City Council will be making a decision on Friday, November 7 on the future of Lansdowne Park. At committee last week, we heard from nearly 90 delegations, we asked questions to city staff, and we debated the pros and cons of the plan in front of us. This post is the second of two parts. Be sure to read Part 1 first: “How we got here”.
Part 2: Balancing risk and opportunity
City staff have recommended a final construction plan and financial strategy outlining the cost and revenues of Lansdowne 2.0. You can access the staff report and documentation here. When I reference pages in the report, I’m referencing document 3.4: “Report – Lansdowne 2.0 2025 Report_oct22 AODA.pdf”.
There has been a lot of noise over the past two weeks on this file, from both sides. Count me somewhere in the middle: I’ve supported a redevelopment of Lansdowne, with a great deal of caution pending the final numbers and analysis. When I read the report, listen to delegations, and challenge staff, I’m trying to separate signal from the noise. Mainly, what is the level of risk attached to various aspects of the plan? How are the risks being mitigated? What are the benefits of moving forward? How does this all balance out?
Capital project funding sources
The new arena arena and north side stands will cost $419-million to build, funded via four main funding sources.
🏙️ Air rights is a fee paid by a developer for the right to build housing (apartments, condos, hotel) on top of the north side stands. A builder called Mirabelle won a competitive process with a bid of $65-million. After accounting for City construction costs and a contribution to affordable housing, the net amount to offset construction is $33.9-million. There is a low level of risk associated with this funding source.
🏦 Internal funding includes $48-million funding from capital reserves and bond premium revenue. There is no risk with this funding source.
🏨 Municipal accommodation tax is from a city-wide tax assessed on hotel and short-term rental stays. Since Lansdowne Park events attract a significant number of out-of-town visitors, $6-million of this tax is being allocated to Lansdowne construction. There is no risk with this funding source.
✅ Those sources total $88-million, leaving $331-million left funded through debt – essentially a long-term mortgage.
(The debt amount could be further reduced by $20-million if a provincial tourism grant is approved, but they’re not including it in the calculations for now.)
Long term debt
- The City would take out a loan for $331-million, with debt payments from 2031 to 2070.
- Total yearly debt payments based on a 4.25% interest rate are $17.4-million. (Net present value.)
- Offsetting revenue of $13.0-million would lower yearly debt costs to $4.3-million. (The left over $0.1-million is due to rounding.)
The revenue to offset the debt payments comes from several sources including:
💵 Additional property tax revenue ($3.6-million per year)
💵 Municipal Accommodation Tax revenue ($2.0-million per year)
💵 Ticket surcharge ($0.7-million per year)
💵 Rent ($0.5-million per year)
💵 “Return on City Equity from Waterfall” – revenue from events, sports, and retail ($6.2-million per year)
City staff developed projections of new revenue to offset the cost of debt, and Ernst & Young did a sensitivity analysis to assess the risk of each source of revenue. (Table 11, Page 119.)
Reference: Table 11 (Page 119)
✅ In a best case scenario, offsetting revenue would cover all but $2.5-million of the yearly debt payments.
❌ In a worst case scenario, offsetting revenue would cover all but $11.7-million of the yearly debt payments.
My reading of this chart is that with the exception of “Return of City Equity from Waterfall”, the sources of revenue are relatively low risk. The projected revenue from retail, sports, and entertainment operations have a lot more variability. City staff and the third party have an analysis of those revenue projections in Table 9 (page 110) of the report.
How realistic are those scenarios? To me, the retail and entertainment side of the business should be stable (or grow) in the coming decades. The sports side is more unpredictable. We’re on solid footing with major tournaments: recent events have included national and international championships for figure skating, curling, basketball, soccer and hockey. The new facilities will be even more attractive for major competitions.
But league sports tend to have ups-and-downs. Current teams include the REDBLACKS, 67’s, Charge, BlackJacks, Atlético, and Rapid FC. Four out of six are new teams since 2015. The REDBLACKS and 67’s are guaranteeing that they’ll play in Ottawa until at least 2042 and intend to stay well beyond that. Over the next 40 years it’s likely that we’ll see that mix of teams change. If recent years are any indication, interest in league sports also continues to grow so, over the long term, these revenues should be stable as well.
🏒⚡️A note on the Ottawa Charge
What we heard from the PWHL last week is that they would prefer a much larger arena to remain viable at Lansdowne Park in the long term. But a larger arena would add $80- to $100-million to the cost, and the PWHL would only guarantee staying at Lansdowne to 2031. As important as they have become in Ottawa’s sports team, I find it really hard to justify a massive change to our long-term financial plan based on the needs of one team. The PWHL and OSEG are still negotiating the long-term lease and it does sound like there are some other options in play that would help keep the team viable at Lansdowne over a longer term. More to come.
📈 On the opportunity side
A Deloitte report measured the economic benefits of Lansdowne 2.0, including:
⬆️ Increase Ottawa’s Gross Domestic Product (GDP) by $590-million over 10 years (2026 – 2035)
⬆️ Increase Ottawa’s GDP by $89-million per year annually from operations
⬆️ 4,900 new jobs created during construction
⬆️ 427 net new jobs during operations (hospitality, retail, and event management)
⬆️ Tourist spending increases by $8-million annually, with 22% higher ticketed event attendance
👍 Summing up
Is it wise to commit to an estimated yearly cost of $4.3-million for a revitalized Lansdowne? As a point of comparison, back in 2010, before the partnership with OSEG, it was costing the City of Ottawa about $4.9-million annually to operate and maintain the “old” Lansdowne. Adjusting for inflation, that’s close to $7-million in today’s dollars. So, a proposed yearly cost of $4.3-million for such a large civic facility is reasonable.
My conclusion is that the overall business case is sound and based on reasonable assumptions. My expectation is not that the project be 100% “revenue neutral”, but the revenues should offset the cost as much as possible. There is risk (there is always risk with major projects!) but staff have presented this risk transparently and realistically. Even in the worst-case scenarios, the project remains affordable and will not hinder the City from investing and maintaining other facilities.
And most of all, there is significant benefit and opportunity. The Lansdowne 2.0 facilities will give us a place to be proud of, and a chance to put our best foot forward for national and international visitors, touring musicians, and sports organizations. That’s a big step up from what we’re presenting to the world at Lansdowne 1.0 today.
What’s next: The Auditor General presents her analysis on the financial plan on Tuesday, followed by the City Council vote on Friday. I anticipate we’ll see a few tweaks and adjustments before the end of the week.