchise potential.  Franchises will be expected to be contributors to the fund more often than receiving disbursements, allowing the fund to grow and fund larger projects.  At the same time, funds can go to help establish stadiums and franchises in other cities, bringing expansion fees and growth to the CFL and its franchise owners.

Why establish a fund now?

Now is the perfect time for a stadium fund to be established.  Many existing and potential CFL cities are looking at stadium projects so the topic is in the headlines and on the public’s minds.  At the same time the CFL is on an upswing with attendance and interest in the league at all-time highs.  To break the next growth barrier, team expansion is needed and existing stadiums need to be replaced in CFL cities to ensure the survival of their franchises.  If the CFL can offer monies from a stadium fund for these projects, they may come to realization quicker than if they were left for public and private funding deals to be worked out.

Is this fund fair to all communities?

Determining contributions by a ticket surcharge may seem unfair as the amount contributed would be dependent on the amount of tickets sold.  Since teams have different sized stadiums and attendance levels, it seems some teams may pay more into the fund.  While that may be, teams with larger stadiums are also more expensive to repair and replace, so the levels of contribution and disbursement are likely equal.

Applying the surcharge across the league also puts all franchises on equal footing, rather than some franchises paying city-imposed taxes on their tickets to pay for stadiums improvements or construction and others not.  New franchise cities get to buy in fairly cheaply, with no major donations in the past, but they will not have disbursements for some years after joining the league, allowing their fan contributions to catch up.

How does this help existing projects?

For some projects, there may not be an opportunity to contribute to the costs before the fund is established.  For others, such as Ottawa or Hamilton, there may be an opportunity to promise a contribution at a later date since they will have long term financing.  Even a promise may not be possible before decisions are made on those projects unless the fund was established quickly.  The quicker the fund is established, the quicker it will be able to help projects in Quebec City and Moncton, which are very close to the stadium needs for a CFL franchise.

Conclusion

I believe that the proposal I’ve outlined is possible but it is still just the seed of an idea.  I have no legal knowledge, insider information or business background to know whether the economics of the plan are feasible and worthwhile or whether an agreement amongst team owners is possible.  The basis of the plan is open to improvements and changes to make it work with the goal of the CFL and its fans being able to assist capital projects across this country.  You can help by stating your support or disapproval of the idea or leave a comment to expand on the basis of the proposal.  If you support the idea of a stadium fund being established, I encourage you to contact CFL and team officials to bring this idea to their attention and point them to this article if required.  The greater the public support shown, the greater chance the idea has the support to be successful.

Comments are closed.

A Stadium Fund for Our Country, Our League was published on April 16, 2009 10:13 PM by dbo.

2,055 words.

This article is categorized under Stadiums and tagged with financing and stadium-fund.

• Funding Stadium Projects
• Ottawa: Countdown to Decision Day