HARTFORD, CT - In Ballroom/Meeting Room Eleven inside the Connecticut Convention Center, the future of the XL Center hung in the balance as the Capital Region Development Authority, (CDRA) made its decision to switch the management company from AEG Management of CT, a part of Anschutz Entertainment Group (AEG) to Global Spectrum of Philadelphia. In a unanimous vote, the CDRA awarded Global Spectrum a 10 year contract to run the XL Center and a seven year contract to manage Rentschler Field.
The CDRA made it clear that they believe entrusting the XL Center to Global Spectrum will preserve the forty year-old structure for the next ten years.
There were three finalists under consideration to run the XL Center by the CDRA. Global Spectrum of Philadelphia, who won the bid, AEG Management of CT - the building manager for the past six years – who finished a close second and there was a bid by Bushnell Management Services, a combo bid with LAZ Parking, that finished a distant third.
Four parts of the ten-point criteria gave Global Spectrum the edge. Atop the list was its desire to secure an American Hockey League (AHL) franchise to be an anchor at the building. Currently the New York Rangers own that franchise, the Connecticut Whale, but their lease is up at the conclusion of the season and the AHL made it clear last week during the business portion of the All-Star Game festivities that they are assisting the Rangers in finding alternatives to Hartford.
“(Global Spectrum has) until March 1 to secure an AHL team,” Michael W. Freimuth, Executive Director of the CRDA said. “They have the term sheet from MSG (Madison Square Garden) and that reflects the last best offer from Global and they have the last terms sheet from the Rangers.
“The AHL has indicated they would like the Rangers to stay here; they like the Hartford market. They want to retain the Hartford market and if the Rangers opted to leave, the AHL said it would work with whoever we selected – either AEG or Global to secure another club. There are two other clubs I have spoken with, that would like to have this market, but they cannot come here until the Rangers say there out.”
AEG, likewise presented to the CDRA that they could get another club, but they are prohibited from owning another team in the league as per league by-laws. AEG owns the Manchester Monarchs.
Global Spectrum also operates the MassMutual Center, home of the AHL Springfield Falcons. They also run the Hamilton, Ontario based Copps Coliseum, the home of the AHL Hamilton Bulldogs. Global Spectrum also manages the Abbotsford Sports Complex where the Abbotsford Heat play their games and they were recently awarded a deal to run a new arena in Laval, Quebec. There is talk that building may be a potential new destination for the Montreal Canadians AHL affiliate the aforementioned Hamilton Bulldogs.
Freimuth explained what clearly became a key element in awarding the deal to Global. “AEG said they had two clubs they have spoken with besides MSG. I said, ‘Lets not rule out the Rangers.’ One issue in the Rangers’ deal is that it’s one of the most expensive lease structures in the league according to the AHL. I got a letter from (AHL Commissioner and CEO) Dave Andrews. They said they want to stay in Hartford. They like Hartford and don’t want to give up on the Hartford market. We feel that the deal negotiated by the Baldwins (Whaler Sports and Entertainment – WS&E – nearly three years ago) operated the franchise (business and marketing aspects only) from the Rangers was not sustainable and the most onerous (lease) in the league. It was not advantageous to the team operation and the team has been compromised by that deal. By extension so has the building because more money goes to the team, the less money there is for the structure.”
The lease, for a staggering $25,000 per game – triple what an average AHL team pays – caused WS&E to run into serious financial problems and failure to pay any of their vendor contracts and fell into debt in excess of $3 million dollars. Despite the blizzard of lawsuits against WS&E (more than 30) in which summary judgments were entered, that entity is technically still in business and has not filed for bankruptcy protection.
The other key element tipping the scales in Global Spectrum’s favor for the winning bid was their commitment of $2.75 million in out-of-pocket expenses up from an initial offer of $1.6 million in year one while AEG stayed at $1.5 million. Global Spectrum also committed to another $8.3 million over the ten-year lease.
Freimuth, was clear that portion of the deal was needed to help with the obvious upgrades needed to maintain the nearly forty year-old building in the near term. “I’m able to drive $20 million (of bonding money) on top of the $2.75 million. We can go into the ice-making system (chillers), the elevators, the escalators (and) the bathrooms. They’re tired, they’re fatigued. Some of the pipes have narrowed down to nothing (effecting) corrosion and water pressure; things nobody wants to think about. I want to see this perform one year before I pledge to do too much.”
The investment capital number would be able to put him in a better position in seeking the bonding for potentially $20-$30 million and to not going directly into general funding.
“I could get $20 million and it doesn’t come out of Joe Taxpayer and the alternative is Joe Taxpayer writes out a check and they may or may not (like it).”
Global Spectrum will be faced with reversing a serious issue of declining attendance that’s gone on each year under the stewardship of AEG and Northland Corporation. That partnership dissolved into a nasty divorce after behind the scenes acrimony came to a head just three years into the six year deal. Add in the problem caused by Northland’s imploding financial situation that came at the height of the early part of the national recession. Four of Northland’s major properties fell into foreclosure and they still retain the title on the atrium portion of the XL Center through an unpaid note that matured at the end of last month.
“All three bidders were frustrated by the Northland situation as we are,” Freimuth said. “We just have to keep getting at it.”
But Freimuth and the CDRA had more issues to contend with in coming to this decision. “Getting more people was a part of the criteria. How you do the ticketing? How you do the marketing? How you secure and retain (fans and business)? What do you do to retain new clientele? One of the frustrations was – it was the same old stuff. One of the issues was could you kick it up a notch? People will come if the building is good. If the team is good they will come and if the team isn’t good your not gonna have (say) restaurant (business).”
Other improvements that Global Spectrum is going to work on include using the Western Convention Hall for events for fans and sponsors, an idea they included in their proposal six years ago,. They also plan on offering special lower loge seating and increasing and improving signage and video for the building.
“Have the hockey, have the activities for the people,” Freimuth said, “But put out a party people want to go to. So it’s just not standing in line on a cold night for a beer or box of popcorn.”
Another deciding factor in driving this decision Global Spectrum’s way was uncertainty surrounding AEG. It’s been in the news for some time now that AEG is on the market and with its entire arena management and sports team ownership worldwide looking for new ownership.
“It did come up and was a factor – but not the sole one. AEG did provide a termination clause if they weren’t happy with a new team or other elements of the deal. I don’t think it was deciding issue,” Freimuth stated. AEG offered a five-year deal with a renewal five-year option after the fifth year of the contract.
There was no discussion apparently of a return of the NHL nor was it a factor in any part of the deliberations for a new operator.
The Bushnell Group, who currently run Rentschler Field, was compromised of some big hitters in the Hartford community. However, they were lacking in several key areas and only scored ahead of Global and AEG is community involvement and awareness.
“XL has a certain sort of international and national flare that Global and AEG had the business and network contacts and Bushnell didn’t,” Freimuth said.
Bob Crawford, a former Hartford Whaler and New Haven Nighthawk and an Owner/Operator of three hockey rinks in the state, a junior hockey team and who held a brief two week tenure as VP/COO of the Connecticut Whale, was part of the Bushnell Group and was disappointed and took the results like a player who’d lost a playoff series.
“We’re local guys. We thought we had something to offer. Obviously, they had another opinion,” Crawford said. His group was eliminated from consideration after the first round of scoring the finalists.
So…a new era begins – again.
The next big announcement coming for Hartford hockey fans will come around March 1st should Global Spectrum secure the Rangers AHL affiliate in Hartford. THAT will be a critical first step.