What were they thinking when they cut a new deal with the Guelph Srorm?

By Gerry Barker

July 27, 2016 (revised)

This week Mayor Guthrie announced that the Guelph Storm junior hockey club would remain in Guelph for another ten years.

I’m a hockey fan but this deal has the strong odour of an inside deal.

Here’s the financial skinny.

Deputy Chief Administration Officer (DCAO) Colleen Clack told a citizen recently that between 2011 and 2015, the taxpayers subsidized the Sleeman Centre averaging $249,000 a year.

Why under her responsibility as General Manager of Tourism and Culture, was she responsible for managing these two facilities? According to her own figures, the River Run Theatre is losing more than $531,000 annually and the Sleeman Centre is losing $249,000 each year. That’s $780,000 a year! Now that was under the old contract signed by the previous owners of the team and was honoured by the new owners. Now remember, this building is owned and managed by the city.

We the public have no idea of the terms of the old Storm contract or details of the new one. We can tell you that three individuals own the team with the chairman, Rick Gaetz, who also is chairman of the Ontario Hockey League (OHL) executive committee.

It would appear that Ms. Clack, as lead negotiator for the city, agreed to lower the percentage of the city’s share of receipts. This was because the team owners said that the financial arrangement with the city was one of the costliest in the 20-team OHL. Was this a case of the lambs being led to the slaughter?

Again, no figures were produced to confirm this claim. There was no business plan presented to council, just a request to lower the city’s share of the revenues. Council approved the new deal. Again, the public was not informed of the details.

Why are we in business with a hockey team?

Why is this a shared revenue deal at all? As Mayor Guthrie said “We are the landlord and the Storm is a tenant.” Under that definition, the Storm should pay a negotiated lease payment amount for use of the Arena. The city has no business participating in the operation of a privately-owned major junior hockey club.

Why should the citizens be expected to subsidize the hockey club through this sharing of receipts or revenue? Because under the sketchy details of this deal, we are subsidizing the team.

Bottom line, if the Sleeman was losing $249,000 under the former agreement and has agreed to take a lesser part of the revenue pie, doesn’t this increase the amount of losses the Sleeman generates each year?

This is one of the oldest ploys in the book. Threaten to move the team and everyone on council goes into a funk. It went from a business decision to an emotional one in a nano second. Once again, the city comes out the loser. But do members of council get complimentary seats and VIP perks? Just wondering.

But there were Storm supporters claiming the economic advantages that the Storm allegedly brings to the city. It’s an interesting take with no measurement of the actual economic affect on the actual cost of running a city of this size.

For every dollar of revenue that is removed there has to be a truthful explanation as to how it affects the citizens. Does this deal benefit the majority of residents? Or is it just the owners of the team? The players are reported to be paid less than minimum wage

The fact that the building is shut down for three months in the summer adds more cost to the taxpayers. Why should the Storm occupation of the Sleeman Centre receive a 12-month deal when it is used, depending on reaching the OHL playoffs, for just some nine months?

In five years, there has been no attempt by the city administration to seek other users of the facility to help pay for maintenance, staff and operational costs. Why doesn’t the administration tell us how much the taxpayers must now pay to keep the Storm in town?

We’re already subsidizing the River Run Theatre across the street to the tune of $531,000 each year. Or take Guelph Transit that is subsidized by the taxpayers of some $15 million a year.

Is this what Coun. James Gordon refers to as an investment? He should understand the difference between capital costs and operational cost. These are only two examples of bad decisions that reduce revenues and reflect emotion rather than practicality.

You cannot run a city by spending money that has little or no benefit to the majority of citizens. This is one reason how the city has got itself in such a financial mess.

Reserves have been drastically depleted due to bad judgment and responsibility. The Community Energy Initiative cannot service in its present configuration without further investment. The administration has acknowledged it will require another $60 million to upgrade the two District Energy Nodes to meet future financial and performance obligations.

Coincidence or did they place an order before the deal was approved?

Yet eight members of city council voted to run the money-losing District Energy Nodes “as is” without further investment for another eight months to prove, what?

The same day, July 18, council approved the “as is” option of an eight-month extension of District Energy, Guelph Municipal Holdings Inc (GMHI) and advertised for a “Business Advisor” on a one-year contract to work for GMHI.

This council vote was held close to midnight, July 18, so the ad for the Business Advisor had to be placed before council approved the extension.

This is an outrageous and deliberate attempt to keep the District Energy Nodes alive despite the findings of the Deloitte consultant’s three recommendation options. Council voted earlier in the session not to proceed with Option three which was to continue operating the District Energy Nodes with more financing to make it viable.

This runs counter to the terms of the District Energy proposal “as is” option that stated there would be no further investment in the project. One would presume that includes adding to the staff.

It is now apparent that these two deals were cooked up behind closed-doors, without any public input or consideration.

We have a Frankenstein council, with the majority obsessed with holding power, controlling us, with most of the majority not understanding for that of which they are responsible. So they depend on the judgment of senior staff. Shades of Urbacon and generally most councillors vote as they are told!

An atmosphere of incompetence pervades our city leadership. It acts like a boil that we keep picking at until it festers.

The mother of all leaks

Mayor Cam Guthrie is chairman of GMHI. Yet the advertisement for a GMHI Business Advisor was posted during the day, hours before the council decision to accept the “as is” option around midnight.

