• Arena, Part I

    by Tyler Dellow • July 19, 2011 • Post, Uncategorized • 111 Comments

    I try not to write too much about the arena, mostly because it makes me feel like I should be working at an alternative newspaper and because it makes me depressed about the state of society, that people argue so vigorously to comfort the wealthy with hundreds of millions in tax dollars in return for such questionable benefits. Every time a government (or anyone) spends a dollar on something, it’s a choice not to spend that dollar on anything else. It’s insane to me that a society with the problems that ours has (and we aren’t doing half bad!) concludes that the most pressing social issue that requires the expropriation of funds is ensuring that the local billionaire has a new ice palace with ermine rugs but so it is. People decide on their priorities by a complicated internal process that nobody else can really understand.

    HHOFTJ

    What you can do though, is call them on any nonsense that gets spewed in support of the idea. “Nonsense that gets spewed in support of the idea” is long form for “David Staples’ latest piece.” It’s funny; when someone like Terry Jones or John MacKinnon writes something asinine in support of the arena, it doesn’t really bother me. Those guys aren’t around to dig deep into issues. They’re employed, in Jones’ case, because they can whip off good lines and because the ladies love him (see screen capture that demeans everyone in it at left), and in MacKinnon’s case, for reasons that elude me. Staples is different though. I’ve had differences with him on analysis but I’ve always respected the extent to which he digs into the facts. He’s written a bunch of fantastic non-hockey stuff in the Journal; stuff that shows that he has the capacity to really dig into a subject. For whatever reason, on the arena, he just seems to have no interest in doing so.

    His latest piece serves as a fine recap of his arguments in favour of the arena. I did Lowetide’s show over the weekend and the arena was a planned topic (the segment can be found here, which prompted me to really go through David’s piece. Unfortunately, a 15 minute segment on radio isn’t really the place to go through stuff in detail.

    (Aside: before you go to court, you generally have to tell the court how much time you need. Lawyers are notoriously horrible at estimating this because it always takes way longer to deal with anything slightly complicated. The amount of detail gathering I did before a 15 minute chat with Lowetide was excessive.) I figured that I’d turn it into a couple of posts – it’s sort of long.

    David helpfully summarized all of the reasons that the City of Edmonton should give money to the Oilers in a paragraph, which can be gone through point by point.

    In this case, numerous factors should guide Stelmach and his successor: a new arena is needed to keep the NHL in Edmonton; a massive public investment in fixing up Rexall Place makes little sense; the proposed downtown project enjoys popular support; it will provide a huge benefit to Edmonton’s neglected downtown; it is normal for the government to help build this kind of infrastructure; it’s a fair deal by NHL standards; and, finally, a $100 million investment is much less than other provincial governments in Quebec and Manitoba are now set to pay for NHL arenas.

    1. A new arena is needed to keep the NHL in Edmonton

    This has been an Oilers’ talking point for which nobody has produced a scintilla of evidence. The Oilers refuse to open their books but warn of doom. Fortunately, there’s a newspaper in Edmonton that has documented some information in relation to the Oilers’ finances over the years. It’s called the Edmonton Journal. I wrote a lengthy post some time back in which I went through the Journal’s archives and pulled out quotes about their financial position from guys who would know. A writer evaluating this claim today has already had a lot of the legwork done.

    (A further aside. Some of you will recall a post last fall in which I discussed a quote from Alan Watt, in which he stated “…we’re a $120-million business and there are no borders in our business.” The comments blew up with people trying to explain how he didn’t mean that the Oilers were a $120MM business, mostly notably from occasional commenter Gerald. It all seemed absurd to me.

    In looking back at the post with all the excerpts from the Journal, I came across an interesting comment from Cal Nichols from what appears to be the summer of 2005 (updated: as per his comment, John MacKinnon was the guy who wrote the story I’m citing; I noted this in the original piece but not this one):

    Nichols acknowledged that revenues league-wide are projected to fall to $1.74 billion from $2.1 billion US in 2003-04. He reckoned the Oilers, who pulled in about $85 million Cdn in gross revenues the last NHL season, will derive something closer to $70 million in 2005-06.

    Some sponsors have fallen away, or committed funds elsewhere, at least for this year, Nichols explained. And the small-market equalization fund that delivered about $2.5 million to the Oilers most years does not exist under the new CBA.

    As we all know, the NHL actually didn’t suffer a big dip in revenues in 2005-06 – it was in the same range that it was in before the lockout. If the Oilers did suffer a big hit, which seems impossible given the playoff run, one suspects that they made it all back in 2006-07, coming off an appearance in the Stanley Cup finals.

    $120MM is 141.5% of $85MM. I was able to find the Oilers’ season ticket prices for the aborted 2004-05 season and they’re now about 130% of the amount that they were then. If you factor in other things, like increases in TV rights and the fact that the rink is sold out every night now whereas it was not before, the $120MM number does not seem all that unbelievable to me, although it’s a pretty healthy increase in revenue when you consider that they’ve been in the playoffs once since 2002-03.

    I should acknowledge that there is some possibility that the Oilers are losing money because the capital structure of the team has changed, although I have my doubts. Assume, for the sake of discussion, that they were a debt free team when Katz bought them and that he took on $150MM in debt to purchase the team. At 4% interest, that’s $6MM in interest payments per year, with each point of interest being worth $1.5MM.

    There’s a point to be made here. When you as a community decide that you’re going to care about the profitability of a private business, you open yourself up to circumstances where the business is sold to the guy with the most aggressive projections, who immediately starts screaming that he’s suffering a loss because he took on so much debt to buy the thing in the first place. If Katz is telling the truth about losing money, you can blame the EIG for this – by demanding the price that they did from Katz, he then needed public subsidies in order to survive. In effect, the premium pocketed by the EIG in the form of a price that could not be justified on the basis of the substantial revenues will come from the pockets of Edmonton taxpayers. Swell group of guys. Local heroes.)

    ANYWAY, David will concede, when you press him, that he’s more worried about the Oilers in the future than in the present. I’m not sure, therefore, why he wrote that Edmonton needs to build a rink to keep NHL hockey when what he meant was that maybe a rink will prevent a problem with keeping NHL hockey at some point in the future, if something comes up. This is a wise concession to make, given that it’s hard to take their fearmongering at face value. I’ve written before about the circumstances surrounding the Oilers prior near-departure from Edmonton – they involved a 60ish cent Canadian dollar, an owner whose empire was crumbling, a booming US economy and a bizarre taste on the part of American cities for building arenas in places where hockey isn’t very popular.

    Could these circumstances happen again? I can’t say they can’t. Nobody who is being honest can say that they can’t. At the same time, there’s some reason to suspect that the gilded age of publicly funded stadia, at the very least, has come to an end in the United States. It is, at the very least, something that nobody can sensibly predict will happen.

    Does it make sense to spend money on the basis of possibilities without anyone identifying how likely they are? Most people don’t behave that way. Most people take all sorts of minute risks every day without worrying about it. If hard times come and money isn’t so readily available in Edmonton, does it make sense to have money tied up in an arena that may no longer be appropriate for Edmonton? I have difficulty with this variant of the argument because it amounts to saying “If Edmonton is someday in a tight spot financially, we want to be sure that we’ve spent a bunch of money on the Oilers because we might not have it then.” Where’s the morality in saying “In the event of a crisis in the future, we want to be certain that the policy preferences of today’s residents, many of whom will be dead or no longer living in Edmonton, have been cemented?” It’s insane.

    In addition, if we’ve learned anything from the Coyotes’ situation, it’s that once you’re relying on the team being present to generate revenue to pay the bills associated with the free money you gave them, they own your soul. If things go bad, you can bet that they’ll be back, cap in hand, demanding more money from the city.

    If even the biggest believers in the arena don’t buy the Oilers’ bald allegations of financial trouble and the best that they can come up with is some scenario of future doom that requires limiting the capacity of the city to respond to whatever crisis might arrive, I question the extent to which we should take it seriously. Baffling that a journalist can write “A new arena is required to keep the NHL in Edmonton” without any qualification.

    About Tyler Dellow

    111 Responses to Arena, Part I

    1. David Staples
      July 19, 2011 at

      If I’ve failed to make this clear — and it looks like I have — I’ll do it now.

      There’s no way the Oilers are moving anywhere right now. This team is solid in Edmonton, just as it was solid in the 1980s, when the CBA stiffled player salaries. But, as we learned in the 1990s, things change. The two similar-sized Canadian teams that didn’t at least have right-sized NHL rinks, Winnipeg and Quebec, lost their teams. Edmonton, which had a decent rink for that time period, survived, partly because owners could see a future in Edmonton at that time with the Coliseum.

