Four months after its grand opening, Quebecor’s Centre Videotron is at least $1.4 millon in the red. According to the contract signed with QMI Spectacles (a branch of Quebecor), the Quebec City has to cover half the operating deficit up to the amount of the arena’s rent.
Mayor Régis Labeaume’s office confirmed on Monday that they sent a check to Quebecor for $729 126 – which is the exact equivalent of four month of rent and the worst-case-scenario for the city.
The news caused outrage in the opposition, but Labeaume was quick to defend the project he has championed and cherished since 2011. He told the City Council that it was unrealistic to expect a starting business to be profitable in its first four months of existence. “I’ve never seen that,” he insisted.
He further accused the opposition of being “tricky” and misleading for claiming that the city was paying the Centre’s deficit. “We didn’t give a penny to the deficit. We only gave back the rent,” he claimed.
He pointed out that Quebecor had already paid $33.5 million to put the name Videotron on the arena.
A Quebecor spokesperson also commented that it’s “normal and expected” for such a project to not generate profits for the first couple of years.
Not as Popular as Expected
Any reasonable hope for quick net profit was arguably contingent on the return of an NHL team to the old capitol. Since the NHL officially announced last week that Las Vegas was chosen over Quebec to house the next team, a deficit was to be expected.
But certainly not such a big one. According to the Mayor’s own predictions, the maximum cost of the Centre to the city – even without a NHL team – should have been $600 000… per year. If the current trend continues, the cost for 12 months of activity would amount to 2.18 Million.
Labeaume conceded that the ticket sales had been largely overestimated. This is a bit perplexing, as the Centre has already presented some rather large names including Metallica, Justin Bieber and Pearl Jam. When this was pointed out to him, Labeaume responded that he thinks “Céline” will fill up the arena, and “anyway, it’s their [Quebecor’s] job to manage that.”
What we Don’t Know
The exact total of Centre Videotron’s total deficit is anyone’s guess. In February, Labeaume agreed to modify the original 2011 contract to allow the Centre to keep all of its financial statements private.
The Access to Public Records Act won’t be any help either as the city doesn’t keep any copies of Quebecor’s financial documents regarding the arena. Municipal employees must go to the corporation in order to consult them, and are only allowed to bring back “personal notes.”
“We are financial partners and we can’t even have transparency,” said Anne Guérette, advisor for the leading opposition party, Démocratie Québec. Quebecor claimed that the new confidentiality clause was necessary – not because they had anything to hide, but to ensure “healthy competition.”
Here is a recap of what we do know: municipal, provincial and federal governments promised to invest a total of $400 million in the construction of the arena. Only $385 was used and $33.5 million was recovered by the City when the Centre opened.
The City was able to make around $370 000 on the ticket sales and parking fees but had to give back the totality of the rent collected from Quebecor to date.
All in all, Quebecor is left with a bit over $350 million of public money in its pockets, and the public is left wondering when they will start paying rent.