Canlan’s growing portfolio of private sector sporting facilities

The Greater Toronto Area is about to get a new indoor sporting facility that’s completely privately built and run, and will mark the first time the company behind the project has created something that doesn’t include an ice rink.

Burnaby, B.C.-based Canlan Ice Sports Inc. announced Monday it would transform an old warehouse in Mississauga, Ont., just west of Toronto, into a 55,000-square foot sports complex.

Canlan has attained an 11-year lease on the property from Rocket Lumber and Building Supplies Ltd. It will spend $1.7 million on the renovation, which is scheduled to begin imminently and be completed by fall.

The building will be called the Canlan Sportsplex — Mississauga. It will house two full soccer fields, one floor rink, three volleyball courts, change rooms, a licensed eating and drinking area, and party rooms.

Michael Gellard, the firm’s senior vice-president and chief financial officer, said despite a seemingly ambitious transformation of the old warehouse, a September opening is feasible.

“The building doesn’t need a lot of work,” he said. “It’s just all the stuff we want to put into it,” he added, much of that being artificial turf.

Mississauga an ideal place for the first non-ice facility

Gellard said a number of factors came together to make Mississauga an ideal place to put its first non-ice facility. For the one thing, he said the existing structure is the right size and dimension to accommodate the sporting spaces that are planned.

What’s more, the company was looking to do something that did not involve ice, and Mississauga, with its fast-growing multicultural population, proved to be the right spot.

“Demographics in Ontario and in Vancouver have changed a lot in the last 20 years,” he said. “Soccer is much more conducive for everybody all over the world, and hockey isn’t quite so friendly, I suppose, to immigrants.”

Gellard said the business case is better right now for a facility based more around soccer as opposed to hockey and skating. He said the company built a series of multi-rink ice facilities in the Toronto area in the late 1990s. At the time, a four-pad arena could be built for between $12 million and $13 million. That price has approximately doubled due to the costs of materials such as steel and concrete, but fees that can be charged for ice time have not risen proportionally, he said.

Opportunities to convert existing buildings

As well, the company is looking for opportunities to convert existing buildings into sports complexes, as opposed to building them from the ground up.

“It’s really hard to get any kind of return on an ice rink or even indoor soccer facilities if you were to build them from scratch,” Gellard said. “The return on investment is pathetic, and so we’re not really big on building them from scratch.
“Our target right now is to grow indoor soccer from these warehouses and these wide-span buildings that can be easily converted, rather than trying to build something from scratch.”

Canlan says it is North America’s biggest private-sector owner and operator of recreational sports buildings with 19 existing facilities, most of them in Canada and a handful in the United States.

Gellard says his company represents a growing trend of private-sector involvement in recreational sports infrastructure, which has traditionally been the territory of municipalities.

Canlan operates its buildings

However, Canlan takes it another step further by being the sole operator of all but one of its buildings, as opposed to the private-public-partnerships (P3s) that have been increasingly used by cash-strapped municipalities in recent years to provide recreational facilities for their residents.

Canlan also happens to run most of the programs out of its facilities, rather than leaving that to outside groups.

“If you’re going to be a private operator in the ice-rink business, you can’t wait for the phone to ring just to rent ice,” Gellard said. “You have to run your own programs.”

Adult hockey leagues are the biggest aspect of Canlan’s sports programs. Gellard said the company is less involved with minor hockey groups, which usually expect municipalities to provide them ice at subsidized ice rates. A for-profit company must charge market rates for such facilities in order to make money, he said.

“Municipalities are expected to provide minor hockey with some decent ice at a reasonable cost that is subsidized by the taxpayer,” he said. “We can’t do that. We’ve got to pay property taxes. We’ve got to pay mortgages.”

The Toronto Stock Exchange-listed company reported earnings of $2.8 million for 2011 on revenue of $72 million. In 2010, its profit was $733,000 on revenue of $69.9 million.

Big cities key to profit

Another way Canlan remains profitable is by going to densely populated, growing and affluent areas, and that means having to say no to many small communities in need of new facilities but struggling to pay for them.

“The smaller towns are always coming to us saying, ‘We need an ice rink,’ ” Gellard said. “Well, we’re not going to build it for you because it doesn’t make any sense for a private operator to go in there and build a single-pad ice rink for a town.”

In terms of where the company goes next with new facilities, Gellard cited southern Ontario, Calgary and the northeastern U.S. as possibilities.

Ultimately, it will come down to finding a good deal in terms of the land and a suitable structure that can be converted, as well as being in a location where the population will support its building and programs.

Paul is a writer, editor and media trainer based in Toronto with over 25 years of experience as a business reporter. He has written for Canada’s major news services on…

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Paul is a writer, editor and media trainer based in Toronto with over 25 years of experience as a business reporter. He has written for Canada’s major news services on…

Read more

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