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Hartford's XL Center Faces Daunting Challenge For Redevelopment

Bids To Manage Downtown Civic Center Are Due On Monday

By KENNETH R. GOSSELIN

December 15, 2012

From the street, the XL Center in downtown Hartford exudes recent redevelopment, all stainless steel and glass, opening into an airy atrium.

But walk a little farther through the interior doors of Veteran's Memorial Coliseum, and it might as well be the 1970s: The arena's single concourse is narrow, there aren't enough restrooms and dining options are few.

Bids to manage the XL Center are due Monday and key to those proposals will be how the physical structure might be transformed for today's more competitive concert landscape and amenities that spectators have come to expect. Tens of millions of dollars will be required in the next decade just to maintain the 16,000-seat arena and exhibition hall, even before major capital improvements.

The future of the arena also will rest on deciding just what the venue's sports market should be: an arena for minor league hockey, college basketball and concerts, or one with bigger aspirations.

"It's a huge issue," Fred Carstensen, director of the Connecticut Center for Economic Analysis at the University of Connecticut, said. "This is a strategically important location in downtown Hartford, in the core of the city. You have make to sure the space integrates and enhances the vitality of downtown. But you have to decide what your ambition is going to be. That is a major question mark."

In the past decade, efforts to return major league hockey to Hartford have ended in failure, most recently with Howard Baldwin's vision for a $105 million XL Center redevelopment, more than a decade after the NHL's Hartford Whalers left. Before that, Northland Investment Corp.'s plan for a new arena went nowhere.

At the same time, competition for concerts has intensified, with the rise of entertainment venues at Mohegan Sun and Foxwoods in southeastern Connecticut and now, the prospect of a casino and entertainment district in nearby Springfield, Mass.

Who Are The Players?

Five potential bidders have expressed interest in pursuing managing the XL Center.

Three groups with local ties have submitted letters of interest to Capital Region Development Authority, which is overseeing the bidding: AEG Management CT LLC, its current steward; Capital Region Sports and Entertainment Group, led by the management arm of The Bushnell and including politically connected parking magnate Alan Lazowski; and Harbor Yard Sports & Entertainment, which manages Bridgeport's Webster Bank Arena.

In addition, two major operators who run dozens of venues in the U.S. and abroad also have sent letters of interest: Philadelphia-based Global Spectrum and SMG Worldwide, headquartered in Pennsylvania.

All options are on the table, including building a new arena to replace the XL Center.

Redeveloping the XL Center to keep it competitive with other venues wouldn't be easy. There isn't a lot of space to expand the building because it is hemmed in by the streets that border it; one recommendation to move suites and other premium seating lower in the arena would mean massive construction; and relocating concessions so they are closer to — or even face — the seating would mean moving all the restrooms.

A recent study of the facility commissioned by the city, which owns the property, found that redevelopment could range between $30 million and $90 million — some of which probably would have to be shouldered by the taxpayers.

Michael W. Freimuth, executive director of CRDA, said proposals could range from the modest, up to $30 million to modernize restrooms and locker rooms, improve signage, perhaps add new escalators — to $100 million or more, if the structure is to be altered significantly.

When the XL Center was built, it was all about the event. Today, amenities provide a critical source of income for venue operators, Freimuth said.

"It's all about the atmosphere you are experiencing when you are there," Freimuth said, "not just the event that you are attending."

At least three of the potential bidders — AEG, Capital Region Sports and Entertainment and Global Spectrum — have confirmed that they intend to bid on the contract, which would run at least three years. Harbor Yard Sports and SMG Worldwide didn't return multiple calls for comment.

The bids are being sought in conjunction with a management contract for the stadium at Rentschler Field. Both the contracts for the XL Center and the stadium expire in August. The authority favors one manager for both venues.

AEG, Capital Region Sports and Global Spectrum aren't tipping their hands just yet, citing the competitiveness of bidding. And the scope of the proposals won't be known publicly even after the bids are submitted, only who has submitted proposals. The authority has invoked a clause in the state's right-to-know laws that allows it to keep the proposals under wraps while negotiating with each of the bidders.

Capital Region Sports said it is well aware of what is at stake. In the authority's request for proposals, Section 13 contains the hot-button about redevelopment or even replacement.

"We don't believe this is simply about managing the building," Michael Fresher, general manager of The Bushnell's management arm, said. "We will be addressing Section 13."

What Are The Stakes?

The manager selected for the XL Center will take over at a crucial time in the facility's history. In addition to improvements, it will have to deal with contracts that expire next year with UConn men's and women's basketball and with the Connecticut Whale, the latter not being a sure thing. The contract for the naming rights also will expire, putting that up for grabs as well.

