The return of Major League Baseball to Montreal: a viable project
Dec 12, 2013, 10:30 ET
MONTREAL, Dec. 12, 2013 /CNW Telbec/ - Following a thorough analysis of the results of a feasibility study, the group comprised of the Board of Trade of Metropolitan Montreal (BTMM), the Montreal Baseball Project (MBP), EY and BCF LLP are pleased to announce that the project to bring a Major League Baseball (MLB) team back to Montreal is financially viable if a new stadium is built near downtown.
"Based on several realistic assumptions, including broadcasting revenues and ticket sales similar to MLB averages, baseball's return to Montreal is definitely feasible," said Warren Cromartie, President and Founder of the Montreal Baseball Project. "Keep in mind that Montreal is currently the largest market in North America without a Major League Baseball team."
"The feasibility study shows that Major League Baseball can be profitable in Montreal," said Michel Leblanc, President and CEO of the Board of Trade of Metropolitan Montreal. "For the project to now become a reality, we need private and public champions to stand and commit to working on it. The road will be long, but we've successfully completed an important step."
The total cost of this project is estimated at $1.025 billion, which includes $500 million to build a new stadium and $525 million to acquire an existing team. It's also important to note that the majority of MLB teams use a hybrid funding model that requires both private and public involvement. "According to this model, the team owner typically funds 67% of the project, or $690 million, while government funds 33%, or $335 million," said Michel Leblanc.
"The amounts required are clearly significant. We estimate, however, that this project can offer private investors an interesting business opportunity and satisfying returns, especially if they can combine this asset with sports content broadcast activities. Furthermore, to the extent that the government gets involved, it would recover its investment in eight years through the QST on stadium and team sales activities, income taxes paid by companies and workers involved in the baseball team project, as well as taxes induced by them, on top of taxes on players' salaries. Once its investment is recovered, the government's cumulative earnings are estimated at $1.188 billion for the following 22 years," said Michel Leblanc.
"The economic benefits of this project would be significant, as in addition to creating thousands of jobs to build and operate the stadium, it will have a positive impact on Quebec's GDP," said Michel Leblanc. In fact, according to the Conference Board of Canada, the impact on the GDP would be $130 million annually during the construction of the stadium, and $96 million when it's in operation.
A new stadium near downtown Montreal
According to an analysis of MLB trends and the opinion of architectural firms Populous and Provencher Roy, building a new stadium near downtown would be the best option for Montreal. This would ensure the stadium is easily accessible by public transit and reach more business clientele. "Three of the sites that were studied meet our criteria: the land adjacent to the Bonaventure Expressway, the Wellington Basin, and the area around the Montreal Children's Hospital," said Sylvain Vincent, Managing Partner for Quebec at EY. "What's more, building a stadium will have a positive impact on the urban development of each of these locations."
In addition to having the capacity for approximately 36,000 people, the feasibility study shows that the new stadium will benefit from being an open-air facility. "Given that the cost of building a retractable roof varies between $150 million and $180 million, we have concluded that doing so would undermine the financial viability of the stadium," said Sylvain Vincent. Note also that the Twins' open-air stadium in downtown Minneapolis, which has a climate comparable to ours, shows that this type of stadium could be suitable for Montreal.
69% of Quebecers and 81% of companies in favour of Major League Baseball's return
According to a Léger Marketing survey of 1,589 Quebecers and 392 representatives of corporations of all sizes located in the Montreal area, 69% of the general public and 81% of businesses support the idea of bringing a Major League Baseball team back to Montreal. As well, Léger Marketing notes that 40% of the population would be very interested in purchasing tickets to see an MLB game in Montreal and season tickets would represent approximately 60% of all tickets sold per game. Finally, the average projected attendance would be between 27,600 to 31,600 people per game.
To get the full version of the feasibility study : http://www.btmm.qc.ca/baseball_back
About Montreal Homerun Project Inc.
Montreal Homerun Project Inc. was created by the Board of Trade of Metropolitan Montreal, the Montreal Baseball Project and BCF LLP to pursue the project of bringing a Major League Baseball team back to Montreal. Its objective is to identify and develop funding sources and advance relations with interested parties, as well as to study potential sites where the team could play. The company will also develop financing and corporate structures in order to fund and hold investments in the team and stadium.
About the Board of Trade of Metropolitan Montreal
The Board of Trade of Metropolitan Montreal is made up of some 7,000 members. Its mission is to represent the interests of the business community of Greater Montreal and to provide individuals, merchants and local businesses of all sizes with a variety of specialized services to help them achieve their full potential in terms of innovation, productivity, and competitiveness. The Board of Trade is Quebec's leading private economic development organization.
About the Montreal Baseball Project
Founded in 2012 by former Montreal Expos player Warren Cromartie, the Montreal Baseball Project's goal is to bring Major League Baseball back to Montreal.
EY is a global leader in assurance, tax, transaction and advisory services. The EY project team, headed by Sylvain Vincent, Managing Partner for Quebec, is directed by Daniel Roth and William Jegher, respectively Senior Vice-President, Transaction Advisory Services and Vice-President, Transaction Real Estate at EY for Quebec. Others who contributed to the feasibility study are the firms Léger, the Conference Board of Canada, BCF LLP, Populous and Provencher Roy.
About BCF LLP
BCF is a firm of more than 180 lawyers and other professionals whose business law practice has been keeping pace with the changing needs of the business world. BCF offers the services of 22 multidisciplinary teams as a solution to the complex needs of its clients. A member of the Meritas international legal network, a leading association of independent law firms, BCF has developed an expertise in every sector of business law. Richard Epstein, partner and co-leader of the firm's Mergers and Acquisitions practice, heads up the firm's team on this project. BCF is a leader in the practice of business law in Quebec and has been the recipient of the award from Canada's 50 Best Managed Companies business award program since 2007. www.bcf.ca.
SOURCE: Montreal Homerun Project Inc.
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