The COVID-19 pandemic is taking a big bite out of the bottom line at London’s Budweiser Gardens. The sports and entertainment centre suffering its first financial loss in 18 years of operation, according to a report coming to a city council committee on Monday.
The report, headed to the city’s corporate services committee on Monday, even hints that the city might consider divesting itself of the sports and entertainment complex built in 2002.
The report says Bud Gardens had a successful 2019-20 fiscal year hosting musical acts as Michael Bublé, Def Leppard, Arkells and Blue Rodeo, plus shows like Paw Patrol Live and Disney on Ice.
Then the March 2020 COVID-19 shutdown hit, forcing events to be cancelled, including the rest of the London Knights season.
“Leading up to the March closure, Budweiser Gardens was on pace to have another successful year, with 84 events being held and a paid attendance of 372,119,” the report says.
It also says the arena operators have done what they can during the shutdown to limit the losses, including laying off 50 per cent of the Bud’s full-time staff, but clearly there are more tough decisions ahead.
Hit will be felt in city’s bottom line
Budweiser Gardens operates in a public-private partnership where the City of London owns the land and leases a portion of it to a trust which owns the building. The London Arena Trust then leases the building to a partnership that includes operator Spectra Venue Management and EllisDon construction.
The city’s share of the net proceeds from operations varies over the life of the 50-year lease. In years one to five, the city’s share was 20 per cent; years six to ten, 45 and years eleven to fifty, 70 per cent.
In recent years, the Bud has been a consistent revenue-generator for the city.
In the three years from 2016 to 2019, Budweiser Gardens poured an average of almost $342,000 into city coffers. That number will fall to just $99,000 for 2020, then likely go to the minimum $50,000 payment laid out in the contract for the 2021 fiscal year, according to the report.
The report warns that the COVID-19 fallout is likely to continue to cut into the city’s share of the Bud’s future earnings, and hints the city may have to step in if cash-flow problems persist: “One-time support may be required depending on the longevity of the impacts of COVID-19 if cash is fully depleted,” the report says.
It also says this situation may continue until the sports and entertainment industry returns to “normal” levels of attendance, which depends on how the pandemic plays out and if and when restrictions of large indoor gatherings are lifted.
The Ontario Hockey League and the provincial government have not yet announced any firm plans to return to play, or whether that return will allow fans back in the stands.
Will city exit Bud Gardens agreement?
The staff report also mentions the possibility of the city getting out of the shared agreement, but notes the city has a limited window to make that decision.
“Civic Administration has identified that there is a limited window during the first six months of Budweiser Gardens’ 2022-2023 fiscal year for Council to consider divesting of the Budweiser Gardens with no financial penalty. Should Council wish to further explore this opportunity, Civic Administration will develop the next steps to undertake the review of Budweiser Gardens in advance of the decision point in 2022.”