..It Comes in Threes in Nanaimo

Posted by Ron Bolin on January 15, 2017 in CITY FINANCE, CITY GOVERNMENT, ECONOMIC DEVELOPMENT | 5 Comments

By David Brown: January 15, 2017

Good luck comes in threes. Bad luck comes in threes. Municipal mega-projects also come in threes
– at least in Nanaimo.

Nanaimo has done the Port Theatre and the Convention Centre.  Now the Make Nanaimo Great people are pushing for a multiplex.

What is a multiplex? It is a hockey arena which can also be used as a venue for other “indoor” sports and for concerts which require a larger audience than can be accommodated by the Port Theatre. But above all else it is a hockey arena.

Why do we need a multiplex. Like with a bad sequel movie you have already heard all the lines. A multiplex will revitalize the Downtown; it will break even or better; it will have a multiplier effect by generating all sorts of additional economic activities; it will bring big concerts and exciting sports events to Nanaimo – including most importantly that coveted WHL team. A consultant has said this is all true.

Nanaimo’s first big municipal project, of course, was the Port Theatre. It came with a vision of happy theatre goers sipping their lattes (pre or post event) at a downtown coffee shop or dining at a downtown restaurant. The spin off effect. It was within a hop, skip and jump from the major downtown commercial street (Commercial Street) so it would be an inevitable revitalizer.

The reality has been somewhat different. It has probably had not had a big impact on downtown business – most retail stores are closed when the Port is being used and theatre goers tend to drive in from suburbia and return when an event is over. Nanaimo might get some acts which it wouldn’t otherwise but it is still a venue choice with location and revenue limitations. It requires subsidization and then there is the inevitable demand for new capital funds for upgrades and expansions. But the Port has one saving grace – Bob Bossin can no longer sing that unlike yogurt Nanaimo has no culture.

Number 2 Mega-Project has been more problematic. Interest payments on capital costs and operational subsidizations will stretch interminably into the future. Months go by without any major conventions. Yes it is nicer place perhaps for a company’s Christmas dinner but what is really happening here is that a subsidized facility is taking business away from other local operations, both profit and non-profit. The Conference Centre’s store space is still not fully leased as high cost (unsustainable) space replaced low cost space. All in all, it is questionable whether it has had a net positive effect on the revitalization of Commercial Street.

The two identified sites for Number 3 Mega-Project are both blocks away from Commercial Street.  It is extremely unlikely that a multiplex would have a positive impact of downtown revitalization. What about all the new economic activity it will generate? Study after study has shown that stadiums or arenas do not generate much new economic activity – they simply redistribute the entertainment dollar. People spend money going to a rock concert or a hockey game that they would otherwise have spent going to a restaurant or having an evening out at the neighbourhood pub. The proponents of a Conference Centre could at least claim that it would bring delegates, living in Calgary or Vancouver to the City but it is unlikely that a multiplex will draw people beyond Greater-Nanaimo.

It is suggested that the Kootenay Ice currently based in Cranbrook might relocate to Nanaimo. The Ice are struggling in Cranbrook with an attendance per game averaging about 1600 which is down from over 3000 in past years. The Ice would be an odd team for Nanaimo since they play in the prairie division (Eastern Conference) of the WHL. Is there a natural rivalry with Swift Current or Brandon? There would be huge travel costs.

The ideal attendance level for a WHL team is said to be around 4,000. Would a WHL team attract that kind of support in Nanaimo? The Junior A Nanaimo Clippers get about 1200 (down from about 1800 at the peak) fans in the 3000 seat Frank Crane Arena. A multiplex would offer nicer seating but also higher ticket prices. Unlike Swift Current Nanaimo is not really a hockey town. There are many competing teams sports that have a significant following on the Island – football, soccer, basketball, several varieties of baseball and lacrosse, field hockey, rugby, volleyball … even cricket. There are lots of people who would prefer to take in their favourite sport from the comfort of the living room couch. There are others who prefer dance, theatre, music or art. Nanaimo hockey enthusiasts will also continue to choose to spend their money crossing the pond to take in a Vancouver Canuck game.

What is the likely ticket support for the Nanaimo Ice? A flourish at the beginning but then a gradual decline into a level which will be financially problematic. So inevitably the private owners of a WHL team will require very favourable terms from the owners of the multiplex; i.e. subsidization.

As to an Elton John concert coming to Nanaimo, forget it. Ticket prices for multiplex events will have a low ceiling in this not very rich town; i.e. you keep ticket prices low in order to get a full house or you have an audience of a thousand or so. Much as we love Nanaimo it is not exactly a prestige venue for a star performer. And for various acts once again one of the Conference Centre’s big problems – Nanaimo is an awkward place to get to and get from – unless you are already starting from Vancouver Island.

Now it would be all well and good if private business built and operated a multiplex but it is already apparent that is not the direction of this project. It is obvious to private investors that a multiplex (for them) would be a highly speculative venture – like the Conference Centre a business that does not even break even on operating costs, let alone generating a return on capital. So once again the mark is the good old City of Nanaimo.

End