      The best predictor of the future is the past. Economic condititions can again change for the NHL, for Edmonton, for the USA, and we could be in a much more difficult position here, which would be made all the worse if we had the NHL’s oldest, second smallest rink (Winnipeg will be smaller).

      So we have a choice. Put $250 million in public money so Northlands can keep its show going at Rexall, put in $250 million in public money for a great new rink downtown that can help revitalized an extremely crappy area of downtown (something people who actually live in this city would give a crap about, eh ;) ) or we could say to hell with it and do nothing.

      If Katz wants his rink, we could say, he can build it himself. Maybe he would. That’s what happened in Columbus. Or maybe he’d stay here while the sun still shined, then if things changed, as they have in the past, he’d pick up and move.

      Weighing it all, and with my desire for a much less crappy downtown at the top of my own personal wish lis for this city, I strongly support the option where we invest in a downtown rink and fix up our downtown.

    2. Saj
      July 19, 2011 at

      There may be a more imminent threat from another Canadian city as opposed to an American one.

      Also, not sure how one can blame the seller if the buyer over-leverages himself; it’s his own fault.

      Other than that, I agree with your points 100%. Keep up the good work. I’m tempted to write to the provincial government; if enough people do, maybe we can make a difference at the margin to help avoid an egregious incidence of corporate welfare. But who knows.

    3. July 20, 2011 at

      @ Saj:

      Quebec City isn’t really a threat; Pierre-Karl Peladeau has a near-monopoly on the media there and has made it clear he wants to own any team in the city.

      Hamilton would be, but given that the interest of the Leafs/Sabres lies in keeping the city out of the league, it’s not clear-cut.

    4. John MacKinnon
      July 20, 2011 at

      One of the reasons the Journal employs me, evidently, is so you can cherry pick sentences I wrote in July 2005 (“interesting comment from Cal Nichols. . .”) and cite them, unattributed, as point to your counterpoint.
      Stay classy.
      Many people frame the Edmonton arena district as either 1990s blackmail redux narrative, or a misguided civic caper, a la Phoenix and their ill-fated, badly located arena.
      The Phoenix example, by the way, seems inapropriate to the Edmonton discussion for reasons enunciated in your blog post. The Coyotes have an attendance problem at their misplaced arena, which showcases a sport few in Arizona care about.
      The Oilers have sold out all but one game since the lockout.
      At any rate, David Staples is correct: The choice in Edmonton is not between spending no public money or recklessly throwing millions and millions at a billionaire.
      The choice is between spending as much as $250 million of public money to upgrade Rexall Place and fashioning a public-private compromise to build a downtown arena district that will help effect a renaissance in a city badly in need of same.
      Given the sorry state of Edmonton’s downtown, the cost seems reasonable to me.
      By the way, you should be careful not to toss about phrases like “I should be working for an alternative newspaper.”
      You’re a Bay St. lawyer who can’t type more than a paragraph or two without reminding the reader of that fact.
      I doubt you would recognize a genuine alternative newspaper if Todd Gitlin marched up to you and slapped you in the face with one.

    5. Paulus
      July 20, 2011 at

      Revitalisation = moving poor people to another part of town, thereby causing the latter region to become financially depressed. Isn’s it weird that when you gentrify an area, the dreg population evaporates suddenly?

      Plus, revitalisation doesn’t necessarily result in wealth creation anywhere, at least in the terms of the public seeing a return on their investment. A precious bit of mysticism.

      But if it’s on David Staples’ wishlist, I’m sure everyone in the province will consider it a priority…

    6. Trentent
      July 20, 2011 at

      $250 Million can buy Edmonton another overpass for the Henday. Or an arena.

      With a $3.0B budget I think it’s time Edmonton spends some money on improving the quality of life for its citizens. And it has done so; the art gallery, Anthony Henday, beautification projects, etc. Why is an arena so contentious? I want *all* of the above and Edmonton can *afford* all of the above. And it is spending to do all of the above.

      It’s like nit-picking the rich neighbour that he bought a new Lexus as opposed to fixing his clunker Ford and extending it’s life another few years. Sure it’s a little showy and, even though he could afford it, you want to scold him for “wasting” money.

    7. Trentent
      July 20, 2011 at

      Just an additional comment:

      Edmonton is no where near Glendale and it spending $180M on an arena where it’s annual budget is ~$450M.

      Those numbers boggle the mind.

    8. July 20, 2011 at

      As to the point of your article, I agree that worry over the Oilers leaving Edmonton is a poor reason to build an arena at this time. The argument advanced by David in the comments points to the revitalization of downtown as something that should be a main priority for the City. That brings to mind whether or not a new arena is the best possible investment of $250M. Do you think that’s the case, David?

      And veering a bit off-topic, it seems downright silly to blame the EIG for Katz coming to the government for money. It seems to me he’d be asking for government funds on this project no matter how much he paid for the team. I understand that the EIG isn’t perfect, but criticizing them here seems way off base to me.

    9. July 20, 2011 at

      Am I the only one amused by MacKinnon’s use of the phrase “Stay classy” which is then immediately followed by juvenile, childish insults?

    10. Tyler Dellow
      July 20, 2011 at

      David-

      Ever heard the saying about generals always fighting the last war?

      Question: imagine you woke up this morning and you were the defence minister of France, the prior occupant of the office having been embroiled in a sex scandal. As a responsible man who cares for the best interests of the French people, I assume that you would immediately check the state of France’s defences against external attackers.

      You learn, to your shock, that France is basically defenceless against the Germans. Germany, the economic powerhouse of Europe at the moment, could stroll across undefended borders. You know that they’ve done so once in living memory and once just beyond it, with horrific consequences for France.

      Would you immediately start construction of Maginot Line II (but an effective one), on the basis that the past is the best predictor of the future?

    11. Tyler Dellow
      July 20, 2011 at

      Saj-

      I agree with you in principle but the place of the EIG in Edmonton history is a bit unique. Basically, for most of the MSM, they were beyond criticism, because they were the guys who saved Edmonton’s team. I always agreed they deserved praise for stepping up and doing it when they did but I also thought that they ran the team as a business and should be judged as businessmen. Guys who were really looking out for the best interests of Edmonton should have maybe not structured their transaction such that Edmonton would be over a barrel.

    12. Tyler Dellow
      July 20, 2011 at

      Oh – I’m gonna do your other arguments too David.

    13. godot10
      July 20, 2011 at

      Tyler. When was the last time you actually were in Edmonton, and saw the downtown, and the area being targetted.

      The City of Toronto has redeveloped parts of its downtown with a combination of city and private money, and usually subsidized by generous handouts from the provincial and federal governments. And it has the docklands to go.

      I’m less familiar with Vancouver, but Expo 86, the Olympics, and False Creek, and I believe the concept is similar.

      The cities that are thriving in North America are the ones that create an urban core where people live. That is why Manhattan, Michigan Ave in Chicago, Toronto, and Vancouver are such successes. Why condos and young intelligent upwardly affluent people are flocking to the downtowns of those cities and populating the condo towers that are sprouting like mushrooms even in the worst economic downturn since the Great Depression.

      The Arena District is NOT really about hockey. It is really about city-building, insuring Edmonton’s future as one of a handful of great livable and self-sustaining cities in North America. Right now Edmonton is a giant suburb, which was good enough for the 20th century, but as with demographic aging, a giant suburb has fundamental weaknesses as a model in the 21th century. Arguably, one needs that vital young urban core to attract the young people necessary to sustain the city.

      Edmonton as Houston is not a great future.

      Win Butler (Arcade Fire) moved to Boston then Montreal and wrote “The Suburbs” about Houston. I don’t think Beyonce lives in Houston anymore.

      Edmonton should not be a place where many young people want to leave or have to leave to pursue their dreams.

    14. dawgbone
      July 20, 2011 at

      Trentent, your example of a private individual using his own resources to splurge would make sense if people were complaining Katz was spending $500mil of his own money when he could tone the arena down a little bit and spend $350mil on a still functional, but less glamourous arena.

    15. dawgbone
      July 20, 2011 at

      Godot, the district right around the arena doesn’t have much in the area.

      It’s got union station, the CN tower, Rogers centre and few tiny businesses right around the area. The old MLG was right in the heart of downtown and they moved out of it.

      Toronto’s “downtown” is a giant beast of an area filled with hundreds of little communities and areas spread out over a 20km radius.

      The arena project makes sense, but the cities money should be used for infrastucture… better public transportation, better road and highway access, etc.