But here is the question: Mayor Guthrie voted against the motion to accept the “as is” option. Is it not strange that the chair of GMHI was unaware of the staff posting to add another GMHI employee, hours before council approved it?

The action by staff illustrates why city council is disfunctional. That decision to post for another GMHI employee was apparently made without the knowledge of the Mayor. Someone in the administration, staff or elected members made that decision knowing full well the council would vote for it that night.

There were three votes that night. The first was to receive the staff report based on the findings of the Deloitte consultants containing three options, 13-0. The second was to continue the “as is” option, 13-0.

The third vote was 8 to 5 with all members of the Bloc of Seven plus Coun. Bob Bell voting to include a city-wide CEI and District Energy strategy presentation no later than Q1 of 2017. Only Mayor Cam Guthrie, Councillors Christine Billings, Dan Gibson, Andy Van Hellemond and Mark MacKinnon voted against the motion. The fact remains that this vote confirmed extending the DE operations for another eight months.

There will be more on this later. It is a complete breakdown of the public trust and the person or persons who perpetrated it should be fired or resign.

But hey! We have a junior hockey team for another ten years but we’ll never know the cost

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8 Comments

Filed under Between the Lines

8 responses to “What were they thinking when they cut a new deal with the Guelph Srorm?

  1. Joe Black

    I had season tickets stop a few years back poor parking , horrible roads ( one lane ) haven’t been downtown in 3 years . I avoid driving through Guelph even the stop and go Hanlon.It could be faster go to Cambridge Lowes than going to Guelphs Home Depot .

  2. Marc

    I don’t understand how anyone can justify spending money on a private hockey club which is owned by millionaires and yet increase ice rentals for kids, reduce transit services, make residents pay to drop off yard waste, start to charge us for storm rain run off sewers, make volunteers pay for their own police checks and the list goes on. Who actually benefits from having the Storm in town – downtown restaurants and bars? How many waitresses and cooks would be laid off if the left? – Is it more than $500,000 worth? Sobey’s can buy the arena and put in a giant grocery store or convert it the new library and sell the old one, or build a new parkade to accommodate all the new GO Train customers everyone keeps talking about or sell it outright and use the money to build a south end community arena. The City can’t afford a giant building that is only used (the stands and upper bowl at least) about 50 nights a year and now needs to give the private hockey club more of a subsidy. How many city staff work at this building and what do they do when their is no ice in the building? Show us the business case how this makes sense when its at the expense of so many other services.
    What pisses me off the most, is that Mayor Guthrie supported this (despite the lack of business plan) and then turns around and talks about service cuts to save money. Was this a payback for the Storm supporting him in the election? We all just got hit with a $500,000 increase to property taxes to pay for this. Did the city require any conditions on its part – Colleen Clack should publically state them because all we see is the owners getting everything and the city nothing in return. If she did a business plan – she should provide the economics and financial impact of what this has on her department’s budget and how it is being paid for (layoffs or property tax increases)…
    Can’t wait until 2018 to come fast enough. Guthrie needs to go back selling insurance as I can’t see how anyone will take him serious about requiring business cases to evaluate decisions on, keeping costs down, lowering property taxes or wanting to cut other services when he just gave the Storm $5 million. Does he not realize the gang of seven will throw this in his face going forward? How does he turn around and vote no on the 10 Carden Street grant (which apparently also has a huge economic impact – and no business case) or district energy (which apparently saves our environment – and no business case) and any other subsidy or grant. How is the privately owned Guelph Storm any different than those groups? We will never know because we don’t do business cases or cost/benefit analysis on this stuff.

  3. geo

    What were they thinking when they cut a new deal? Thinking is optional and is not encouraged at Guelph City Hall.

  4. Tobi

    Well said Marc!

  5. J.R.

    You should be looking at the terms of the last Storm contract. Under the terms of the contract, the City of Guelph agreed to install a multi million dollar video scoreboard in the Sleeman Centre if the Guelph Storm met certain attendance thresholds. The Storm did not meet the required thresholds but Ann Pappert, buckling to pressure from Storm ownership, agreed to install the video board with the City bearing 100 percent of the cost despite staff recommendations to the contrary.

    • JR: To complete the circle of this tawdry exercise, is that $75,000 was spent to replace a perfectly working clock in the Sleeman Centre in 2009. The money came from the Federal-Provincial infrastructure financing in which taxpayers had to contribute one third in order to get the senior government funds. The city share was $22 million that ballooned to $27 million to accommodate $2 million for separate bike lanes on Stone Road, The Sleeman Time clock and an assortment of Farbridge’s pet projects. The administration did not have that kind of money lying around, so it called a $30 million note owed by Guelph Hydro. As we now know, it was the beginning of tapping Guelph Hydro to finance the Community Energy Initiative, Another expensive Farbridge project that has cost, so far, $37.1. million.

  6. Laura

    Another question to be asked is whether storm ticket holders are still getting free bus rides to the games on the city’s buses. This is supposed to be “revenue neutral” because the Storm pays for advertising on the buses? Revenue neutral for who One wonders.

    • James

      Revenue Neutral as the team is required to promote the free rides via all social media outlets, in ads, and in arena announcements, GT also gets free ads on the big screen in exchange GT gives the free rides and puts the GO STORM GO on the buses. You can find this all on the City website.

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