Why Canadian Tire Centre is Where it is

By Bruce Firestone | Uncategorized

May 24
[Excerpt from Don’t Back Down,
the real story of the founding of the NHL’s Ottawa Senators and why big leagues
matter
, Bruce M Firestone, Ottawa Senators founder, 2015. All rights
reserved.]

As the Ottawa Senators get ready to face the Pittsburgh Penguins in
game 7 of the eastern conference final on Thursday May 26th, 2017,
there is considerable discussion about why the Sens are having so much
difficulty filling their rink, not only during the regular 2016/17 season but
also during the playoffs up to and including last night’s third round game 6 in
Ottawa where attendance was about 3,000 below capacity.

It may have something to do with a malaise in the local economy
(although employment in Ottawa-Gatineau is an astounding three quarters of a
million people with jobs out of a total population of 1.3 million), federal
civil servants still not being allowed to accept free tickets or be guests at
the rink, the high cost of going to a live game, the convenience of watching for free on television at home and being able to see Don Cherry and his sidekick, Ron Maclean, do their thing, the lack of belief that the Sens can actually win (Ottawa has long been known as a show-me kind of town),
formidable competition from the CFL’s Redblacks who play in a newly renovated (downtown!) TD Place stadium in a well-run Lansdowne Live community, big brother envy of downtown arenas elsewhere in places like Montreal and Toronto (with a tremendous Maple Leaf Square experience thrown into the mix) or maybe a negative perception of team executives and a subsequent cooling of the longterm love affair that has been going on ever since the unlikely and unexpected grant of conditional NHL franchise to Ottawa in December 1990.

Additionally, there may be a sense that since the team is likely
headed to a downtown arena to serve the next generation of fans; they may just
as well wait until they do.

So there is a great deal of blame being heaped on the team’s original
founder (who ultimately chose the suburban Kanata location) for its current attendance
woes. Why would anyone have been foolish enough to stick a major community
facility like the Palladium (the arena’s original moniker) in the sticks?

Here’s one reason—if we hadn’t, we wouldn’t have to worry about flagging
attendance because the team wouldn’t be playing in Ottawa…
it would be in Anaheim.
That’s right. If the OMB (Ontario Municipal Board, which the government of Ontario is threatening
to terminate) hadn’t approved its current location, there was no way the team
could have survived playing in the Ottawa Civic Centre, a 10,000-seat arena. 

The Sens had a standing offer to relocate to California to play out of a then Ogden-owned
arena, which lacked a primary tenant. This was before the advent of the Mighty
Ducks, now the Ducks, who play out of the Honda Center.

So here’s an excerpt from Don’t Back Down, the real story of the
founding of the NHL’s Ottawa
Senators and why big leagues matter
. It explains why Canadian Tire Centre
is where it is…

I get asked why the Canadian Tire Centre (CTC) is in Kanata and not at… (pick one) Lebreton Flats, Lansdowne Park, in Orleans (in the east end) somewhere along Highway 174, at South Keys, at Lac Leamy in Gatineau or right downtown like the Bell Centre in Montréal or the Air Canada Centre in TO.

All of these locations were ones we looked at from 1987 to 1989 before we decided on the current location for the Palladium—in Kanata along Highway 417 (the Queensway) with its “own” interchange.

First, here are a few observations that came primarily from Gino Rossetti, Detroit-based architect of record for the Palladium as well as the Palace of Auburn Hills where the NBA’s Pistons play. A city needs an arena site that has:

1. A large horizontal surface for parking

2. A site that is not less than 85 acres and preferably 100

3. Access to a major transportation corridor

4. Access to public transit

5. A site that would allow the structure to be half in the ground and half above grade to distribute guests more efficiently and to make the building more human scale.

Other things on our collective wish-list included:

a. Access at grade

b. Double-loaded storefronts at grade so that on days when the arena is dark, there is still be life in and around the facility

c. Opportunity for architectural signage to maximize that revenue stream

d. A curtain-wall entrance that left no doubt as to how to access the arena.

Let’s first look at some of the alternative sites. LeBreton Flats is owned by the National Capital Commission and the NCC informed us that they had a (very) long term plan for the site that did not include an arena, even if was going to be a “very nice arena”, it was still just a rink to them. They felt that national priorities such as a new museum (which turned out to be the War Museum) or a new SCC (Supreme Court of Canada) building should take precedence.

