Current Lease Would Keep Blue Jackets In Columbus

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Nationwide Arena(Photo: Steve Grant (flickr))
Nationwide Arena(Photo: Steve Grant (flickr))

The prime reason behind the city and county’s planned purchase of Nationwide Arena is to keep the Blue Jackets from leaving. The team says its current lease with the Arena is not sustainable. But WOSU reports a provision in the team’s current lease says the team can’t go anywhere.

The Blue jackets say they are losing 12 million dollars a year because of the team’s lease with the arena, and that can’t continue. That has officials like Mayor Michael Coleman worrying the Arena District’s prime tenant will skate out of town.

“Remember City Center? It’s like saying ‘Remember the Alamo?’”

So to keep the team, the city and county would use casino tax money to buy the arena. The Blue Jackets would get free rent. In return, the team promises to stay in Columbus until 2039.

But the Jackets’ current lease with nationwide arena prohibits the team from leaving. A provision in the lease says the franchise cannot apply to transfer to another location or enter into a contract that would move the team to an arena other than Nationwide Arena. The provision would also apply to any new owner if the team was sold.

Attorney John Rosenberger brokered the deal for the city and the county. He said these kinds of provisions are common, but likely would not hold up in court.

“Even if it could be enforced and the result was to make the team insolvent it would put you into a bankruptcy court where words don’t count like they used to. So I think the conclusion this is a lead pipe, cinch winner for Nationwide and the Blue Jackets, it’s just not a good conclusion,” he said.

The Franklin County Convention Facilities Authority, would control the arena. Its head, Bill Jennison, agreed the stipulation would be difficult to enforce when a company is in financial trouble.

“You can get maybe one to two years of rent out of an entity that’s probably all you’re going to get. You can’t force somebody who’s losing money to stay over a long-term basis if they don’t have the resources to do that,” he said.

So how’s the proposed deal any different from the current lease? What would keep the Blue Jackets from leaving once the facilities authority takes over ownership? Rosenberger said a stronger agreement and liquidated damages. In simple terms, millions of dollars in fines.

“It starts out causing the Blue Jackets to be liable to the CFA for $36 million and burns off over time and reduces. And because we’ve agreed to the damages we have certainty, if you will, and we also have a disincentive for somebody to breach and leave,” Rosenberger said.

The $36 million penalty decreases over the term of the agreement. And there’s a chance a future team owner desperate to move the Jackets would write off the penalty as part of the cost of re-location.

  • Growlertdi

    Perhaps if the team was any good, and/or the ticket prices lower people would come there with their families and spend money so the team wouldn’t lose $12 million a year… I sure miss the old Cooper stadium. Large families could go there and not have to spend a fortune and have a good time.

  • Sky

    Didn’t we vote (several times?) to not use tax money to support the Blue Jackets and their arena? Even if the tax money in question is “new” money from the casino I would be doing this. Let em leave.

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