    16. July 20, 2011 at

      On revitalization:

      Quebec city’s inner core turned into a dump along the 80′s. So they had to “revitalize” it from the mid-90′s onward. All in all, it was a success, the downtown sector is now beautiful and welcoming. Dunno how much it costed, but I would bet it was way over 100 millions over the span of 10 years or so.

      And, as I said, it worked. Thing is, they invested the money in things like re-configuring boulevard, streets, greeing the streets, refurbishing some old buildings, helping tear down other and get the economic ball rolling by getting high tech companies and a fairly big university to get a campus in there.

      Stuff like that, y’know.

      The thing is, they didn’t put a big fucking arena in the middle of it all because that would’nt have helped. You want to revitalize downtown Edmonton? Invest the 250 millions so people get to live and work there. The arena won’t help doing this in a sufficient scale.

    17. godot10
      July 20, 2011 at

      dawgbone:

      One is steps away from the Entertainment/TheatreDistrict/TIFF Bell LightBox/CBC/Thomson Hall and the restaurants/nightlife on King Street.

      They are working on Union Station. MLSE has the attached business and condo tower (with ESPN top-ranked sportsbar Real Sports)

      Condo towers are sprouting like mushrooms just west of Rogers Centre and in the Entertainment District.

      A little further west in Liberty Village also.

    18. Mr DeBakey
      July 20, 2011 at

      I’ve stopped reading Mackinnon & Staples’ Journal columns, but still get to enjoy their wordsmanship over here. Its awesome. As an aside, at the rate I’m going, I’ll soon be getting the Journal 7 days a week to read Doonesbury and puzzle over the Sudoku.

      On the week-end, I hinted over at Lowetide that I disagreed with Staples’ “Stelmach” piece.

      But, you know, there was one thing of interest tucked away in the item.

      It contains the first words I’ve seen by a specific person identifying a specific project that is tied to the arena’s construction. We’ve heard & read about the development, the tax dollars, Paris du Nord – all of which will flow from this magnificent building. But not one detail until now.

      So, a nugget amidst the dross.

    19. ranford4life
      July 20, 2011 at

      godot10 said: The Arena District is NOT really about hockey. It is really about city-building, insuring Edmonton’s future as one of a handful of great livable and self-sustaining cities in North America…Arguably, one needs that vital young urban core to attract the young people necessary to sustain the city.

      Of course the Arena District is NOT really about hockey. It’s about generating revenue, something Mr. Katz is phenomenally proficient at. I do not disagree that the urban core needs to be revitalized, but as Olivier mentioned, is building a mammoth arena the best way to do that? Supposing the $250M of public coin is available for such a purpose, are there more effective ways to spend it?

      Comparisons to NYC, Toronto, Vancouver, and Chicago are unfair for a number of reasons. For one, they all have defined geographic borders that limit sprawl in one or more directions. Two, they are among the largest urban centres in North America. In Edmonton, land on the city borders is cheap and infinitely available. The relatively small size of the city and reasonably good highway infrastructure makes commutes comparatively simple and efficient.

    20. Truth
      July 20, 2011 at

      I realize the Maginot line comparison was directed at Mr. Staples, but I have to comment.

      First, this is obviously a hypothetical situation as Germany was not an economic powerhouse at the end of the WWII, they were quite the opposite. By referring to history to realize that France was not invaded after WWII should not imply that that Maginot line II would have been a waste of resources. You are looking at a false past, history cannot be reflected upon.

      Secondly, since we are using hypothetical scenarios, if it was possible for France to construct an absolute effective maginot line after WWI it would be absurd of them not to. Germany was becoming an economic powerhouse prior to WWII, not after. You use the Maginot line as it is historically known for its ineffectiveness while attempting to relate the large expenditure in Edmonton to keep Quebec (or another city) from taking the Oilers. However, an effective maginot line may have meant no WWII. I would be willing to bet France would have paid $250 million for that.

      If building this arena was to be absolutely effective in keeping the Oilers in Edmonton the choice would be easy for Edmonton, even before realizing the many other benefits listed by others above, mentionably Godot10.

      After all, the German invasion of Belguim, due to the actual Maginot line, brought the British into the war. What if Britain had not entered the war? This may be similar to the Federal and Provincial government not spending any money on keeping the Oilers in Edmonton. German could be the official language in France (or French the new language of the Oilers).

    21. Tyler Dellow
      July 20, 2011 at

      Jared – don’t get hung up on the reference to the Maginot Line. My point is this: history tells us that Germany will invade France. France basically has no defence against this now; the border is almost gone. If history is the best predictor of the future, why has France not built itself a new modern day Maginot Line, with lasers and anti-aircraft guns and massive sulphuric acid filled moats surrounding the entirety of the country? If history is the best predictor of the future, they’re insane not to.

    22. Tyler Dellow
      July 20, 2011 at

      I assume David will agree with me on this point.

    23. Tyler Dellow
      July 20, 2011 at

      If building this arena was to be absolutely effective in keeping the Oilers in Edmonton the choice would be easy for Edmonton,

      If building this arena takes the Oilers future in Edmonton from a 99.99% certainty to a 100% certainty, I’m not so sure that the choice is that easy.

    24. Showerhead
      July 20, 2011 at

      Before I get into the posts I feel speak true, I can’t believe a statement like “The choice is between spending as much as $250 million of public money to upgrade Rexall Place and fashioning a public-private compromise to build a downtown arena district that will help effect a renaissance in a city badly in need of same.”

      Talk about framing the issue. This is why you get paid, sir, but wow. It’s sad that the majority of the reading public will simply take your two options, think no deeper, and come up with the obvious conclusion. Like others have said, every dollar invested in this magic bullet “public-private compromise” comes with opportunity cost.

      From my perspective, dawgbone and Olivier hit at the core of the issue. To compare Edmonton’s downtown to those of similar cities… well, you’ve actually got to choose similar cities now don’t you? Come off the Vancouver, Montreal, Toronto comparisons – there are geographical and artificial factors acting to create population density in the downtown, density that would absolutely still be there without a hockey rink development.

      It’s about time we listened to the city planners on this one, folks, not the journalists. Population density is the key to a vitalized downtown and it cannot be artificially created by one major complex – it can only be created through the investments Olivier listed: “they invested the money in things like re-configuring boulevard, streets, greeing the streets, refurbishing some old buildings, helping tear down other and get the economic ball rolling by getting high tech companies and a fairly big university to get a campus in there.”

      Let Winnipeg, so commonly used as justification for investment of public money, stand as an example of why Olivier writes the truth. Investment in other areas of our downtown has been limited since the MTS Centre was constructed. Social spending and downtown programming has been cut while crime and poverty on the streets immediately surrounding the MTS Centre have gone up. Our downtown has not been “revitalized” and I’d warn you to be cautious of anyone who says it has been. I love this city and even its downtown but any reasonable analysis of what has happened here since our rink was built can’t possibly end with the conclusion that building a new rink in Edmonton will revitalize its core.

      Tyler, keep the posts coming – I’m keen to see the rest of your perspective.

    25. Showerhead
      July 20, 2011 at

      Tyler, where are you going exactly with the history argument? History, with context, is a great predictor of the future. Clearly the context has changed in global politics and hence, no 21st century maginot line. In the case of the arena, I could see legitimate counterarguments about the context in Edmonton not having changed by all that much. Refutable arguments, sure, but unless I’m missing something I feel that you’re being a bit hyperbolic.

    26. dawgbone
      July 20, 2011 at

      godot, everything is steps away from something in downtown. Most of the people I know who go to a game/event at the ACC don’t go to the theatre district. They take a cab to the distillery district or up to University for the nightlife there.

      Also, any public money has gone into infrastructure around the many areas of downtown.

      No one is arguing that a downtown arena doesn’t make sense, just that public money shouldn’t go into the arena but into surrounding projects to make the area more attractive to businesses.

    27. July 20, 2011 at

      Why bother? You could point out that the NHL didn’t have a CBA with a salary cap in the 90s. You could point out that a decline in the Canadian dollar will likely lead to a lowering of the cap. You could point out that Rexall isn’t the oldest arena in the NHL. You could point out that it was renovated twice in the past ten years and is structurally sound. You could point out the economic literature on public subsidies of arenas. You could point out that an arena doesn’t solve the issue of density, and therefore doesn’t help our downtown. You could point out that the Oilers haven’t shown that they are losing money. You could point out that they haven’t received any revenue-sharing money, which means they are a top ten revenue earning team in the NHL. You could point out that the CRL is a tax that prevents tax dollars from being used on other public priorities. You could point out that Columbus used a property tax abatement of 75-100% to get people to live downtown. You could point out that San Diego is so in debt with their baseball stadium bonds that they’ve had to offload it to one of their development agencies. You could point out all that, and it still wouldn’t matter, because an intellectual lightweight is an intellectual lightweight.