Then chair of the NCC Jean Piggott explained it this way, “If you ask me privately, Bruce, the answer is ‘no’. A rink just isn’t in our plans for this important site so close to the parliamentary precinct. But if you ask us publicly, the answer will be, ‘we’ll study it.’ You see, we don’t like to say no to members of the public so we say we’ll study it until one of two things happen—you either give up and go away or you die, whichever comes first. And frankly, we don’t care which.”

Jean was a great gal with a terrific sense of humor. But of course, she meant it too.

Now you might ask, “But how come the Sens and the NCC are today talking about moving the team to LeBreton?”

Good question.

The answer is simple: over the last 25 years, the NCC has had a change of heart. They aren’t too impressed with the state of development at LeBreton today, and believe they need to find new ways to animate the site to make it more of a Toronto Distillery District and less like outer suburbia. Animation here means creating a live-work-play-entertain-learn-make-shop-walkable community, which requires an anchor like an arena and major league sports team.

We also looked at the Lac Leamy site where the Casino du Lac Leamy is now. It’s a beautiful site, next to water, close to a major highway and just five minutes from Parliament Hill. Better yet, it was for sale at that time. After all, you can’t build on a site that doesn’t belong to you (ie, in the case of NCC ownership of LeBreton Flats).

But there were already two NHL teams in the province of Québec (unfortunately, les Nordiques have long since moved from Québec City to Denver) and the majority of the Senators potential fan base did not want to see a third team headquartered there while Ontario still only had one team.

What about locating a team at Lansdowne Park?

There were three significant issues with that choice. Firstly, the Civic Centre would be impossible to renovate for the reasons I dealt with above.

Secondly, there are more lawyers living in the Glebe than practically anywhere else in Ottawa. How would they and the Glebe community react to having another two million visitors descend on their neighborhood? I can tell you from hard experience—not well. The planning for a new arena might have taken years to get approved, if ever.

Thirdly, we felt that the NCC (again) would never allow Ottawa’s transit operator, OC Transpo, to run buses on Queen Elizabeth drive. Hence, the only way to get people in and out by public transit would be Bank street. The MAXIMUM number of people that OC can run up and down Bank  street is about 2,500 pph (people per hour).

For an arena with a 20,000 person capacity, it would take four hours to exit everyone from the building using buses, if you were to rely on public transit for, say, 50% of attendance at a game or an event[1].

Now that tells you something about why the ACC and the Bell Centre are downtown arenas. We could have built the Palladium on a downtown site if Ottawa had a big time people mover like the métro in Montréal or the subway in TO. Those two systems can move between 20,000 and 30,000 pph—a huge increase from what OC can do.

When I used to go to Montréal to see Expos games, we would drive downtown, have dinner and then take the métro to the Big ‘O’, Olympic Stadium; we would never think of taking our car.

But I can tell you that if we relied on buses, we would have had one sellout—opening night and after that, there would have been a fan revolt.

Even in 1987-1989, we thought the event horizon to get a rapid transit system here in Ottawa was a generation away and given the way our city is currently proceeding (or not proceeding), I am not holding my breath to see a high capacity light rail system appear in Ottawa any time soon that links east and west, north and south[2].

In fact, people coming from east end Orleans by car would have taken more time to get to Lansdowne Park or LeBreton Flats than to get to CTC in Kanata—sure, they can get to their Queensway exit in 20 minutes, but threading their way off the highway and hunting and pecking their way to a parking spot, who knows where, could easily take more time and gas than going to the west end site where CTC sits today.

So why not build a big, multi-level parking garage somewhere?

Well, you can’t actually park more than 7,000 vehicles vertically. Since everyone will leave at the same second the team loses in overtime to the Maple Leafs, a multi-level garage simply will not work.

It will become grid locked.

If you have ever been in a major shopping plaza like downtown Ottawa’s Rideau Centre on Christmas Eve (the only time of the year when men outnumber women there) and everyone leaves at the same time (ie, closing time), the public garage becomes such a nightmare that police have to be called to come and untangle the mess—one car backing out while another moves forward on every level results in an unsolvable puzzle. I know, I was in just such a mess one Xmas eve.

So I knew when we were looking for a site that we needed one that we could own, that would have enough room for 7,000 cars and 500+ buses on a single level.

The soil conditions had to be right to bury half the building. If you have ever been to Madison Square Gardens, you already know what a pain it is when everyone has to go UP to get to their seats for a Knicks game or whatever.

There had to be room for a new interchange and there had to be more than one way to get to the site. It couldn’t be imposed on existing communities who would react in NIMBY (not-in-my-backyard) fashion to the extra traffic, noise and congestion that would be generated by a MCF (major community facility)[3].

