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Anger over tax dollars being used in Brampton hockey team bailout

CRISTINA HOWORUN | posted Monday, Jul 31st, 2017

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The Brampton Beast is offering hockey fans a chance to own part of the franchise.

“It’s something very unique. I’m from the Toronto area, I don’t think there’s ever been a chance to own part of a hockey team,” explains Cary Kaplan, a part owner and the team’s general manager.

“You can’t buy the Toronto Maple Leafs as an individual or even as a group.”

“Valuations for teams like this are in the $5-10-million area, for the whole 100 per cent. It’s still a lot of money to buy even one share, we’re looking for people to buy five or 10 per cent.

A 10 per cent stake in the East Coast Hockey League (ECHL) team could cost you $1-million, but Brampton taxpayers are already footing part of the bill – whether they like it or not.

“We have a situation where gains are being privatized and risks, socialized,” explains Brampton Councillor Gurpreet Dhillon.

Last year, Brampton council agreed to give the club $500,000 a year for three years, in exchange for sponsorship and advertising opportunities.

“Council gave away a million and half dollars to a private, for profit organization that had poor planning and made poor business decisions and the evidence is clear that the team will likely never make money,” Dhillon adds.

In 2016, the Beast went to Brampton Council asking for an immediate cash infusion of $750,000 for operating costs, as part of a deal to cover the team’s projected losses of up to $1.5-million. The club had lost close to $4-million since 2013, when it launched in Brampton.

A staff report suggested the deal wasn’t in the best interests for rate payers, saying: “The purpose of the proposed partnership for 2016-2017 season appears mainly to be a vehicle or mechanism for City funding to cover the Club’s anticipated operating losses of up to $1.5 Million.”

“The Brampton Beast’s information does not show evidence of achieving financial break-even based on the key drivers of revenue already within the control of the
Club, i.e., tickets and attendance, suite licence, advertising, pouring and naming rights,” reads a report signed by Brian Rutherford, the City’s Director of Business Services.

“Based on the available information, it appears that funding losses in one form or another will be required for some time to cover the Club’s expenses,” he adds.

Despite city staff reservations, Council voted overwhelmingly in favour of doling out the cash – only Mayor Linda Jeffrey and Councillor Dhillon opposed the bailout.

“Bailout is the wrong word,” explains Kaplan. “It’s just like the City buys a park or community centre. Cities also invest in local hockey teams in every single city,”

And Brampton has invested. The City has invested about $20-million in the Powerade Centre, where the Beast plays. And while the Beast is outselling its predecessor – the OHL’s Battalion – and has seen sales growth year-over-year, it’s still only selling about 55 per cent of its tickets, and a staff report suggests only half of those seats are actually filled come game-time.

“We feel like we are getting there,” Kaplan says of attendance at the 5,000 seat arena. “Two thousand more people in an area like Toronto and Brampton shouldn’t be too hard to get. We think this community initiative will help us fill the last few seats.”

But Dhillon says residents are questioning why tax dollars went to a private company in the first place. And now that the club is selling shares, shouldn’t the City get a stake equivalent to its investment?

“People I spoke to are pretty angry. Because that $1.5 million essentially has gone nowhere. It’s gone to a team that’s selling a 50 per cent stake. It could’ve gone to youth programs, senior programs, drug addiction, but now we’ll be seeing nothing,” he says.

“All we did in Brampton – just like in Toronto, North Bay, Belleville and everywhere else – is say ‘we’d like you to partner with the team’. So they’re a sponsor,” Kaplan explains.

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