    28. July 20, 2011 at

      Where’s the morality in saying “In the event of a crisis in the future, we want to be certain that the policy preferences of today’s residents, many of whom will be dead or no longer living in Edmonton, have been cemented?” It’s insane.

      I don’t think this point is being made often enough in this debate. The argument seems to go that we should build an arena now, because this market might need one some time in the future to keep the NHL here. And at that time, we might have other finanical priorities, and not be able to justify the spending on a new arena.

      It’s a little bit like saying “I should finance a new car today, because if I lose my job and my current car breaks down at some point, I might choose to take the bus instead of getting the new car.”

      It’s logic like that that leads to people living out of their brand new Lexus because they can’t afford to pay the rent.

    29. Matt D
      July 20, 2011 at

      Tyler was being hyperbolic, I take it, because the non-hyperbolic version of the argument wasn’t getting through. That version was, roughly: Canadian teams left when a) the Canadian dollar was at a 60 year low, AND b) when American cities were suffering a bout of collective insanity in building tax-subsidized arenas, AND c) when there were several major American cities without teams who wanted them. It took all three of these factors combining to get teams moved.

      Tyler’s point is that the fact that these things all happened together in the past is no reason at all to think that they’ll all happen together in the future, and indeed that there is lots of independent good reason for thinking that they’re very unlikely to happen together in the future. Some of those reasons are even based on the power of the past to help us predict the future. For example: it’s probably not a good idea to make policy decisions on the assumption of the dollar being at a 60 year low (or 60 year high, for that matter). If you do, your decisions are likely to be bad ones.

    30. Smytty777
      July 20, 2011 at

      Showerhead: agree that comparing Edmonton’s situation to Vancouver or Toronto makes no sense. Calgary is likely the closest comparable, but even that comparison does not work due to the make up of the two cities. Although it is interesting that Calgary is already quietly planning their own downtown arena to replace the Saddledome and it will be interesting to note the use of public funds for that project as it moves forward.

      The problem with investing the $250M to revitalize the downtown is how to do it? The arena is being sold as a trigger to leverage $1B in private investment. There are unfortunately few details that are publicly available in regard to the $1B in private investment downtown, which in my view is the biggest reason to be leery of the project.

      If the City can actually leverage $1B in investment downtown then the project is a win.

      I have not heard of alternatives suggestions to the arena to the trigger this investment or as a catalyst to downtown revitalization, but they should be explored.

      If there is a viable alternative for the public investment then it can be looked at, but that would not relieve the city of the fact that an aging arena needs to be upgraded. Within the next 5-10 years Rexall will require a major maintenance and capital investment that the City will be on the hook for. Northlands’ estimate for this was $200M.

      So while David has certainly framed the issue, the investment will have to be made at some point and if it is an upgrade of the current Rexall then public funds would be involved.

      Any potential plan for the use of funds needs to take that upcoming cost into account.

    31. July 20, 2011 at

      No one is arguing that a downtown arena doesn’t make sense,

      I would actually argue that it doesn’t make sense, at least from the perspective of solving the density issue in Edmonton’s downtown. What the city needs is more people living downtown. An arena doesn’t solve that, because people still leave at the end of the day. It’s similar to an office tower, in that sense. So we’re talking about opportunity costs. But yeah, if the guy paid for it himself, I’d live with it, even though I don’t think it solves any density issues. At least we’d have some extra cash to do things that could really help downtown, like the per-unit residential subsidy that helped build up the area west of 109th street. Instead we’re going to subsidize a billionaire to put up the exact opposite of what we need in the downtown core.

    32. mats thomassen
      July 20, 2011 at

      The Maginot Line analogy works better if your point is that a static defense is, in fact, not much of a defense at all.

      As proven by Glendale’s current predicament.

      I am from Calgary and currently live in Ottawa. Having an arena downtown (as opposed to, I don’t know, Kanata) is unquestionably a more desirable thing.

      However, what really makes me want to live downtown are the shopping and nightlife districts, the restaurants, the large numbers of young adults, and the proximity to my work. I really doubt anyone bought a $700,000 condo in downtown Calgary primarily because the Saddledome was close by.

      Owners should build the arena. Cities should build the surrounding infrastructure. How this could be controversial is beyond me.

    33. Nigel
      July 20, 2011 at

      Another point around the Toronto SkyDome (I refuse to use Rogers Centre) as a source of revitalization is that a lot of the credit should really go to the “Two King’s” policy changes at City Hall – which really drove the ‘condo-ization’ of King West. See: A fun sentence in that report? “The City does not offer any financial incentives to attract
      development to the Kings.”
      In contrast, the SkyDome? Public-private partnership built it for C$570M and later sold to Rogers for $25M (after a series of other financial wranglings like SportsCo).

    34. Showerhead
      July 20, 2011 at

      Matt D:
      the non-hyperbolic version of the argument wasn’t getting through.
      This makes me sad, but thank you – I understand it now.

      Andy Grabia:
      the entirety of post 27
      This makes me sad, but thank you – you mentioned many good points.

      Smytty:
      There are unfortunately few details that are publicly available in regard to the $1B in private investment downtown, which in my view is the biggest reason to be leery of the project.
      This reminds me of various justifications for the City of Winnipeg and Province of Manitoba to invest in the new Bomber stadium in Winnipeg. As someone who has seen many presentations and documents related to the matter, they mostly turned out to be smoke. You’re absolutely right: if $1B is somehow leveraged out of this deal, it is a win. The only problem is that no one can show you how and if they try they will likely come up short.

    35. dawgbone
      July 20, 2011 at

      Andy, so what your saying is in the context of my argument (which was no public funding for the arena but public funding for other things around the arena), is that no one is arguing that a downtown arena doesn’t make sense.

    36. Mike W
      July 20, 2011 at

      MacKinnon and Staples seem to have the bulk of their argument hinge on an either/or choice: a new arena or the “$250 million in public money so Northlands can keep its show going at Rexall”

      This speaks to the lack of skepticism and good reason that has been missing in almost all reporting related to the arena, from day 1. The $250 million price tag originally floated was related to the deluxe renovation of Rexall, with a an entirely new, donut-ring concourse surrounding the original structure. What was never properly discussed is what would be NEEDED to be renovated in the next 20 years or so, which was physical plant equipment like an ice-making machine (I tried to find out how much a machine like this might cost — I found a listing for $800,000).

      And with that, alternate renovation proposals that wouldn’t cost hundreds of millions were never considered. As of the early 2000s, Oilers ownership referred to Rexall as “state of the art” — are we really to believe it’s the rat infested crush-hole that only tax-payer money can fill?

    37. JonB
      July 20, 2011 at

      No way Katz has his note at 4% from CTI Financial I’d guess more like 7 to 8%. I’ve had the same argument with people many times about the Oilers losing money . The only plausible way this is even remotely true would be because of Katz having to service the note he needed to buy the team.

      And MacKinnon can you please bring some of the venom and fury from your post above to your column. I’m tired of being continually dissapointed by your paint-by-numbers, idea stolen straight from the AP headline facimile, bland ass columns.

    38. July 20, 2011 at

      Andy, so what your saying is in the context of my argument (which was no public funding for the arena but public funding for other things around the arena), is that no one is arguing that a downtown arena doesn’t make sense.

      Sorry, I’m a bit confused by this. I was arguing that a downtown arena isn’t the best way to “revitalize” the downtown core, public dollars or not.

    39. July 20, 2011 at

      The only plausible way this is even remotely true would be because of Katz having to service the note he needed to buy the team.

      Bingo.

      And no one’s talking about how much the value of the team will increase once he has this sweet arena deal. I’m guessing it will be around, um, I don’t know, maybe $100 million?

    40. David S
      July 20, 2011 at

      As I understand it, Katz is in for $100M cash for the arena, plus $125M in forgeone revenue from the ticket tax. The CRL looks to be around $100M, so really the public expense should be around $125M. On top of which, the planned development immediately surrounding the arena (where Katz will invest an additional $100M) could be in excess of $1B. This is in addition to the condo projects in the hopper and already in progress outside or adjacent to the boundaries of the arena zone. Just watch the downtown development permit applications spike when this deal finally gets done.

      Yes, there’s an arena at the core, but it seems some people here are loath to remember that it’s an entire district we’re talking about. With condos and office buildings and restaurants, bars, clubs, stores, etc. ALL of this will contribute to the increased density this city sorely needs – to Andy’s point.