Well, we looked for a long time for an appropriate site and we didn’t find one—the CCEA did that for us.

The Central Canada Exhibition Association had thought about moving out of Lansdowne Park for quite a while. Their board found the site where CTC is now—not me. One day I woke up to read in a local newspaper that the CCEA had optioned a site of some 500 to 600 acres at Huntmar and the Queensway. I jumped in my Saab and drove to the Huntmar overpass; I stood on the bridge looking east. I could see the homes of Kanata marching like ants over Moodie Hill towards me and I knew that the CCEA had beaten me to a great site.

I silently saluted them and cursed them too.

I told my staff at Terrace; we were all disappointed.

But a couple of months later, for reasons known only to the CCEA, their board decided to release their options on these lands. Again, I read about that in the same local newspaper. By 10 am, Jim Steel and I were sitting in one of the local farmer’s homes drinking rye and trying to convince the family to sell their lands to us.

Fortunately, many of those fine people did—we ended up with 600 acres.

We told only a few people what we were doing—Des Adam, then mayor of Kanata knew as did Jimmy Durrell, mayor of Ottawa and Andy Haydon, chair of the RMOC, Regional Municipality of Ottawa Carleton.

We told them and then premier of Ontario, David Peterson, that they each had a magic wand, and we wanted them to use it—we said that private money would buy the team ($50 million) and build the building[4] ($240 million), but we needed three things from government. One, we needed the Palladium site (100 acres) and the remaining lands (500 acres) to be given a priority[5] in terms of rezoning the lands for a MCF and other uses. Two, we needed public monies to fund the new interchange (a $30 million cost) because the day the interchange was completed, it would have to be given to MTO (the Ministry of Transportation for Ontario) for $2, and you can’t finance something you don’t own—it would be like me putting a mortgage on your home. Three, we needed their support to tell the NHL in December of that year (1990) what a great place Ottawa is, how much hockey is loved here and what a great place Ontario is to invest in.

Alberta had two teams, Québec had two teams, but the largest (and, at that time) the richest province only had one.

We asked them to focus their wands on the Palladium lands and, presto/change-o, the lands (after all due process) would be rezoned. The average price we paid for our property was $12k per acre, and we made no secret of the fact that, after rezoning, we hoped the value would increase to $112k per acre (lands in the area are now trading for $300,000 to as much as $546,000 per acre). The $100k per acre increase in value multiplied by the 500 acres of “surplus” land we had bought (and which we planned to resell) would exactly equal the $50 million purchase price for the NHL expansion team.

But we told them we wouldn’t keep that money—we would put it in armored trucks and take it to Ziegler’s office in NYC and give it to him. In return, we would get a (pretty crappy looking) faxed piece of 8 and ½ by 11 inch paper called a NHL expansion franchise. We would put Ottawa on the map, and it wouldn’t cost the city of Ottawa a dime.

We won local votes in Kanata and at the RMOC by a margin of 32 to 1, and later we obtained the agreement of the Mr Peterson’s (liberal) government of Ontario to our three requests.

David was a deal-making gunslinger of a premier. He chain smoked (never in public though). He was also a good listener on the day that our in-house general counsel Terry Denison and I visited Queens Park in Toronto. He was careful not to commit himself until he’d heard all three of our asks.

The thing that appealed to him most was coming to Palm Beach in December (much warmer than Toronto at that time of year) to tell the NHL’s BOG what a great place Ontario is. It was going to be a great PR opportunity. He also liked hearing this was not another Sky Dome financial fiasco.

No one knows exactly how much it cost to build that stadium, but $650 million is about right. It was supposed to cost $150 million, but when you have a government guarantee backstopping construction, you can make strange decisions like, say, adding a hotel after the building is already coming out of the ground.

Two things kill your budget in construction—change orders and delay, both of which are, of course, connected. And adding a hotel post hoc because a politician thinks it’s a cool idea is a change order of immense stupidity.

Sky Dome was sold to Rogers Communications and renamed Rogers Centre in November 2004; it sold for a reported (paltry) $25 million. Ontario taxpayers wrote off hundreds of millions.

So David liked our plan to have private money buy the team and fund the stadium, and he understood that it made sense for Ontario to build the new interchange that would make the whole thing work—public money for public infrastructure, private money for a private (supposedly) for-profit business.

Things were looking pretty good early in the summer of 1990.

