What Lansdowne 2.0 is Really About, Explained in One Chart

Bailing out OSEG through a 1% tax increase and the chance to build luxury condos on prime public land.

If you think that spending $493 million to upgrade the Lansdowne stadium should be put to a citywide referendum, sign the petition at the button below.

Lansdowne was supposed to make money for the City and the Ottawa Sports and Entertainment Group (OSEG). As part of the partnership, OSEG assumed the risk of managing any losses.

The real reason that OSEG has been pushing to redevelop Lansdowne is because the partnership has been a financial failure.

This can be summed up in one chart.

Lansdowne loses OSEG about $10 million a year

That’s it. The Lansdowne 1.0 model got it wrong. We now know the OSEG strategy of focusing on big events cannot sustain the Lansdowne site.

Plain and simple. Failed business model.

Doubling down on a failed strategy

Which makes it baffling that City Council would support a Lansdowne 2.0 that essentially does more of the same.

Lansdowne redevelopment is slated to cost $493 million. Subtract the $51 million of your tax dollars that will be used for upfront payments, as well as the $29 million in “air rights” received from allowing one lucky developer build luxury condo towers in the middle of the park, and tax payers are on the hook for about $22 million per year in debt payments for the next 40 years.

1% Lansdowne tax

That’s equivalent to a 1% property tax increase for Lansdowne for the foreseeable future.

OSEG would pay $500,000 in rent each year and there would be a ticket surcharge that brings in $700,000. But those barely make a dent in the annual debt payments of $22 million.

And those luxury towers would contribute about $3 million in annual property tax revenue that could be used, unusually, to service debt.

But whichever developer wins the “competition” to secure the air rights (spoiler alert: it will almost certainly be Minto, the main OSEG partner!) will not build until market conditions are prime to sell their condos at maximum value. The indication provided to Council was that it could be a decade before those towers are built, and any property taxes realized.

Revenues from the Lansdowne 2.0 partnership are supposed to contribute about $9 million a year, which would be used for debt servicing, but those revenues are a trickle until 2050.

Back a decade ago, OSEG’s business model showed that Lansdowne 1.0 would create $100 million for the City. Of course, that never happened. The City never got a penny.

A 1% Lansdowne tax is the only thing that’s guaranteed with this vanity project.

It’s all about the towers

Here’s my theory. Lansdowne is actually all about building the towers.

The OSEG partners have shown that they’re not particularly adept at managing a multi-use retail and sporting site, having lost over $100 million already.

But the OSEG developers are good at building homes and towers.

Whichever lucky developer wins the air rights to build the two towers (spoiler alert: I’m putting my money on Minto!), stand to make $70 million or more in profits, assuming a 15% profit margin on 770 units selling for an average price of $600,000.

The profit on those towers goes a long way towards wiping out past losses.

Runaway costs

We’re waiting on a new Lansdowne Partnership report, for the 2024 fiscal year that ended in March. We’ll see how much more the partnership lost last year.

At some point, the City will need to update Lansdowne project costs. Here is what we were told previously:

• May 2022: $332 million

• October 2023: $419 million

• June 2024: $493 million (Auditor General’s estimate)

• Today: ?

Time to shelve this vanity project

With Ottawa residents facing large property tax increases next year, it’s absurd that we are considering spending half a billion dollars on upgrading a sports stadium.

It’s time for Ottawa City Council to cancel this bad idea.

At a minimum, Ottawa residents should decide by referendum whether we want to spend $493 million on upgrading a stadium.

If you agree, join over 2,500 other people who have already signed the Lansdowne petition calling for a binding citywide referendum.