A major renovation of Hartford's XL Center is expected to cost tens of millions of dollars more than the previous estimate of $107 million, with the long-discussed transformation of the aging arena creating uncertainty and further speculation. There is a high possibility that the company will be forced to downsize.
Five months ago, the Metropolitan Development Authority put out a call for bids to see how much it would actually cost to renovate the already-shrunken sports and entertainment arena. Since then, an analysis of the bids by CRDA, a quasi-public agency, has reported more than $140 million for individual components of the project. This significantly exceeds estimates, as well as the state funding and private investment that has been put in place on an interim basis to fund the renovations.
“The dilemma is this: You spend $100 million doing major repairs and you don't have much to show for it,” said Michael W. Freimas, executive director of CRDA, which oversees arena operations. “You can do a lot of sexy things without fixing the base. Then the elevator stops and you're like, 'What's going on?' We're kind of between a rock and a hard place. ”
Freimas said the $140 million was clearly a “dud.” But Freimas said the project could be cut to $125 million with significant cuts, without sacrificing what is needed to increase the venue's profitability, which is critical to securing private investment. He said he believed it.
“I think we're getting close, but we're not quite there yet,” Freimas said.
Freimas said this approach would require new bids, as required by state procurement rules. The decision will be postponed until June, but it is still unclear whether the project will proceed. If that happens, renovation work could begin in the fall.
Even if the next bid is closer to $125 million, it may likely need to raise additional funds from the local business community.
Mr Freimas said if bids rose too high again, the venue could be forced to continue with the same 'band-aid' methods of repair and 'struggling' as before. .
The CRDA board was scheduled to discuss the matter at its monthly meeting Thursday.
The latest development comes after more than a decade of disagreements over the future of the arena, which celebrates its 50th anniversary next year.
Opponents of the renovation have long argued that the building should eventually be closed because it would be too costly to state taxpayers. Typically, the venue loses $2 million a year, and the pandemic has caused even more losses.
Supporters say it's an important part of the downtown ecosystem and an asset to the area. Arenas are likely to become even more important as entertainment becomes more important as office space is expected to decrease and housing increases.
The opening of a $5 million sports betting venue at the arena last year was seen as a precursor to a major renovation.
Scraping down
The renovations are aimed at increasing the competitiveness of the XL Center by installing a new arena for events. We will support the venue to rebuild its track record in the red and continue to do so for another 20 years.
The current plan is downsized from the $250 million cost a few years ago and focuses on adding premium seating in the lower half of the arena, where ticket prices are higher.
In addition to premium seating, including “loge” seating outside the concourse, club space under the stands, and “bunker suites” at the event level, the upgraded concessions are all aimed at increasing revenue for the arena.
Also a priority will be technology to improve electronic ticketing, phone app transactions, and handling the high volume of social media posts and text messages during events.
Freimuth said scaling back the renovations would mean eliminating the reconfiguration of loading docks to more quickly move in and out of trucks associated with shows and concerts, saving $18 million. It is said that there is a possibility.
Mr Freimas said there could be fewer premium seats and fewer bunker suites.
No matter what form the renovation takes, Freimas said technology must be a priority. Freimas said upgrades to the electrical system are also a must to accommodate the ever-increasing needs of shows and concerts.
Attract more concerts
The state Legislature recently approved a total of $80 million in public funds for renovations.
Gov. Ned Lamont supports major renovations to the XL Center, but only through private investment that would ease the burden on state taxpayers, who collect most of the money.
Last year, state lawmakers supported a plan to allow at least $20 million in private investment in the project.
Los Angeles-based Oak View Group, which currently operates day-to-day operations at XL, has expressed strong interest in investing in the XL Center for nearly two years. OVG continues to negotiate with CRDA over the investment amount.
But for OVG to make that investment, it will need to make renovations to ensure a return on that investment.
OVG has extensive experience in relocating sports and entertainment venues. The organization manages 300 sports and entertainment venues and redevelops others around the world.
OVG's investment is strongly tied to attracting more concerts to XL Center, an event that is a major revenue generator for modern arenas. But in order to attract more high-profile concert bookings, renovations will also need to include relocating the stage to increase the number of seats with unobstructed views of the performers. Build the overhead structures needed for modern light shows. A loading dock has been modified at the rear of the arena to allow for faster access to and from shows.
If OVG agrees to the investment, the organization will significantly expand operations at the arena, including negotiating contracts with key tenants such as the University of Connecticut and paying for most of the building's repairs, excluding major renovations. Become.
The bill calls for OVG to absorb annual net losses at the arena, but would keep the first $4 million in net income. Above $4 million, net profits will be split 50-50 between OVG and CRDA.
Kenneth R. Gosselin can be reached at kgosselin@courant.com.