Icing a deal

The Wellington Dukes hosted a full house when they played a Russian junior team in January.

Cost certainty, ice rates and advertising rights the key issues

The ice plant at the Wellington and District Community Centre will spin back to life next week. By then just two weeks will remain until the opening of the Wellington Dukes training camp.

On Tuesday night Council at last approved the contract but not before effectively removing the cap the team had been seeking.

For the better part of a year the two sides have been working toward a deal to improve the operating conditions for both the team and the County.

The Dukes organization is looking for cost certainty over the five year term. They are also seeking a way to leverage their drawing ability and convert it into a source of revenue for the team. The County meanwhile needs this facility to generate more revenue and activity to offset higher operating costs. It also has an interest in ensuring that the successful junior ‘A’ hockey club remains successful and in Wellington.

When Michael Mulvihill assumed ownership of the team last year, it was in tight financial straits.The operating costs of a junior franchise have risen dramatically in recent years, a situation made worse by the league’s decision to buy out failing franchises.This was done to reduce the number of teams and in turn improve the overall calibre of play. But the cost has caused some teams to reconsider whether they can afford to stay in or take the cash.

Mulvilhill says he wants the Dukes to stay in Wellington and has committed re- sources to ensure the team remains here for at least five years. But he and his representatives have said they need some consideration from the municipality to ensure the viability of the team beyond the five-year commitment. The Dukes have proposed a structure comparable to other agreements that other teams in this league have negotiated with their respective communities.

Specifically, they have negotiated the right to sell advertising in the arena portion of the complex— that is, along the boards, on the ice and in the stands. The deal called for a 70/30 split— the Dukes would sell the advertising, manage the contracts and retain 70 per cent of the revenue, and the municipality would earn the remaining 30 per cent.

This was an easy concession. Municipal staff didn’t want to do the job, and they didn’t do it well. A significant revenue opportunity was being missed. So much so, that even 30 per cent cut of the sales estimated to be generated by the hockey team is likely to deliver more revenue than was expected under County management alone retaining 100 per cent of the proceeds.

Other key points in the agreement included moving the team’s practice times earlier in the day, backing out of prime time to enable the municipality to generate greater revenue from this time slot.

The agreement also calls for a five per cent limit on annual increases in ice rental fees. Some on council have questioned certain provisions of the deal.

Some are worried about signing a five-year deal and committing a venue that has not yet operated for a full year and whose costs are not fully understood. Some on council are seeking either a shorter deal, the elimination of the ice rental cap, or alternatively a clear ability to review the terms of the agreement each year. Others worry the advertising deal may by too rich for the hockey team.

Some worry about both.

“We are the ones with the operating costs,” said Robert Quaiff, councillor for North Marysburgh.“ But we are going to hand over $28,000 in revenue? What about the ad revenue at Picton? I would expect if we do this deal the Pirates will be knocking on the door looking for a similar deal.”

Others worry, rightly, about the lost earning opportunity in all County venues.

“We need someone to go out and market these facilities,” said Kevin Gale, councillor for Sophiasburgh. “Not just advertising but the space and other revenue opportunities.” Jim Dunlop, councillor for Wellington, said he would agree with Gale—except it isn’t being done, nor is there a plan to do it.

“I would prefer our staff did this job too,” said Dunlop. “But it wasn’t being done.”

He also addressed those who are looking to the hockey organization to pay more because operating costs might be greater than expected. “We need to find more users and rent these facilities more,” said Dunlop.“Rather than burden existing users with more costs—we need to do our best to ensure our facilities are being used to their fullest.”

Council discussion drifted, at times, toward policy and wish lists. The issue at hand, however, was a tentative contract that had been hammered out between the hockey club and municipal staff. In the end council instructed its staff to go back to the bargaining table—they wanted the 70/30 deal changed to 50/50 and they want clear ability to review the terms of the contract on an annual basis.

The Dukes General Manager Marty Abrams hinted the structure of the revenue sharing deal might be up for negotiation—but was puzzled over the implication of an annual review in which all the terms were on the table. “It cuts both ways,” said Abrams. “If in a year’s time we (the Dukes) want to do something completely different and contrary to the contract—is that contemplated in this new request?

“Any changes made during the five years would have to be mutually agreed upon—otherwise what is the meaning of a contract?”

Nevertheless the requested changes were agreed upon and the revised agreement presented to council on Tuesday evening.

Some councillors attempted to remove a five per cent on ice rental increases from the deal but were turned back. But they were successful in making ice rates part of the annual review—essentially gutting the cap.

In a statement the Dukes general manager said, “”We are very disappointed in the Prince Edward County council’s decision last night regarding our proposed five year arena contract. Nevertheless, the Wellington Dukes will continue to prepare for the upcoming season with every intention in icing the best possible product for our loyal fans.”