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June 6, 2023

Lamont budget deal pledges up to $80M for XL Center renovations

A planned $107 million XL Center rehab would redesign the stage, create premium seating areas at ground level, renovate seating, upgrade vending stations and other functions on the concourse and more. 
By Michael Puffer

Connecticut taxpayers could cover up to $80 million in renovation costs for the XL Center arena in downtown Hartford under the budget deal struck by Gov. Ned Lamont and legislative leaders this week.

Among the multitude of provisions in the budget compromise is the outline of a deal that would see Los Angeles-based entertainment and events company Oak View Group bear at least $20 million in XL Center renovation costs in return for a long-term agreement to manage the roughly 15,500-seat sports and entertainment venue.

Under the enabling language in the budget bill, OVG would cover any annual operating losses, but get to keep the first $4 million in yearly profits. OVG and the Capital Region Development Authority would split any additional profit evenly.

The CRDA – a quasi-governmental agency responsible for economic development initiatives in Hartford and East Hartford – manages the XL on behalf of the city of Hartford.

OVG has operated the XL on behalf of the CRDA since late 2021, when it acquired venue management and hospitality company Spectra, the company previously contracted to manage the XL center.

The facility currently runs at a roughly $2.5 million to $4 million deficit yearly, which is covered by the state.

Backers say the XL Center is needed to promote vibrancy in Hartford, and pays dividends in extra demand at restaurants, hotels and other nearby businesses. CRDA leaders believe renovations to make the building a more attractive and economical venue for performers could see it turn a profit.

CRDA's leadership hopes to strike a deal with OVG that would fund a large-scale renovation. The enabling legislation in the budget compromise is an important prerequisite that would allow for a deal. 

The CRDA has tried for years to secure funding for a large-scale repair and upgrade of the roughly 50-year-old arena. Lawmakers balked at a comprehensive $250 million plan in 2018, but had approved $40 million for repairs and upgrades in 2017, and signed off on another $65 million in 2019.

Portions of that money have been slowly fed out through the state Bond Commission for work at the XL Center, including an ongoing $15 million package of repairs and upgrades including construction of a sports-betting lounge on the edge of the building overlooking Ann Uccello Street. 

Michael Puffer | Hartford Business Journal
Construction crews last summer worked on the new sports-betting lounge at the XL Center, which debuted in September 2023.

Providence-based Dimeo Construction is also making commercial kitchen improvements, adding restrooms and upgrading other building systems.

In May, the Bond Commission released $7 million for additional repairs and upgrades at XL, as well as designs for bid documents on a grander renovation.

The CRDA has spent months negotiating with OVG on a deal that would see the company bear a portion of renovation costs in return for a long-term operating agreement that includes a cut of the profits.

CRDA Executive Director Michael Freimuth has previously said his agency expects to begin soliciting bids for the large-scale renovation this summer. He expects bid returns in time to determine in “late fall” if costs fall in line with the projected $107.2 million budget.

“If the budget comes in too high, none of this going forward,” Freimuth told members of the CRDA venue committee during a May 9 meeting. “If the budget comes in line, we can secure the OVG arrangement.”

Under Lamont’s current budget deal, an agreement may be entered into with the operator of the XL Center as of July 1, which will be OVG. That agreement — which, under the budget language, must be entered into no later than Dec. 31, 2025 — sets out a number of additional terms.

The agreement must outline future upgrades, remedies for breach of contract and a requirement that the contractor (OVG) furnish an annual, independent audit report for the CRDA and the secretary of the governor’s budget office. The secretary’s approval will also be required for any long-term management agreement between CRDA and OVG.

Before striking a deal with OVG, CRDA will also need an agreement with the city of Hartford to extend the lease of the XL Center to the authority. During that lease, any equipment or other personal property added to the arena will be considered state-owned and not subject to taxation, something the state will not compensate with a payment in lieu of taxes. 
 

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