      I know it seems like a simplification, but it’s the truth. The city will be on the hook for a major reno at Rexall or that same money could be used to catalyze an entire downtown district PLUS an arena. It’s a no-brainer that money should be spent where it generates the better return, which is logically downtown (for the above-mentioned reasons).

      Are the Oilers losing money? Nobody knows the truth about the team’s financial position. But if they’re making less money than their competitors, then they are in effect losing potential revenue. It seems to me this new arena is being built to remedy that fact with a huge increase in corporate suites, something that’s not possible at the existing arena.

      Lastly, let’s keep in mind the reason the MSM was so easy on the EIG was because their employers (Journal, SUN, radio) generated HUGE advertising revenues from the businesses that were owned by the EIG members.

    41. kinger
      July 21, 2011 at

      That picture is amazing.

    42. JonB
      July 21, 2011 at

      It’s really absurd to leave the CRL portion of the funding outside of your “public expense” calculation.

      That’s 225 million in city funding before the mythical provincial funding comes in.

      And let’s not forget the significant infrastructure cost the city will need to incur to make the downtown area suitable for arena traffic. Pin down a city planner Mr.Staples and ask him what the costs will be for roadwork, street widening, transportation…etc.etc

    43. dawgbone
      July 21, 2011 at

      @Andy, I never said it was (the best way to revitalize downtown), and it was me you were quoting.

      I just said I don’t think anyone was arguing against a downtown arena (on it’s own merit).

    44. Showerhead
      July 21, 2011 at

      Lastly, let’s keep in mind the reason the MSM was so easy on the EIG was because their employers (Journal, SUN, radio) generated HUGE advertising revenues from the businesses that were owned by the EIG members.

      You’re absolutely right – this is a great point. I am quite glad to have grown up in an age of internet and blogging and independent media. There are certain advantages that will always be attached to being part of a corporation but the blogosphere has become a meritocracy where tough questions do get asked and good writers do their best to answer them.

      Also, they insult each other a bit, but they all seem to think a large chunk of public money for an arena is a poor decision so I am still happy.

    45. Tom Benjamin
      July 21, 2011 at

      Are the Oilers losing money? Nobody knows the truth about the team’s financial position.

      This is not true. Katz knows exactly what is what. He knows what the revenues are right now and he can project them for another 20 years at Rexall. He has also projected them given a new arena under the proposed terms.

      Doesn’t it matter whether Katz is getting a good deal, or a great deal or a knock your fucking socks off deal? Doesn’t it matter whether his return on his basically riskless investment is 5%, 10% or 25%?

      The public should be able to say, “Come on, I like the idea but the city is carrying all the risk if the revitalization doesn’t work out. Either the city should get a piece of that new revenue stream or Katz should put up twice the money.”

      Even if I thought a downtown arena was a brilliant idea, I’d want to know that the price is fair. Otherwise, it is a pig in a poke.

      The city has leverage in these negotiations. Katz has no place to go. Kansas City could give him their brand new arena and it probably would not pay him to move the Oilers. This is a good hockey market that generates good revenues in an acceptable rink. There’s nothing better than that for Katz in North America and there probably won’t be anything better for the next ten years.

      Open the books, Mr. Katz, or take a hike.

    46. David S
      July 21, 2011 at

      A large chunk of money “for an arena” is a false statement. It’s a large chunk of money for an arena district. I wish people would apply the right context to these discussions. It just so happens that the arena is the lynchpin to the entire project.

      And I’ll reiterate. That “large chunk of money” WILL be spent either at Rexall or downtown. There’s no other outcome. If the money will indeed be spent, then logically you want to spend it where it’ll do the most good.

      *Note: I’m not David Staples, nor posing as him. I just happen to agree with alot of what he says. He posts under his own full name.

    47. David S
      July 21, 2011 at

      @Tom

      Either the city should get a piece of that new revenue stream or Katz should put up twice the money.”

      Increased population density, making the city more attractive to a working population (potential and actual), ancillary development, increased civic pride and downtown revitalization are all potential sources of “new revenue streams”.

    48. Bank Shot
      July 21, 2011 at

      What was never properly discussed is what would be NEEDED to be renovated in the next 20 years or so, which was physical plant equipment like an ice-making machine (I tried to find out how much a machine like this might cost — I found a listing for $800,000).

      As far as I know the ice plant has already been replaced. The next move would be replacing the piping in the concrete floor which would run into the millions I imagine. The floor would need to be torn up, the new piping laid, and welded, new concrete poured, and no events for a few weeks while this happens.

      I’m sure other renos aren’t going to be cheap either. Northlands currently wants the seats redone and they are looking for $800,000 just for that. It’s unsure how much, but the city would clearly be losing money if they stayed in the old arena long term.

      With a new rink, the city will have a 35 year lease which will pay a heck of a lot more then the Dollar per year they are currently receiving. Also, with the way this project is being conceptualized, the new arena complex will in all likelihood have a much longer shelf life then Rexall Place. It’s easy to abandon a rink in the middle of nowhere. It won’t make much sense to abandon a giant complex with casinos, hotels, and cafe, bars, and a WINTER WONDERLAND PARK!!!TM in the heart of the downtown core. This thing should generate revenue for the city for 40+ years.

      As an investment for the city of Edmonton, it doesn’t look like that bad of a deal. Sure, a rich man is going to profit from this government spending, but that would be the case regardless of where the city spends that money.

    49. Tom Benjamin
      July 21, 2011 at

      Increased population density, making the city more attractive to a working population (potential and actual), ancillary development, increased civic pride and downtown revitalization are all potential sources of “new revenue streams”.

      So what? I’m talking about the cost of the arena. Does it not matter whether Katz makes out like a bandit and the city carries the risk that these potential sources actually becomes a real source? Is it fair if Katz gets a much better return on his money than the taxpayer? Why? How about if Katz takes half the revenue from the rink and half the revenue generated by increased civic pride?

      Even if I accept your arguments about all the benefits to the city of this project, I still need to know that the deal with my partner is a fair one, don’t I? Is it? How do you know?

    50. Showerhead
      July 21, 2011 at

      It’s a large chunk of money for an arena district.

      Increased population density, making the city more attractive to a working population (potential and actual), ancillary development, increased civic pride and downtown revitalization are all potential sources of “new revenue streams”.

      Show me how, because right now your argument has the cart placed squarely in front of the horse.

    51. Showerhead
      July 21, 2011 at

      Whoops, closed my bold tag in the wrong place. Post above should read arena district.

    52. David S
      July 21, 2011 at

      @ Tom

      I don’t care about Katz’ return. He bought the team, is putting up a substantial amount of cash and is overseeing the entire development. He’s not in it for charity and I get that. What the city gets (and yes, there’s some risk involved) is in excess of a billion dollars of development for an investment far far less, with all the items I mentioned above.

      Let’s not forget the crux of the argument. Upwards of $250M WILL be spent. The choice is refurbishing an outdated facility or (in effect) rebuilding downtown.

    53. David S
      July 21, 2011 at

      @ Showerhead

      Each of the benefits I mentioned have offshoot revenue stream generation outcomes, either directly or indirectly. Not sure how you’re concluding “cart before the horse”.

      Detailing each would take far more time and effort than is warranted as I’m not prepared to write an economic paper right now. I’d suggest re-reading Staples’ article series on the matters in question.

    54. Kris
      July 21, 2011 at

      If the arena is a good investment that many Edmontonians love, just create a bond that they can buy that will fund the arena. Then, create a small tax of the supposedly wonderful yield on the billions of investment in the new super-downtown which will then go to the bondholders.

      If the arena is a good investment that will bring over a billion in new investments and all sorts of other benefits then we should buy the bonds. If it isn’t a good investment, then we shouldn’t buy the bonds. But if we shouldn’t buy the bonds, why should the taxpayers be forced do something tantamount to buying bonds to finance the arena?

      My guess is that people wouldn’t and shouodn’t buy the bonds because there is a strong chance that the new developments wouldn’t come, which means the arena investment is a bad investment for anyone, including the taxpayers. But if the arena defenders are right that the downtown revitalization is such a good idea, then people would and should buy the bonds.

      A compromise proposal would be to have the city subsidize the return on the bonds -paying less than 250MM, say maybe 50MM- to make the bonds more attractive. And that might be fair, given that the city may benefit in some small way from the arena. (I would argue the arena hurts the downtown long term, but that’s an urban planning debate that would take forever to discuss.)

    55. Kris
      July 21, 2011 at

      Why should we believe that Rexall can’t be renovated for much less than 250MM?

