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Moncton’s Downtown Centre Seat Debate

Moncton’s Downtown Centre Seat Debate

The evolution of Moncton’s Downtown Centre has passed yet another milestone in terms of public debate; one that started with whether we should build such a facility to one that questions the number of seats the Centre should contain.  The purpose of this column is to provide some key information to continue to nurture this debate. 

In 2009, City of Moncton consultants IBI produced reports and made some important observations relevant to the seat count in the proposed Downtown Centre.  

“From a market perspective, the 9,000 seat cap is a maximum in our view and assumes a responsibility on the part of the city, tenants and operator to actively grow and sustain the market for the centre over the medium to long-term.

However, the benefits of having a large facility capable of capturing one-stop shows is constrained by the supply of these shows; therefore, there is a need to balance the additional market capture that could occur with the costs of constructing and operating a large facility, one that may for all other purposes appear out of scale.

...While an 8,000 seat facility will yield savings in capital costs as well as some operating costs relative to a 9,000 fixed seat facility, the analysis assumes that there is unlikely to be a significant difference in revenues between these facilities. While this is a reasonable assumption, it should be borne in mind that a larger facility will enable access, however occasional, to those touring acts which seek larger facilities comparable to those found in the largest urban centers.

Wherever new facilities are located, any increase in the overall number of seats in the Moncton market will be affected by the limits of discretionary spending in this market. While one facility may not directly compete with another, they all compete for the same entertainment dollar.”

Since the 2009 IBI report, new venues have been added in Moncton – namely Casino NB and the Stade Moncton Stadium. Entertainment and events competition has naturally become much greater in Moncton. For example, Casino Moncton is providing a very comprehensive offering and other venues including the Capitol Theatre have become much more active in their programming.

In 2013, Moncton City Council approved a Request for Qualifications (RFQ) directed to the private sector development community that indicated the Downtown Centre must have a fixed seat count in the range of 7,500 to 9,000 seats which would include club seats, luxury suites, party suites and capacity to add approximately 1,500 additional non-fixed seats, located on the playing surface of the arena for non-sporting events.  As such, the total range of available seats for concert events would be from 8,500 to 10,000.

In March of 2014, City Council determined what it could afford for purposes of the RFP and set the project cost at $95 million (inclusive of HST). This amount was based on its 30-year financial plan that maintains the City’s property tax rate at the current level.  The construction cost per seat would be $12,500 by 2016 dollars and would provide a 7,500 permanent seat facility, and 8,500 seats for concerts/events when using the ice surface for seating.  The construction cost per seat was established by City staff based on analyses of projects of similar scale elsewhere in North America.

Given the expert analysis of the Moncton marketplace, such as the IBI Market Analysis and Feasibility Study and more recent discussions with the Project Proponents and other industry experts, it was clear that a 9,000 seat cap is a maximum for the Moncton market.  The same expert analysis stated that while a somewhat smaller facility will yield savings in capital costs as well as some operating costs relative to a 9,000 fixed seat facility, there is unlikely to be a significant difference in revenues between the two.

Concert promoters and building operators consulted on this project have suggested our market should be able to support a facility capable of selling 8,500 seats for concert events (including ice surface seating).

On February 5, 2014 the City met with representatives from both successful proponents, EllisDon and Bird Construction, who were told that the City could not abandon an existing 6,800 seat facility and build a new 6,800 seat facility. In addition, the new facility needed to be built with the future in mind.  The Proponents indicated that an important part of the design and pricing in such a venture was to find a “sweet spot” in the market with the seat count.  Their preliminary view is that 7,500 fixed seats plus 1,500-2,000 on the ice surface area would provide flexibility for the 8,500 seats viewed by concert promoters as ideal for our concert market.

Moncton City Council wants to build an iconic building in the city’s downtown, one that the taxpayers of Moncton can afford.  If the seat count increases, say to 9,000 fixed seats, the facility could cost $114 million.  Based on the financial assumptions contained within the City’s long-term financial strategy, the City can build a 7,500 fixed seat facility (with 1,500-2,000 additional seating) without increasing the tax rate.  As the seat count increases, both the cost to build and the cost to operate increase as does the tax rate.  As residents, we must carefully consider the tax rate increase associated to a 9,000 or more fixed seat facility.  We have learned from other cities and event centre operators that it is important to “right size” the facility.  Demand creates excitement, sells tickets and appeals to sports franchises, promoters and artists. Empty seats do not.

The RFP proponents will advise the City of their rationale in relation to the seat count for Moncton based on their market analysis and business case, a criterion of the RFP.  Further, no building operator will assume the full business risk of operating the Downtown Centre if they cannot succeed due to an over-sized building.  In that circumstance, the business risk would be assumed by the taxpayers and would likely represent an increase in the property tax rate. The objective is to build a world class entertainment venue with minimum to no risk for our taxpayers as contemplated in the RFP. 

Thus, when considering the Downtown Centre project, it is important to establish the right balance between building for the future, the business risk factor, what the market can support, and what is affordable for taxpayers.

The seat count issue remains an unanswered question, one that will only be answered through the RFP process, expert advice, community input and Council’s decision.

The City of Moncton looks forward to receiving community input from residents on this important question.  You can share your thoughts on the seat count question with City Council in writing (655, Main St., Moncton NB, E1C 1E8);  by email at downtowncentre@moncton.ca; or by posting your comments on-line at moncton.ca  (click on the Downtown Centre icon).

Thank you for participating in the public debate.

Jacques Dubé
City Manager