But for some reason, Mr Peterson decided to call an election two and a half years early[6] and, with a nearly impossible splitting of the vote, Bob Rae and the NDP came to power later on September 6th 1990 with a majority[7] in the legislature based on a 37.6% share of the total vote.

Mr Rae’s new government had just one member from an Ottawa riding compared to taking 11 of 12 seats in Hamilton-Wentworth and Niagara regions, which spelled trouble, big trouble for us.

We didn’t know this at the time.

After Bob Rae was elected, I called a senior staff meeting to talk about the results.

“Here’s my take. The new NDP government,” I said naively, “will value the Palladium as much as Mr Peterson’s did. It means jobs, union jobs, and that’s the power base for the New Democratic Party. It’s like our Honda Motor Car plant or a new Ford factory, which means so much to Toronto… I’ll call Bob, congratulate him, and ask him to reaffirm the government’s commitments to us. Everybody OK with that?”

They were.

In Ottawa, commercial construction is largely the domain of union workers. By this point, we had hired PCL Constructors, a large employee-owned firm operating in the United States, Canada and Australia, as general contractor, GC. We also had hired local ZW Group as project manager.

The job of the GC was to provide us with a GMP, guaranteed maximum price, a price above which they guarantee the cost to complete will not exceed.

For that to be a meaningful guarantee, the GC must be credible, be bonded, and, above all, must be trustworthy. If you don’t have a rich uncle with an unlimited checkbook standing ready to bail you out (eg, the Ontario taxpayer), you cannot conceive of going into a project like this without a GMP.

So you agree in advance that the GC will make a flat fee (it can vary from 5 to 21% of the project’s cost, depending on size and complexity) and you get the GC to sit on the same side of the table with you, the owner/developer/promoter. Your interests are theirs and vice versa.

The PM, project manager’s job, is to liaise with the GC, the architect, the owner, the unions, the sub-trades, the engineers, building inspectors, financiers, city and provincial or state approval authorities/facilitators/ expediters, and to run the schedule and keep everything on track. S/he is the owner’s eyes and ears on the project, and keeps everyone honest. They too are on a flat, pre-negotiated fee.

The folks who sit on the other side of the table are the sub-trades who competitively bid on each set of working and shop drawings.

You also need to establish a contingency fund that you expect will be completely spent to assure quality. In addition, you’ll set up bonuses for things like early delivery of a completed building and a cost savings sharing formula—where everyone from the architect, GC, PM and ownership benefit from any cost savings discovered during construction (provided that quality and safety do not suffer as a result).

I am quite sure this is the right way to run a railroad, and deliver large complex projects on time and on budget.

PCL divided the Palladium into four quadrants each with their own tower crane and team. They really built four buildings, and finished on budget ($240 million including $30 million for a new interchange) and six months early (in 18 months instead of 24[8]).

The other thing you need is a not-crazy owner who will not, under any circumstances, approve any change order unless it is required for the safety of the public when your building opens.

But all of this was still years into an uncertain future. After months of calling Queens Park in the fall of 1990 to no avail, we finally received a letter from Mr Rae’s government. It was November 29th 990, less than a week before we had to be in Palm Beach to present our case for an expansion franchise for Ottawa.

Forgive me for (grossly) paraphrasing his letter—

Dear Mr Firestone:

Do you remember how the previous occupant of this office foolishly made three promises to your company?

Well, I feel I should mention that, you know, Ontario is facing hard times, and so it’s with great reluctance that I have to say that too bad/so sad, but we can’t afford to build a new interchange for you so you are on your own on that score, so to speak.

I realize it’ll be the only interchange ever built by private money on a 400-series highway in Ontario. Just imagine, you can make history!

Also as a new premier, I’m sure you’ll understand that I’m super busy right now running Ontario, so I have to decline your kind invitation to visit Florida for this year’s NHL winter meetings. Again my apologies.

Oh, and lastly, did you know that there are really only two levels of government in Canada? Under the British North America Act of 1867, which created this great nation, there is no such thing, constitutionally, as a city, town, village, township or county, they are all really administrative creatures of the provinces. This means I can sack any mayor or reeve or councilor I so choose, and upend, reverse or ignore any bylaw, zoning ordinance and official plan amendment I don’t like.

Do you know the expression—le roi, c’est moi? Well, it is with deepest regret that I have to tell you Mr Firestone that I intend to use all the powers of the provincial government of Ontario, its ministries and authorities to oppose the rezoning of the Palladium.

Yours very truly,

Robert

Bob Rae’s government

ps Go Hamilton go!

pps BRING BACK THE HAMILTON TIGERS who played in the NHL from 1920-25.