      I’m skeptical and would need to hear from an unbiased authority, with multiple bids from contractors trying to honestly compete with each other.

      It’s also possible Katz could finance all of this on his own and is just being savvy by getting the city to take the risk’ knowing that it’s traumarized citizens are irrationally panicky about the team moving.

      So, it’s not clear that the choice is between spending all the money renovating Rexall or a similar amount on a new arena. That’s not at all a given.

      The possibilities are:
      Katz builds the arena all on his own.
      Bonds finance the arena
      The city pays some, but much less than Katz is asking. (They call that negotiating.)
      The city puts 25Mm into Rexall.
      Etc.
      Etc.

    56. Tom Benjamin
      July 21, 2011 at

      I don’t care about Katz’ return. He bought the team, is putting up a substantial amount of cash and is overseeing the entire development.

      His investment in the team is an entirely different thing. We are talking about his investment in this project and the city’s investment in this project. The benefit to the city will be the same no matter how it is financed. Should the city put in $2 for every $1 put up by Katz? Or should Katz put up $2 for every $1 put up by the taxpayer?

      You do not know whether he is putting up a substantial amount of cash or not because that depends on his return. If his revenues jump by $30 MM a year with a new rink, he’s putting up a pittance. You don’t know whether he is making a good offer or not.

      Katz has surely tabled an offer that reflects the minimum amount he can put into the deal and still have it sell politically. The city should want him to put in more money until the deal doesn’t make any financial sense to him.

    57. July 21, 2011 at

      @ David S

      No need to write an economic paper on the topic, since plenty of actual economists already have. I’d suggest staring with some of Brad Humphreys’ writing on the matters in question.

      A downtown arena might spur on development in the downtown core, but unless people in the Edmonton area have been holding back a bunch of their entertainment dollars, waiting to spend it once a new arena district is built, then it’s not likely to increase city revenue overall.

      If people want to make the argument that the ‘increased civic pride’ is worth the expense to the city, then fine. Just stop pretending that this thing will somehow pay for its self.

    58. chartleys
      July 21, 2011 at

      There are a whole pile of things wrong with the base of the majority of the THIS HAS TO BE DONE arguement.

      It’s lack of logical sense is truly baffling. I to am really struck how Staples seems to unquestionably towing a company line that he isn’t even part of. I honestly stopped reading his pieces.

      Fact the Oilers are losing money – false unless they are badly mismanaged

      Fact it will cost 250 million to keep Rexall running – false to completely renovate it significantly upgrading a facility that at present already has the surrounding infrastructure in place so no additional cost will be neccessary.

      It goes on and on and on and on.

      the part that really bothers me is the revitalization arguement. It just lacks any semblance of sense. If that is the primary goal, wouldn’t 250 million in subsidies to companies not currently operating in town to build new office buildings likely accomplish a great deal more? Couldn’t you develop an entertainment district without a massive concrete megaplex in the middle of it? How come Rexall didn’t revitalize the area it’s presently in? Seems like this is a sure-fire can’t miss type of deal only if you choose to completely ignore the mounting evidence to the contrary.

      Do I understand why the city of Edmonton needs to pay for an arena for a what should be already profitable business so that it can freeze out Northlands and absorb all the concert revenues to make even more money?

      That is the underlying question. Sure, I’ll build them a new arena, keep the concert revenue for the city of Edmonton itself (hey it is our buidling). The ‘deal’ as it’s proposed is so devoid of sense. It’s stunning to see anyone unquestionably stump for it and David continues to do.

    59. spOILer
      July 21, 2011 at

      David Staples said…

      The best predictor of the future is the past. Economic condititions can again change for the NHL, for Edmonton, for the USA, and we could be in a much more difficult position here, which would be made all the worse if we had the NHL’s oldest, second smallest rink (Winnipeg will be smaller).

      No rational, logical person can make this statement. The future is unknown, but this is a known solution to that unknown future. Sheesh.

      Staples said…

      So we have a choice. Put $250 million in public money so Northlands can keep its show going at Rexall, put in $250 million in public money for a great new rink downtown that can help revitalized an extremely crappy area of downtown (something people who actually live in this city would give a crap about, eh ) or we could say to hell with it and do nothing.

      These aren’t the only choices, but falsely limiting the choices is a typical strategy.

      Staples said…

      If Katz wants his rink, we could say, he can build it himself. Maybe he would. That’s what happened in Columbus. Or maybe he’d stay here while the sun still shined, then if things changed, as they have in the past, he’d pick up and move.

      Yup. We call that capitalism here. And hey, if Katz wants to accept the risk of a venture in Atlanta, Phoenix, Seattle, wherever, all the power to him. It’s his team, not ours.

      Not to mention he could still do this after we build him his arena.

      And when the hell did arenas become “infrastructure”.

    60. David S
      July 21, 2011 at

      @ Chartleys

      The $250M figure was the “donut reno” estimate put forward to bring Rexall up to league standards and included a wider concourse, additional seating and increased luxury boxes (where the real revenue is generated). This is probably a no-go because it’s clear Katz wants nothing to do with Northlands.

      As far as subsidies go, well no that won’t work. The arena is the anchor tenant and needs to be the first-mover before other developers will commit – and I can tell you for a fact that there are several interested parties waiting for this thing to break ground.

      With respect to why Rexall has not generated revitalization, well I must assume you’ve never been to a game because that answer would have been self-evident. The area is surrounded by lower middle class residential areas and worn out industrial buildings, most of which would hold out for nonsensical buy-outs, versus the vacant tracts of land the downtown project would be able to use (and which has been spoken for already by the Katz group) at substantially less cost.

      In general, I don’t get it. I’ve never seen such resistance to progress. Twenty years ago some of you guys would be whining about “that damned internet” and bottled water. Our city center is a shithole right now. It will be going forward unless somebody has the balls to change things and take some risks in the pursuit of improving things. So what if it costs me tax dollars? At the end of the day, I live here and I for one welcome the prospect of a downtown upgrade, even if it does involve *cringe* commerce and vitality.

    61. Tyler Dellow
      July 21, 2011 at

      Twenty years ago some of you guys would be whining about “that damned internet” and bottled water…I live here and I for one welcome the prospect of a downtown upgrade, even if it does involve *cringe* commerce and vitality.

      Do you really think that people who comment on this site are opposed to progress and commerce?

    62. spOILer
      July 21, 2011 at

      I’d like to know, given what I am sure is The Journal’s desire to present fair and balanced reporting to their audience (and given their responsibility to be a check on government per H.L. Mencken), who is providing the contrarian point of view at The Journal?

      Which member of any part of the MSM is providing the contrarian view?

      That seems a bit strange doesn’t it?

    63. spOILer
      July 21, 2011 at

      In general, I don’t get it. I’ve never seen such resistance to progress. Twenty years ago some of you guys would be whining about “that damned internet” and bottled water. Our city center is a shithole right now. It will be going forward unless somebody has the balls to change things and take some risks in the pursuit of improving things. So what if it costs me tax dollars? At the end of the day, I live here and I for one welcome the prospect of a downtown upgrade, even if it does involve *cringe* commerce and vitality.

      Yet another strawman. My god, does it never end? You should really go work for a central bank.

    64. spOILer
      July 21, 2011 at

      It will be going forward unless somebody has the balls to change things and take some risks in the pursuit of improving things.

      Something we would all like Katz to do… Accept the risk of his venture and have the banking industry finance it accordingly.

    65. David S
      July 21, 2011 at

      @Tyler

      I made a point of listening to your segment on LT’s show. You’re well spoken and obviously intelligent. I would have appreciated you and Staples going at it in a debate if it were possible.

      What I don’t get is, it’s really easy to put down something. It’s far harder to say “how could we make this work?”. To my eye there’s lots of smart guys on this site taking the easy way out. Where’s the fun in that?

    66. Matt D
      July 21, 2011 at

      “Spelling out basic economic truths” = “taking the easy way out.”
      OK then.

    67. spOILer
      July 21, 2011 at

      Staples said…

      The arena is the anchor tenant and needs to be the first-mover before other developers will commit –and I can tell you for a fact that there are several interested parties waiting for this thing to break ground.

      Imagine that. The government is giving away free money and developers are interested. The shock.

    68. incubo nero
      July 21, 2011 at

      I belive what David S is trying to convey is that . . .
      “The only option is for Katz to do this on his own” = “taking the easy way out.”

    69. spOILer
      July 21, 2011 at

      David S…

      The solution is a no-brainer. The businessman finances his project with that sector of the economy dedicated to financing and assesment of risk and the municipal government builds the surrounding infrastructure, financed by present and future property taxes.

