Leave it to local government to find a way to lose money on something as near and dear to Canadians' hearts as professional hockey.
Abbotsford's long, painfully expensive dance with the American Hockey League (AHL) is finally over, but taxpayers there will be picking up the pieces for years to come, after subsidizing the Heat hockey team by at least $15 million in just five years. Thankfully, B.C. now has an auditor general for local government, and it couldn't be more needed in Abbotsford than right now.
Back in 2009, desperate to find a tenant for their white elephant of a brand new arena, Abbotsford city council signed a 10-year sweetheart deal with the billionaire owners of the Calgary Flames. The Flames moved their AHL affiliate to Abbotsford, with taxpayers covering any financial losses.
And the losses quickly mounted in what may be the worst example of a municipality handing out corporate welfare in B.C. history.
Abbotsford taxpayers cut the Flames cheques totaling $7.2 million to cover operating losses over the past five years. On top of that, taxpayers paid another $5.5 million to escape the final five years of the contract, which Abbotsford officials believe to be roughly 50 per cent of what they would have paid if the contract had run its course.
Amusingly, Abbotsford officials tried to pass off that $5.5 million as a "saving" to taxpayers -- but that spin fell flat.
How bad was the taxpayer payout? During the Heat's five-year run, the Canadian Taxpayers Federation calculates every attendee benefited from a $21.48 taxpayer subsidy -- every fan, every seat, every game, for five expensive seasons.
To get ready for the Heat in 2009, taxpayers paid $2 million for a fancy scoreboard and video screen
to meet AHL requirements. Abbotsford's mayor at the time, George Peary, ludicrously claimed the scoreboard would be a "revenue-maker." Clearly it wasn't.
That same year, Abbotsford taxpayers also shelled out $350,000
to redesign the brand-new arena's dressing rooms and add a kitchen and hot tub for Heat players. If only they had installed a movie-like hot tub time machine, Abbotsford taxpayers could go back and stop this nonsense from ever starting.
At the time, Abbotsford CAO Frank Pizzuto claimed the Heat would be a "significant economic stimulator which will reap benefits for the community."
Pizzuto, who abruptly left Abbotsford in 2012 with a $321,000 severance package
, was dead wrong. The hot tub renovations, scoreboard upgrade and loss covering runs the total taxpayer bill to more than $15 million -- not including arena construction costs, operating subsidy or management fees.
That's a lot of money wasted by a community that is struggling with infrastructure deficits
, the province's 4th highest debt load
, and homelessness
Like so many corporate welfare schemes, Abbotsford over-promised and completely under-delivered. When the team arrived in 2009, then-mayor Peary lavished praise: "Abbotsford is grateful to the Calgary Flames... for the tremendous effort to bring the American Hockey League to our building." Five years and $15 million later, Abbotsford taxpayers are just as grateful to see them go.
The law governing B.C. cities, the Community Charter
, was supposed to protect taxpayers from this type of corporate welfare. It specifically forbids councils from giving any "grant, benefit, advantage or other form of assistance to a business," yet the Heat collected cheques for five full years.
Some good can still come out of all this wasted money. The auditor general for local government, Basia Ruta, should conduct an audit into Abbotsford's books and give taxpayers the full picture of how much the Heat deal cost, why the Community Charter
rules were not enforced, and what lessons other local governments can learn from this debacle.
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