Burns arena deal offered

Blast owner asks to run Canton soccer facility

Profits would be shared with city

Possible rental fee increase concerns some critics

April 26, 2004|By Doug Donovan | Doug Donovan,SUN STAFF

A prominent Baltimore businessman is proposing to manage a city-owned soccer arena in Canton through a private-public partnership aimed at helping the city cut costs while buttressing his plans for a major waterfront development.

Edwin F. Hale Sr., chairman and chief executive officer of 1st Mariner Bank and a builder, responded to the city's call this month to hire a private firm to run the operations of the Du Burns Arena at Ellwood Avenue and Boston Street.

The arrangement must be approved by the Board of Estimates, which could vote on the proposal next month.

Hale's $2 million, five-year bid exceeds the city's request for proposals by offering to also maintain the Canton Waterfront Park across Boston Street from the nearly 20,000-square-foot arena. The Blast, Hale's professional indoor soccer team, plays its games at the 1st Mariner Arena downtown, but practices at the Du Burns Arena and has its corporate offices there. In addition, the arena is used by amateur soccer and lacrosse teams that rent time on the indoor and outdoor fields.

Under the proposal, Hale Properties LLC would assume all the risk for the financial operations while sharing future profits with the city.

"It makes a great deal of sense," Hale said. "We think it will benefit everyone."

If the city accepts, it would not be the first time a private company has been hired to run a parks facility. The Baltimore Municipal Golf Corp. runs five public courses. Three other facilities - an ice arena, a museum and a family center - are run by private companies.

A recent city report has shown that privatization efforts have saved Baltimore nearly $9 million annually. Other services taken over by private contractors include managing workers' compensation claims, operating a health clinic, cutting grass, and protecting and cleaning city buildings and parks.

Rick Abbruzzese, a spokesman for Mayor Martin O'Malley, said the city encourages such partnerships whenever they save taxpayer money and improve services to the public. Officials with the Department of Recreation and Parks said the proposal is being reviewed to see if it benefits the city.

Not everyone thinks the deal is good for everyone who uses the arena.

John Schruefer, president of the Baltimore Metro Soccer Officials Association, said Hale would need to raise rental fees charged to the amateur teams that use the field in order to generate the level of revenues the banker is projecting.

"I don't think it will be a good move at all," Schruefer said.

City officials said that under the proposal Hale could not raise fees without the approval of the Board of Estimates, a process that would permit public input.

A similar deal to have Hale operate the arena was considered last year, but fell through. Hale said that the profit-sharing formula would not have made the venture worthwhile.

This time around, he said, the new profit-sharing plan takes into account the financial risks his company is shouldering.

Hale's proposal calls for evenly splitting revenues that exceed $415,000 with the city. The city's earlier failed effort to privatize the arena asked for a percentage of gross revenues.

"Mr. Hale has invested millions of dollars into Baltimore, and this continued commitment will be evident in the management of the arena," Joseph Wesolowski, Hale Properties' executive vice president, wrote in the company's proposal.

Hale's investments in the area are evident. He made his first million in 1979, when he sold the city the property for the waterfront park, which now includes the Korean War Memorial.

The soccer arena, named for Baltimore's first black mayor, Clarence H. "Du" Burns, is visible from Hale's office at 1st Mariner Bank's headquarters off Clinton Street.

From the same window, Hale looks out on 20 acres of leveled dirt where he plans to build the $100 million Canton Crossing, a project of offices, hotels and shops that abuts the Canton Waterfront Park. He is also proposing to build a $50 million cruise ship terminal at the site. Hale said his management team can maintain the park, the arena and its adjoining outdoor soccer field in a fashion that is consistent with the tone of his projected complex.

In his proposal, he asserts that he can operate the arena, the outdoor soccer field and the park for $415,000 annually, and that the operation can generate sufficient revenues. The city operates the facility at a loss.

"Out of the box, this would stop the bleeding" for the city, Wesolowski said.

In the fiscal year that ended June 30, the city operated the arena for $317,000, slightly exceeding the $313,000 in revenues from the soccer, lacrosse and other sports clubs that rent it. The year before, the facility operated at a $26,000 loss.

Hale said he would spend $150,000 to install an air-conditioning system that cools the entire arena, not just the offices. He says the cooler field would attract more sporting and social events to use the facility in the summer. Profit-sharing with the city would begin after he has recouped the cost of the system.

He also said he intends to market the arena's banquet rooms for weddings and other events. And he hopes the presence of the Blast will help draw more sports events, such as statewide soccer tournaments.

The facility employs two full-time city workers and 12 to 20 part-time workers. All such workers would have the "right of first refusal" to work for Hale's management company.

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