    70. The Other John
      July 21, 2011 at

      Where to start?

      OIlers putting $100m into a new arena;
      COE is putting in $125m directly;
      +COE is buying land for FMV from Katz
      +COE is funding 100% of projected ticket tax revenue up from
      COE is getting tic tax money back over 20 years
      +COE is paying for all infrastructure related tie ins
      COE is capping arena cost at $450m, less land, less tie ins(COE responsibility)
      which means either a fixed price contract or construction cost overruns are
      Responsibility of COE ….. Did I mention the Oilers in for $100m

      Now the commercial development originally proposed was 2 office towers and 2 hotels. Those “proposals” have been “blown up” real good by pretty basic supply/demand principles. So we are now talking about bars, restaurants and condos. No developer has announced their projects so far. We have not heard what the Oilers propose with their “announced” $100m contribution. Business Columnist at Journal has heard from nobody that plans to develop. in fairness that is Lamphier’s “pointed not balanced” view. In a nut shell that’s the Arena District that the Other Dave S talks about.

      To build a billion dollars worth of bars, restaurants and condos is a really really big development

      Have to say if I was the Oilers I would do this deal in a freaking heartbeat. Micro nanosecond! If I was the COE, I would not do this deal on what will become a $550-600m cost where I only have the Oilers $100m up front.

      To build on Dave Staples “Transparency by all is needed” column today wherein he expressed his pointed opinion that Northlands must open their profit/loss data to the COE, I am sure he will now call for the same level of disclosure from the Oilers. Fortunately the Northlands annual financial statements are already public records. Available to anyone

      Sorry last comment was being facetious, we have been told by Oilers that they are losing $$$ so we need look into that issue

      Eagerly await Part II

    71. Schitzo
      July 21, 2011 at

      I thought that Staples piece today was truly remarkable. Slagging Northlands for being financially opaque while Pat Laforge is out and about crying poor. Go figure.

    72. kris
      July 21, 2011 at

      Tyler,

      This is a great piece. Researched, clear, broadly considered, and fair.

      Would David Staples be willing to publish it on his Edmonton Journal blog as an interesting, balanced, counterpoint to his arguments? He could add a little rebuttal to each piece.

      If not, that says a lot about the MSM in Edmonton.

    73. incubo nero
      July 21, 2011 at

      @TOJ:
      Well, same op piece had Farbrother express confidence that Katz group will open books. Came about as a response from a Sloan question.

    74. July 21, 2011 at

      which would be made all the worse if we had the NHL’s oldest, second smallest rink

      Madison Square Garden.

      Hmmm, it’s weird Staples, but when I see somebody talk about Rexall as the NHL’s oldest arena I for some reason keep blurting out those three words. I’m not sure why…

      Madison Square Garden.

    75. July 21, 2011 at

      What the city gets (and yes, there’s some risk involved) is in excess of a billion dollars of development

      Will the City of Edmonton give $94,000 to every homeowner who builds a $375,000 house? After all, what the city gets is a $375,000 investment in our city at a much reduced cost.

      This, I admit, is not a fair comparison. A homeowner will continue to pay taxes, while Katz (apparently) will not.

    76. July 21, 2011 at

      The arena is the anchor tenant and needs to be the first-mover before other developers will commit – and I can tell you for a fact that there are several interested parties waiting for this thing to break ground.

      Of all the arguments in favour of a new arena, “Terry Paranych can’t make a killing if tax money doesn’t go into this” has to be one of the worst ones.

      With respect to why Rexall has not generated revitalization, well I must assume you’ve never been to a game because that answer would have been self-evident. The area is surrounded by lower middle class residential areas and worn out industrial buildings

      The new arena is going up near the Greyhound Depot and the Boyle Street Co-op, isn’t it? When they want to build another new arena on Whyte Avenue in 2050 are you going to just dust off the same excuses and remarket them?

    77. chartleys
      July 21, 2011 at

      Again and again and again bs points that lack substance. The problem is you are dealing with intelligent people that see the true zero sum value of the current plan.

      It’s a terrible deal.

      Where is the new business? 2000 more seats…that’s the key to revitalizing the downtown core? A big concrete structure that surges bodies in and out (most of which already venture into existing business/hotels before or after the game…If I’m not mistaken isn’t Rexall already a very highly booked venue for large musical acts?

      It doesn’t add up to much.

      You want investment that will pay. Start paying attention to the Nait LRT line development and the bizarre short sighted “no surrender” approach this thing is getting rammed through with. It comes above ground too soon and is going to stifle northern edge development going forward.

      As for condos…I’ve honestly never seen a listing sporting “Right next to big arena” high on a list of demands. Build a solid LRT plan, put in some green space, zone in a grocery store. Likely a bigger draw for residencial…still the whole business thing though.

      It’s not like Hyperglobal megacorp is going to be excited about planting their new headquarters into this CRL taxed zone anytime soon. This revitalize downtown smells as bad as weapons of mass destruction did. It just really doesn’t contain any substance. That is the problem.

    78. chartleys
      July 21, 2011 at

      It’s not to say this thing is the worst idea forever but the model put forward isn’t even worth considering.

      The public coffer puts up the lion’s share of the financing. A steep increase in profits (by freezing Northlands out of concert business and increasing capacity for season tickets and luxury boxes) directly goes to Katz (this is present value guaranteed cash). The taxpayer hopes other things magically present themselves. This is disregarding the likely expansion of enterprise that will naturally be taking place due to the Natural resource potential of the north and attributes any new growth and new industry is explicity only going to be downtown if a new arena is there. It’s laughable at best. Closing the municipal airport (thus allowing the construction of bigger buildings) and providing tax relief incentives for business to establish downtown seems like a solid revitalization plan. Big complex is not the catalyst. It just isn’t.

    79. Kris
      July 21, 2011 at

      I think your opponents have conceded on this first argument. Edmonton is an excellent hockey market, even with the current arena, now and in the foreseeable future, and Katz won’t do better elsewhere. The team will not move for the next 10 years at least.

      If 10 years from now, we need to publicly finance the arena and team to prevent them from leaving, we can reconsider it then.

      Let’s move to the next argument.

    80. Bank Shot
      July 21, 2011 at

      The public coffer puts up the lion’s share of the financing. A steep increase in profits (by freezing Northlands out of concert business and increasing capacity for season tickets and luxury boxes) directly goes to Katz (this is present value guaranteed cash). The taxpayer hopes other things magically present themselves

      City of Edmonton gets paid on an actual lease. Right now the Oilers pay a dollar per year, Northlands gets all the concert revenue, and stays in operation only due to yearly handouts from the city.

    81. Bank Shot
      July 21, 2011 at

      The public coffer puts up the lion’s share of the financing. A steep increase in profits (by freezing Northlands out of concert business and increasing capacity for season tickets and luxury boxes) directly goes to Katz (this is present value guaranteed cash)

      City of Edmonton gets paid on an actual lease. Right now the Oilers pay a dollar per year, Northlands gets all the concert revenue, and stays in operation only due to yearly handouts from the city.

    82. JohnnieOil
      July 21, 2011 at

      It is a sad state of affairs when most of the arguments against the new downtown arena are framed by an apparent envy and jealousy that Katz has more money than you. By not having any development sure has helped the poor people downtown hasn’t it, so don’t build and it will help the poor more? Maybe some jobs generated by the project may help. As for public money where is the cries of outrage over the money spent on museum or the new museum planned for 300 mil$ of public money? A project that will have no or very little revenue stream and will require millions more of tax dollars in order to operate, where is the outrage on that? Is it because it’s art? Well hockey is an art too, performance art if you will but with a solid revenue stream and gives Edmonton a much more global exposure than any museum will. Plus the city will get their investment back and own the arena and land without having to pay any of the operations and maintenance costs, pretty good deal as far as I am concerned. Just look in Vancouver, Pittsburgh that have a downtown arena. Before the arena was put in downtown Vancouver that part of town was skid row. Now it is full of condos, bars, shops, restaurants and many other small business, the new arena was the start without it it would have never happened. Yes the arena in Vancouver was built with private money but the land and surrounding parking was sold to the griffin family for 1$ and theynalso got tax exemptions, loan garuantees and from the city and is basically the same. Also this project is more than just the arena it is a whole district with hotels, condos, entertainment areas, shopping and more, put aside your jealousy of Katz having more than you and look at the big picture and while at it ignore commentary from writers, bloggers from Toronto who appear to unable to think someplace outside of Toronto would have better facilities for their hockey team than they do.

