OSEG boss says 'stark realities' require Lansdowne deal with city to be reworked

Lansdowne Park

The CEO of the Ottawa Sports and Entertainment Group is defending a proposal to amend the organization’s 30-year partnership with the city at Lansdowne Park, saying OSEG’s owners have poured tens of millions of dollars more than they originally anticipated into redeveloping the property and need extra time to make that money back.

Mark Goudie responded Friday to criticisms from Ottawa councillors who questioned a new city report that made several recommendations, including extending the public-private partnership by a decade and letting OSEG’s partners tap into a $4.7-million lifecycle reserve fund to cover expenses.

Goudie said the organization – which owns the CFL’s Redblacks as well as the OHL’s 67’s and manages the stadium, arena and retail and commercial spaces at Lansdowne Park – expected to start breaking even by 2022 before those projections got derailed by the pandemic. 

He said OSEG partners Roger Greenberg, William Shenkman, John Pugh and John Ruddy are willing to pump an additional $40 million into the project over the next five years to cover expected losses.

“We have a great working relationship with the city,” he told OBJ on Friday. “So when we go to the city with the stark realities of what’s going to be required over the next five years, it’s to ask for help.” 

Goudie said the Lansdowne venture has been much more expensive than OSEG originally expected. As of March 31, the organization has pumped $152 million into the park and its facilities ​– nearly $100 million more than the $55 million they projected it would take to fund the project when council gave it the green light in 2012.

Target of five million visitors

Goudie said costs of refurbishing the aging home of the Ottawa 67’s and other improvements were far costlier than initial budget projections, while it’s also taking longer than expected to hit the “magic number” of five million annual visitors Lansdowne needs to break even. Last year, the park attracted about four million people to its shops and events.

Under the current 30-year agreement with the city, OSEG funds maintenance expenses and other day-to-day costs of running the 24,000-seat stadium, the arena and related infrastructure, and covers all operating losses. In return, the city charges the group just $1 a year in rent.

The new proposal would extend that agreement from 2044 to 2054. It would also extend until 2066 OSEG’s annual $1 annual rent for the retail component of the site, which OSEG developed.

Goudie told OBJ that four new tenants are slated to take over vacant space in the next few months and Lansdowne’s retail component is 97 per cent leased. Still, he said 2020 has been a tough year for many retailers.

“With COVID, our retail tenants are struggling much like we are,” he said. “What we’ve tried to do is to be as flexible as we can, recognizing the hardships that they’re facing.”

In a report released this week, city staff noted that OSEG’s $106-million mortgage on the retail component is due to be refinanced in the next two years, putting the owners “at a very real risk of having default be their best business decision” – which would leave the city on the hook for millions of dollars in payments.

Staff argue that extending the partnership will give OSEG more time and flexibility to recover from the effects of the pandemic and find additional financial partners if necessary. At the same time, staffers say the city will be protected from covering any deficits for an additional decade. 

But Capital Coun. Shawn Menard, who represents the Glebe, said he’s not convinced the proposal would benefit taxpayers in the long run.

“There is no way to guarantee that the proposal will keep OSEG solvent for more than a year, and no contingencies for what happens should we find ourselves in this exact same situation in the near future,” he said in a statement. 

Menard also questioned the timing of the report, noting the auditor general’s review of the Lansdowne agreement is set to be tabled at a committee meeting on Nov. 24 – just one day before council would consider a revamped deal with OSEG.

'Short-sighted measure'

“The city report purports to represent the best way to help OSEG continue without any business case or consideration of other options for the public or councillors,” he said, calling it “a short-sighted stop-gap measure created out of panic and without sufficient reflection, which could turn into a long-term liability for Ottawa.”

Goudie, however, countered that OSEG’s owners have a deep attachment to the community and have no intention of abandoning the site. 

“This partnership hasn’t been solvent since its inception,” he said. “It has persevered … on the backs of our partners’ investment. What we are proposing is to let that continue.

“The OSEG partners … could have chosen a path that says, ‘This isn’t in my best interest – emotionally, financially – and they could have chosen a different route. They haven’t chosen that route. I think that demonstrates their commitment to this project.”

The report also proposes a working group composed of representatives from OSEG and the city that would examine ways of boosting attendance at Lansdowne and generating more income from the property. 

Goudie said OSEG is open to new ideas for enhancing the site that could include additional housing and other forms of intensification.

“Lansdowne is a regional asset, and I think to understand how Lansdowne can reach its potential, we should be reaching out to the region,” he said. “The city will run this process, but we are game to hear all of people's ideas and thoughts of Lansdowne should evolve into.”

The city's finance and economic development committee will consider the report on Nov. 12.