With interest rates destined to rise, the cost to the City of Ottawa for renovating Frank Clair Stadium will end up being a financial “bullet in the head,” insisted Capital Ward Coun. Clive Doucet Thursday.
“If people still want to put that bullet in the head, they have the right to do that, but they should know that they are pulling the trigger,” said Doucet at an event to discuss the cost to the city for renovating Lansdowne Park.
Ottawa is paying the full cost of building the stadium, and will have to take out a $116.9-million loan over 40 years. If they can get an interest rate of 5.35 per cent, the city will end up paying $167 million in interest alone.
Most stadiums in North America are funded by a mixture of public and private funding, said Sprott School of Business MBA program director Ian Lee.
Lee predicts that by the time the city takes out its loan, interest rates will have risen steeply and the amount the city will repay will be much higher.
The Ottawa Sports and Entertainment Group guaranteed that the new Ottawa football franchise will operate for five seasons, bringing in an estimated $56.8 million.
“If we’re only guaranteed five, I’m going to assume the stadium only has value for five years,” said Lee. “That works out to a subsidy of $6.4 million per game by the 800,000 people of Ottawa. It just seems like it could be a lot cheaper if we put fans on a Greyhound bus to Toronto or Montreal to watch a game.”
The Ottawa Sports and Entertainment Group would not be involved with this project if they didn’t think the team would be around longer than five years, said spokesman Kevin McCrann.
“This is Ottawa’s world-class open-air stadium,” McCrann said. “It will host Carleton University football games, soccer games, concerts. It’s a public facility.”