I’ll admit this isn’t an exact copy of that letter, but you get its drift. I knew from the moment that I got it that Queens Park would leak it, probably that very afternoon, so I called a press conference in one the buildings we’d built, at 301-303 Moodie drive in Ottawa. This was serving as Terrace head office and official center of the universe, at least as far as things relating to the Ottawa Senators were concerned.

image

Mallorn Centre and Royal Bank
Pavilion

Over 80 members of national and local media showed up for that briefing, sure to a man (they were practically all men in those days) that the Sens were toast. Most of them were secretly cheering for us to fail, I believe. It’s just the Canadian way.

Canucks in entertainment, tech and education have had to leave (mainly for the US, previously for Britain) to achieve a higher level of success before acceptance (subsequently) at home.

No Canadian would dare dream BIG in Canada, would they?

I held up the letter and said, “There’s no need for you to take notes. Copies of this letter from the government of Ontario will be available for you to take with you when you leave.

“Obviously, today is a disappointing day for all of us here at Terrace and for hockey fans in Ottawa, west Quebec and eastern Ontario.

“The government of Ontario feels that, despite the overwhelming local support for the rezoning of the Palladium, it would be better to leave the lands in their current state—wet clay that produces no more than $7,500 per year of feed corn.

“But here’s what we are going to do,” I concluded, my voice shaking with emotion.

“We are going to go down to Palm Beach next week and tell the NHL that they should award their franchises to places where that will nurture them, to people who love the game of hockey and appreciate it for the great game it is.

“Then, after we win an expansion franchise, we’re going to come back here and litigate with our own government.

“There is a thing called the Ontario Municipal Board, which is the ultimate arbiter of appropriate land use in this province. It is not up to Mr Rae or his ministers to decide that unilaterally. We will go to the OMB, and we will win approval for our building.

“Thank you for coming.”

Something went unsaid at that press conference—OMB panel members are appointed by government. They are (mostly) former distinguished real estate lawyers. And they were appointed by liberal and conservative premiers, every single one of them.

Bruce M Firestone, PhD, Ottawa Senators founder, Century 21 Explorer Realty broker, Real Estate Investment and Business coach. Follow him on twitter @ProfBruce or email him bruce.firestone@century21.ca

[1] Arrivals tend to be more spread out than departures since, if you lose to the New Jersey Devils in Game 7 of an Eastern Conference Final as the Sens did in 2003, EVERYONE wants to go home at exactly the same moment. Hence, departures for OC buses on Bank street would have been problematic since the mix with cars would effectively lock down the street.

[2] Only in Ottawa would city council sign a binding contract to build a light rail line from downtown to its south end with responsible firms like Siemens and PCL (the latter built the CTC), acquire land rights, do preliminary design work and spend $80 million, only to cancel it. Then pay tens of millions in compensation to Siemens/PCL, lose more than $900 million in senior government subsidies for the new line, and torpedo about $1 to $2 billion of knock-on private sector development at planned-for stations… to get nothing.

[3] Communities are now being built around CTC by Mattamy, Minto, Richcraft and others, but the key difference here is that people who buy those homes are self-selecting to be near CTC. We are not imposing them on an existing community. This was a matter that caused me a great deal of worry at the subsequent OMB (Ontario Municipal Board) hearing that would eventually decide the fate/approve construction of the Palladium. We believed that the Palladium would be a trigger for development around it—if you look at our original plan called West Terrace, now expanded on and improved by the city of Ottawa who renamed it the Kanata West Concept Plan Area, it called for significant residential development as well as other employment and commercial development. More on this later.

[4] We told Mr Peterson that this was not another Sky Dome (now known as the Rogers Centre) which cost the Ontario taxpayer about $500 million in losses.

[5] We did not ask for special treatment only that the Palladium not get backed up behind, say, approval of your home renovation. I told the premier that this was eastern Ontario’s motor car plant, which is a big industry in southern Ontario, an analogy he immediately grasped.

[6] No Ontario premier had ever called an election this early, and almost certainly no one will ever repeat this mistake. The electorate never forgave Mr Peterson for calling a needless election, so his high pre-election approval numbers disappeared in just a few weeks of campaigning.

[7] Mr Rae won 74 seats in the 130-seat legislature, up from just 19 when the election was called.

[8] It took about three times longer (60 months) to finance the building and overcome all the planning hurdles, which tells you that the development business in bureaucratic, risk-averse nations like Canada is becoming bizarrely complex and uncertain.

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