The arena historically has been a money-loser. AEG's current management contract does not require disclosure of bottom-line financials, but the state estimates that annual loss is about $3 million. AEG declined to comment on the financials.

Since AEG became manager in 2006, the number of events at the XL Center, including sporting events, has risen by 35 percent, to 172, according to AEG, helped partly by the closing of the Expo Center in the North Meadows. AEG says attendance has risen in that period, increasing from 640,000 to 740,000, despite a decline in attendance at UConn basketball games.

The city-commissioned study of the XL Center said that was still weaker than the 800,000-plus earlier in the 2000s — though some of the decline could be attributed to the recession and the slow recovery.

Charles H. Steedman, AEG Management CT's general manager, said AEG has invested $3.5 million in capital improvements, adding new video boards; improving lighting in the concourse and the appearance of concessions; upgrading safety systems and strengthening the roof to better handle heavy equipment suspended for concerts.

Steedman said he is proud of what AEG has accomplished in bringing big names such as Taylor Swift, Carrie Underwood, Lady Gaga, Bruce Springsteen and, now, Justin Bieber, to the XL Center.

"We still think there is a long way to go," Steedman said. "We want more, too."

New venues are placing an emphasis on spectator comfort with wider chairs, more leg room, cup holders and storage, said Adam W. Jones, director of sports advisory services at consulting firm PricewaterhouseCoopers in New York.

Jones said the latest trend is in "loge seating," which includes four or six seats in a private box that is typically lower in the arena, affording good views. The boxes are not as expansive as a luxury suite, but have chairs and tables with partitions in between.

"There are less luxury boxes and suites as corporate appetites have shifted," Jones said. "Facilities have found this has opened up a new market for smaller businesses to invest in season tickets," Jones said.

No matter the scope of redevelopment, a renovated facility on its own does not guarantee success, Jones said.

"It's just one piece of the puzzle," Jones said. "Success is not only having a new facility, but strong management and engaged stakeholders. You have to go out and market the facility. You have to have the support of residents."

Similar Circumstances

The city of Providence in neighboring Rhode Island faced a similar crossroads in 2005 for its downtown civic center arena. Also built in the 1970s in the same architectural style — bunker-like with darkened windows — it hosted the AHL's Providence Bruins and the Providence College basketball games, as well as concerts.

Concern had been building for years about the erosion of concert business to other venues plus worries about rising costs to maintain old heating, cooling and ice-making machinery that was nearly 40 years old. Unlike Hartford, Providence's civic center didn't have luxury suites.

The choice was made to renovate rather than build a new arena because of the center's location near a shopping mall, hotel and convention center.

The state bought the facility from the city and embarked on an $80 million, three-year renovation, financed mostly with state bond money. The venue never closed completely as the work was done in stages, including widening the single, narrow concourse, said Jim McCarvill, executive director of the Rhode Island Convention Center Authority.

"We came out 20 feet on either side, created space, added circulation space and concessions with suites," McCarvill said. "We removed the concessions from the inside to the outside. We enlarged the lobby."

The facility opened in 2008 and has seen a modest increase in concert business, but not a big bump, and it is still looking for another sports tenant. The new venue is losing an average annually of $1 million to $1.5 million. The venue turned a small profit in 2010, but it was a matter of few thousand dollars, McCarvill said.

The renamed Dunkin' Donuts Center — "The Dunk" — still faces intense competition for concert business from the Mohegan Sun and Foxwoods casinos that have deeper pockets to bring in the big names. There also is a dearth of live touring acts, McCarvill said.

"They can pay more," McCarvill said. "We will make money parking cars, but I don't have slot machines in the lobby."

So was the redevelopment worth the $80 million?

"We needed to improve this as part of our destination sale," McCarvill said. "We renovated a facility in its place, right near shopping and dining and our convention center. The primary goal was that you need or want the facility to get people downtown for a variety of activities."

A New Arena?

Three years after it opened, in 1978, Hartford's arena suffered a spectacular roof collapse just hours after the end of a UConn basketball game. The structure was rebuilt, reopening two years later. In the past 20 years, the state has invested more than $45 million in the facility for capital improvements.

Now, as the city is expected to transfer ownership to the state so the authority can guide the XL Center's future, is there a chance a new arena could be built?

Freimuth said that is an option for bidders but would have to include a plan to transition out of the existing facility.

"Rumors seem to be unending in this town about a NHL franchise driving a new facility," Freimuth said. "And we would be remiss if we didn't put out the option for such a proposal. That card gets called this Monday. We'll see if it happens. My internal optimism/realism seesaw moves on this question. I'd like to believe it would be possible, but I'm a realist in a world of difficult budgets, sluggish economy and an NHL that isn't playing games."