- The Washington Times - Tuesday, January 18, 2005

Developers, restaurateurs and retailers near MCI Center say they have felt no significant impact from the NHL labor dispute that has forced the cancellation of 24 Washington Capitals games at that arena this season.

“There’s no stopping this train now,” said Douglas Jemal, chairman of Douglas Development Corp. and owner of several commercial properties along Seventh Street NW. “It’s a mature area now. It’s not precluded just on games like before. It’s a neighborhood where people want to be.”

A lengthy work stoppage by the NBA six years ago nearly dealt a fatal blow to what was then an emerging neighborhood in Chinatown.

The NBA locked out its players for 202 days, sending businesses surrounding new MCI Center in a frantic search to replace revenue lost because of the cancellation of Washington Wizards games.

The NHL is embroiled in an even more bitter labor dispute with its players. The lockout is in its 125th day, and the cancellation of the remainder of the season is expected soon.

Business managers said they are feeling none of the dire effects that accompanied the NBA lockout.

“Sure, it would be wonderful if the Caps were here, but we really haven’t taken that much of a hit,” said Christina Reaves, general manager of the Austin Grill. “There’s so much more going on around here.”

Much has changed in Chinatown since the unsteady days of late 1998 and early 1999, when the NBA lockout was in full swing and layoffs at neighborhood restaurants were common.

The area at that time depended heavily on MCI Center events — Wizards, Capitals and Georgetown Hoyas games and the occasional concert — for financial stability.

However, the neighborhood since has added attractions like the popular International Spy Museum, the new Washington Convention Center and most recently the Gallery Place complex, which by itself includes 14 movie theatres, nearly 200 condominiums and a mix of retail shops and eateries.

In addition, the National Portrait Gallery is in the midst of a dramatic renovation and will reopen in July 2006. Residential and office development in the area also has mushroomed, with several prominent law firms eschewing the K Street power corridor for a Chinatown address.

“What’s gone on with hockey is unfortunate and has maybe hurt some of the sports bars a bit, but any full-service restaurant in that area has hung in just fine. Business is bustling,” said Lynne Breaux, executive director of the Restaurant Association of Metropolitan Washington. “The city and certainly that area has so much more to offer now.”

Metro lost between 4,000 and 6,000 riders from each canceled Capitals game. However, that hockey-related loss amounts to less than 1 percent of the rail system’s ridership, which hovers between 600,000 and 650,000 a day.

NHL players and owners are fiercely at odds over the league’s economic system. Player salaries tripled in the past decade, growth the owners want to stem. The owners want a system that ties player salaries to overall revenue, ideally through a salary cap.

The players’ union wants to continue the marketplace-based system currently in place. The union proposed a luxury tax system similar to the one used by Major League Baseball. That system allows teams to spend an unlimited amount on player payroll but charges a tax on payroll above a certain amount.

Management quickly rejected that proposal and others similar to it, saying luxury taxes on high-end payrolls are not a sufficient safeguard against losses they say have exceeded $1.8billion since 1995.

During the months of off-and-on negotiations, mainstream sports fans have moved on to other events.

ESPN, a major TV partner for the NHL, is drawing better ratings with replacement programming like college basketball and poker than it did with the NHL. Nationwide polls consistently show fan indifference about the labor dispute.

Despite the economic resilience of MCI Center’s neighborhood, the NHL lockout still has claimed some victims — primarily those most directly connected to Caps games.

Washington Sports & Entertainment, the Abe Pollin-controlled entity that runs MCI Center, loses more than $300,000 a Caps game through the absence of merchandise and concession sales and catering to luxury-seat holders, as well as partial rebates to corporate sponsors.

Pollin, like all NHL arena operators, is allowed a rolling, 60-day window to book new events on days previously reserved for hockey games. Pollin’s staff has used that opportunity to bring in a few replacement events, most recently the Australian children’s musical act Hi-5. But most major concerts and events require more than two months’ advance notice, limiting the company’s ability to recoup lost revenue.

“We’ve definitely taken a hit because of this — no question,” said Matt Williams, Washington Sports & Entertainment spokesman.

The Caps forfeited most of their revenue because of the lockout, for which club owner Ted Leonsis voted in favor. Leonsis has said he will lose far less money this season by not playing at all than by playing under the current economic system, perhaps a third of the $30million the club lost last season.

Other people with direct links to the Caps, such as parking attendants in nearby garages and several hundred part-time employees who work at MCI Center on game nights, also have suffered. But unlike in 1998 and 1999, the overall economic vibrancy of Chinatown is no longer at risk.

“This is simply one of the hottest areas in the city,” said Michael Stevens, president of the Washington, D.C., Marketing Center. “There has been such a diversification of the entertainment options and land use in that area, it’s simply not as dependent on the hockey customer as it used to be, and that’s a good thing.”

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