403-527-5773

Economic & Other Impacts of Arena Closure

Dear Mr. Mayor Clugston & Honourable Councillors of Medicine Hat,

 

It has come to my attention that there is a decision in tomorrow’s City Council to get rid of Arena at the end of this hockey season. If I could for a moment describe to you why such a decision would be such a bad financial decision for our city.

As a business owner, I can easily see why someone might think that saving $700 000 in Arena operating costs per year plus the $2.5 million in 10-year capital costs would be a good thing.  However, would you do it if it meant losing over $24 million in economic activity in our city over the same 10 years?

In addition to many of my other volunteer roles, I am also the tournament director in Medicine Hat Minor Hockey.  Over the past 2 seasons, we’ve been able to grow our tournaments thanks to the availability of the extra ice that presently exists.  Here’s what you need to know.

 

1. Economic Impact of  Our Winter Tournaments in Hockey and Ringette

Prior to 2014-15, tournaments in Minor Hockey & Ringette were positioned as such:

  • We had approximately 63 visiting teams come to Medicine Hat in the Winter to attend.
  • Mr. Varga (who was our GM at the time) is very aware of the difficulty of scheduling large tournaments because of the ice availability.  This is why he only let me do one.

 

This year (2016-17), tournaments in Minor Hockey & Ringette will be as such:

  • We will have approximately 191 teams visiting our city this winter (not including spring tournaments)

 

This means that:

  • We will have 3315 visiting players coming to our city
  • We will have 701 visiting coaches and scouts coming
  • We will have 4302 visiting parents & siblings
  • We will have a total of approximately 10646 extra people coming to our city who wouldn’t be coming otherwise
  • $2 915 611 generated in economic activity due to the extra people in Minor Hockey alone (Calculated for Canadian Sports Tourism)
  • $3 894 277 generated in economic activity because of Ringette & Minor Hockey.
  • These numbers could even be bigger however the city doesn’t have enough weekend ice to make this work.  So how does it help to reduce an ice surface?

 

In total (without even expanding tournaments) the net tournament economic revenue generation would be Close to $39 million over the course of 10 years.

According to the paper, the total costs to run the Arena are $9.5 million ($700 000 per year + $2.5 million is capital expenses) over 10 years.

If you do simple math, why wouldn’t you spend $9.5 million over 10 years if you can generate $39 million?

Please keep in mind that these numbers don’t even include figure skating competitions/ winter games and other events like sledge hockey.

Closing it would hurt so many businesses who already are finding it tough in our economy.  Let’s not add to the problem by voting to shut down the Arena.

 

2. Problem with Canalta Centre

I know that everyone thinks that we can just take the Arena ice and move it to the Canalta Centre.  However, we can’t use the ice whenever we want to. On Tiger Game Days (36 per year) the ice is not available.  In addition, it is not possible to run a weekend tournament at the Canalta Centre because of other events and the the WHL teams needing to practice on it. So the Canalta centre can’t give us preferential ice in order to run our tournaments to the extent where they generate revenue for our organization and especially our city.  In short, this is not even close to an even swap.

 

3.  Our Organization is Growing

Thanks to the less expensive ice and better time schedules, our Minor Hockey association is growing.  In Alberta, virtually every other hockey organization lost members this year except for us and we are very proud of this.  This is due to a number of factors but especially ice costs and ice availability.  Our forward thinking city officials kept the ice costs low and availability high to promote more children and adults to increase their physical literacy skills by learning a sport on ice.  If the usage is going up, let’s not make any rash decisions.  A higher ice fee is difficult enough.

Our tournaments are also growing.  Due to the success of our tournaments last year, there are over 600 visiting teams trying to get into our tournaments.  Where else in our city do we see this wanting to visit Medicine Hat?  We can make this even bigger for our city than it already is.

 

4.  Promotion/Branding of Our City By Being Able to Run These Larger Tournaments

We have ordered 1800 custom made Olympic size medals promoting Medicine Hat that will be used for our tournaments.  These are better than any other medal given out in Western Canada for tournaments.  Every tournament participant (in the non-Rep levels) gets this and from past feedback, the kids are amazed that we can do this.

We also this year have ordered 1800 custom made & individualized scarves (shirts were done in the past 2 years) that will be given to all of the participants.   Virtually nobody does this but us. This makes us proud that we not only brand our organization as one of the best in the country but also our city as one of the best in the country.

This all costs the taxpayers nothing and yet promotes our city to so many visiting families.  I don’t know of any other organization that does a better job in city promotion, all with a bunch of volunteers.  What I’m trying to get at is that we are doing promotion for our city and there is nothing the city has to do but keep our rinks open so that this continues.

 

5. It is Difficult to start at 6:00am in the Morning

I’ve heard the argument that we can just get teams to start at 6:00am for hockey practices, etc if we shut down a rink.  If this were true, why did we build an indoor soccer facility and not start getting teams to start at 6:00am at the fieldhouse?  The reality of today’s society is that many wouldn’t play soccer if this was the case.  So why do hockey, figure skating , and other rink sports get penalized?  If this happens, this will absolutely hurt our numbers as more people will choose a different sport that doesn’t have such drastic time commitments.

 

6. Minor Hockey & SEAC Just Renovated and Moved Into the Arena

Medicine Hat Minor Hockey (& SEAC)  just moved into the arena last year and spent tens of thousands of dollars to renovate.  All of this ends up being a huge waste of time and resources if we have to move out so soon.

 

7. Higher Costs to Play Hockey in Medicine Hat

When I took over as tournament director, our tournaments made us $15 000 in net profit.  In 2 short years, we will have boosted our net profit to close to over $100 000.  With it being a tougher time  to get sponsorship in our city, this revenue is crucial to keeping our costs down.  By reducing a rink (and thus cutting tournaments by at 2/3) this would mean a significant decrease in tournament proceeds.  This means drastically higher fees in an economy that can’t support it.

 

In Conclusion

What needs to happen is actually the opposite of what is being proposed to council.  We need to promote our organizations to do exactly what Minor Hockey and Ringette are doing.  Why can’t we have more of “Growth Mindset” in our community to find ways to make money with what we already own instead of the “Destruction Mindset” that is being proposed to council?  Use our facilities to create a better financial future for our city and not the opposite.  I urge you at the council meeting to vote “NO” to the Arena closure.  Other solutions could be to let the Hockey Hounds Arena (which is a much worse Arena) go dark a few days during the week if necessary and then assess the impact.  Whatever you do, PLEASE DON’T TRAVEL DOWN A PATH OF NO RETURN. 

I realize that I’m “just a dentist” (to quote the movie The Hangover) but I also do know a bit about math which is why I hope that my math will help council see an angle that you may not have considered until up to now.  I hope that this inside information will make council reconsider any attempt to shut down our Arena. 

I can be reached at 403-580-1355 if you have any questions (I should be able to answer as long as I’m not with patients).  I have spreadsheets to support my numbers and you are welcome to see them.

Sincerely, 

Dr. Nick Douvis

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