Rangers affiliate Wolf Pack’s Home Up For Sale
In the latest development for the home of the Hartford Wolf Pack, the XL Center is officially up for sale. The Capital Region Development Authority on Monday (CRDA) released a Request For Proposal (RFP). This is part of the agreement from the Connecticut legislature in the last budget session as the agency had to sell the building to potential buyers, in return for additional repair funds for the facility. The agency had two years to sell the building, and they decided to do this as soon as possible.
What To Know
This will began a lengthy process for the CRDA when buyers bid on the building. This can get complicated because if the agency agrees to sell the building to one of the potential buyers, then there has to be multiple sets arranged through the state to complete the transaction. This also includes legal paperwork and other agreements from multiple parties.
If there is no buyer, which is doubtful, then the authority’s next steps would be undetermined as the agency will have to meet with the next elected governor in office along with the new legislative body.
There has been one group confirmed in this process. A private equity firm based in Chicago called Oak Street Real Estate Capital has made noise regarding their plans for the XL Center. The firm also wanted to buy other real estate in the city of Hartford. From the standpoint of the dated arena, the group would be a good choice. However financially, that remains to be unseen.
Oak Street Real Estate capital would purchase the arena for $50 million. Then they would fully renovate the facility to meet the standards of the National Hockey League for a cost of $250 million. To fully renovate the XL Center, it is recommended the cost will be around that ballpark for a top to bottom refurbish, similar to Madison Square Garden’s. In fact, the architecture that designed the renovation for Madison Square Garden also helped draw the XL Center’s.
The potential problem with the proposal is the financial terms. Oak Street would force the state to pay 7.5% or higher interest rates for any investments in the renovations, essentially rent for use of the building. I am not a financial expert and I will leave the CRDA to crunch the numbers. They will know how the proposal works the best once they review the offer.
There are other parties interested as well. However they will not be revealed until later on in the process if they do bid. Stay tuned for those. You have to wonder if James Dolan is interested because MSG used to run the XL Center in the early 2000s before another venue management company came in. In addition, MSG owns the Wolf Pack. There could be potential to make money and expand MSG’s footprint in the arena business. How much return on investment remains to be questionable regarding the current finances of the XL Center.
Deadline for questions regarding the building or the RFP is due on May 18th at 3:00pm. The CRDA will then post answers to the questions on June 1st, 2018 at 3:00pm. The questions could possibly be posted on the agency’s website. I will check on that when the time arrives.
The most critical stage of the RFP is the deadline date. All responses are due on Friday, June 29th at 3:00pm. All submissions must be completed and submitted prior.
The CRDA and the state of Connecticut will review every potential buyer and discuss in meetings their findings in each proposal. This will be the most lengthiest part of the process. The CRDA will take their time on this to see if any proposal is feasible. They also have the right to choose no one. If there is a winner in the RFP, then they will recommend it to the state and future steps would continue.
The potential winner of the RFP would be announced presumably in Fall, during the 2018-19 Wolf Pack season.
The XL Center only operates the atrium space. The XL Center land line is just the arena. The atrium space and the front of the facility is owned and operated by Northland Investment Corporation. Northland is a difficult party and they make it hard for the CRDA to buy the atrium space and the front part of the facility. This could be a potential roadblock down the road if the building is sold to a buyer. You can read more about it here.
Why Renovate the XL Center?
The building is facing fierce competition from the nearby casinos. Mohegan Sun operates a arena that is smaller, but draws in concerts and other acts. MGM is opening up a casino in Springfield which will cause additional competition for the venue. MGM also manages the Mass Mutual Center, which is home of the Springfield Thunderbirds. The way that casinos write off events is completely different compared to a venue on its own.
Casinos generally offer more guaranteed revenue to the performers as well. The nearby concert venues in the summer also takes away concerts at the XL Center. Also add in a limited, old rigging system for events, then the XL Center is at a huge disadvantage. The 40+ year old facility is doubled the age of a modern venues with continual updates or renovations.
The state of Connecticut has not invested in the venue since the roof collapsed in 1978. Since then, one renovation took place. That was just to repair and update some systems to keep it operating. The facility continues to get band aids and eventually will need a makeover to stay open. The venue is in the red yearly due to the loss of events and a dated facility. The expenses are much higher due to many deficiencies from the event level standpoint to all the way up to the lights on the ceiling. Mike Freimuth of the CRDA claims that if the XL was given a good amount of funding today, then they could resolves issues with the aging venue. For instance, to renovate and get a new roof for the venue is at least $15 million. Replacing the current electrical system would cost around $20 million. Wonder why the costs are high? Its because the current systems operating are so outdated that the parts for replacements are not made anymore or the company has gone out of business. The XL generally has to replace entire systems than parts.
Regarding the Wolf Pack side and hockey operations, Hartford was one of the more primary focus for the renovations in 2014. The Wolf Pack had more space and renovated locker rooms, showers, workout room, and other amenities to help the New York Rangers prospects grow. The CRDA had to upgrade their portion of the arena because they want to keep MSG happy, which they have been.
From an operation standpoint, running the building for hockey is difficult, but there has been improvements. A few amenities was added for the fan experience such as the fan bar and a few lodge boxes. The ice level lounge was established last season to give fans another way to enjoy the game from a different perspective. Spectra, the building’s venue management company have to think outside the box to draw people in for an dated arena. The suites are high as the sky, which harms the facility as people prefer to watch events up close or low. There is no WI-Fi in the building, and that could become a problem is the XL has a huge crowd on hand. Fans on their phones with limited connections create an unhappy visit.
You can check out the RFP here.
Follow along with the future of the XL Center all summer long here! If any breaking updates occur, I will let you know.
Until then, good luck CRDA.