    83. David S
      July 21, 2011 at

      Actually, the opponents are probably sitting back and shaking their heads. Both Staples and Mackinnon have asked basically the same question, and not one response here has come up with an answer. That question being where best to spend the afore-mentioned $250M. Either upgrading Rexall, with little or no additional benefit, or downtown with the very real benefit of an entire pocket of dead space being re-developed (on top of secondary spin-off development).

      Alot of “intelligent” posters have sidestepped the issue quite nicely, waxing poetically on green space, LRT improvement in the north end of the city and the like, which besides being off topic are not going to catalyze the type of development that’s possible here. But hey, if it stops one damned entrepreneur from making some money you’re all for it.

      So let’s get back on topic, shall we? The fact that major money is going to be spent is not the issue at hand. It WILL be spent. The only issue is where and how to get the best return for that money. Some of us happen to think downtown is the better option. Anybody else have a better alternative?

      Of course, Staples’ third option is always on the table. Do nothing, sit back and wait for Folk Festival tickets to come on sale. No more “forward thinking” talk around here. That derelict land downtown is just fine the way it is. “Big thinking” and things like “urban densification” is loser talk anyways, right? We like things juuuuuust the way they are thank you very much.

      Right?

    84. David S
      July 21, 2011 at

      BTW – since when do comments await moderation here at MC79? Weird.

    85. JohnnieOil
      July 21, 2011 at

      It is a sad state of affairs when most of the arguments against the new downtown arena are framed by an apparent envy and jealousy that Katz has more money than you. By not having any development sure has helped the poor people downtown hasn’t it, so don’t build and it will help the poor more? Maybe some jobs generated by the project may help. As for public money where is the cries of outrage over the money spent on museum or the new museum planned for 300 mil$ of public money? A project that will have no or very little revenue stream and will require millions more of tax dollars in order to operate, where is the outrage on that? Is it because it’s art? Well hockey is an art too, performance art if you will but with a solid revenue stream and gives Edmonton a much more global exposure than any museum will. Plus the city will get their investment back and own the arena and land without having to pay any of the operations and maintenance costs, pretty good deal as far as I am concerned. Just look in Vancouver, Pittsburgh that have a downtown arena. Before the arena was put in downtown Vancouver that part of town was skid row. Now it is full of condos, bars, shops, restaurants and many other small business, the new arena was the start without it it would have never happened. Yes the arena in Vancouver was built with private money but the land and surrounding parking was sold to the griffin family for 1$ and theynalso got tax exemptions, loan garuantees and from the city and is basically the same. Also this project is more than just the arena it is a whole district with hotels, condos, entertainment areas, shopping and more, put aside your jealousy of Katz having more than you and look at the big picture and while at it ignore commentary from writers, bloggers from Toronto who appear to unable to think someplace outside of Toronto would have better facilities for their hockey team than they do.

    86. July 21, 2011 at

      @Kris, agreed. I’ve never had the displeasure of being blackmailed, but I’d wait until the threat was actually made before I’d start putting my rare beanie babies on ebay.

      This is a crude analogy, but this is like your 10 year old neighbour coming by and saying that in a decade when he’s 20 and in a gang, he’s going to come by, kidnap your wife and demand a million dollars for her safe return. But today’s your lucky day… he’s willing to go halfsies with you right now. So, pay him $500k today and he won’t kidnap your wife in 10 years.

      Except in this context, Katz hasn’t even had the decency to make the threat yet… he’s relying on others to make them for him.

      Just like I’d take my chances that my 10 year old neighbour will grow up, move into a college dorm and forget the threat he made, I’ll take my chances that in 10 years, most Americans still won’t love hockey, the Quebec Predators and the Hamilton Panthers will be thriving and at least 10 US teams would give up their double-wide, marble-laden concourses for two-thirds of the attendance and average ticket prices the Oilers are generating out of a $10m upgraded Rexall Place.

    87. dawgbone
      July 22, 2011 at

      I think the most important question that needs to be asked to the people of Edmonton is this:

      Why don’t you live downtown?

      I can’t imagine that the answer is “Because there is no arena”.

      There needs to be an incentive for people to move there. For many people, that means it needs to be a combination of convenience, safety and affordability.

      If people aren’t living in the d/t area, then all of this development isn’t going to help. It will look pretty at first, but sustainability will be difficult.

    88. Smytty777
      July 22, 2011 at

      @FACLC

      I assume you are joking about MSG being an “older” building than Rexall right?

      MSG underwent a $200M renovation in 1990 and is undergoing a $500M renovation right now.

      To refer to its original construction date without taking the renovations into context and suggest it is older than Rexall is completely laughable.

      The only building older than Rexall is the Islanders in Nassau.

    89. Scott Hennig
      July 22, 2011 at

      @ David S… This is a false dilemma argument. That’s why nobody should answer it.

      I have never talked to anyone who thought that spending $250m on a goofy doughnut was a good idea. The fact that it’s not actually going to cost $250m anymore is mute. It’s a stupid plan at most prices.

      The issue is that no one on council has asked for a real estimate on doing basic maintenance on Rexall. Can we spend $10 million and keep it operational for the next 15 years? Or is it $25 million? Or $50 million?

      Nobody on council has asked these questions. But if we have to choose between spending $200-$300m on a new arena or $10m on maintenance on the current one, maybe that’s a debate worth discussing.

      Further, what does happen if we do nothing? Sometimes teams leave (see Seattle Super Sonics), but only if they have a better place to go… sometimes the team owner leverages a property development to pay for the entire new arena on their own (see Columbus).

      Considering there is no better place in North America to go right now, I will take my chances on Katz buying a new arena himself and that the 20 teams that are doing worse than Edmonton moving to better markets before the Oilers do.

    90. Showerhead
      July 22, 2011 at

      Ask any city planner who is worth his or her salt: to have vitality in your downtown, you need consistent population density. To invest in the arena development as planned and not in transit, housing, local businesses, etc is like sending a knight to a jousting tournament with a world class lance and no horse to ride on.

      If the arena development goes forward as planned, private money should pay for it and public money should go towards development of city infrastructure – there’s your “public/private compromise”.

    91. chartleys
      July 22, 2011 at

      Showerhead already said it better than I can but it begs repeating:

      the question is not the 250 million worth of leveraged debt is going to be spent. Is it really? regardless of whether the or not the city really stands to benefit this money has to be spent?

      The question that the majority of the pro arena shlock has been riding to battle under the piss pour, thinly veiled guise of downtown revitalization. Livability of the core are the essential components of this arguement. So questions like:

      1. Is an arena going to ensure that older, troubled neighbourhoods like central mcdougal (was a homeowner right in the area) going to be provided with full-time policing to curb violence going to be solved by building a new arena?

      2. Is the building of a new arena going to curb the closure of inner city schools?

      3. Is the building of a new arena going to somehow begin taking adequate tax from the commuters who use the infrastructure but do not contribute to maintaining it proportionally?

      Honestly, I used to live like 4 blocks from the proposed site. A large entertainment complex, the surging crowds and quagmire of parking and traffic movement issues is not going to make the surrounds anymore desireable to live in, in fact likely has the opposite effect.

      The saddledome is pretty much downtown, pull up real estate listings and see if there is much mention of it. Probably not because it honestly creates somewhat of an infrastructure black hole around it. People go in, watch their show and leave. It’s just not an overly desireable thing to live right beside.

    92. July 22, 2011 at

      Madison Square Garden.

      Hmmm, it’s weird Staples, but when I see somebody talk about Rexall as the NHL’s oldest arena I for some reason keep blurting out those three words. I’m not sure why…

      Madison Square Garden.

      And in between MSG and Rexall is the Nassau Veterans Memorial Coliseum (1972).

      That question being where best to spend the afore-mentioned $250M. Either upgrading Rexall, with little or no additional benefit, or downtown with the very real benefit of an entire pocket of dead space being re-developed (on top of secondary spin-off development).

      Because half an arena complex is the only thing one can spend $250M on to improve the downtown core.

      Limiting the scope of debate to control the outcome. Politics 101. Very nice.

      I assume you are joking about MSG being an “older” building than Rexall right?

      MSG underwent a $200M renovation in 1990 and is undergoing a $500M renovation right now.

      What an absurd argument. Lots of buildings undergo renovations. Doesn’t make them new. How old was the Montreal Forum when it was closed? 72 years, or 28? The Lougheed House on the outskirts of downtown Calgary underwent massive renovations and restorations to become a museum, but it’s still over a hundred years old.

      If that’s the case, why not just put eight or nine figures into Rexall? Bam, magically new arena. Forget that 1974 construction date; renovated 2012, baby!

    93. July 22, 2011 at

      Forget that 1974 construction date; renovated 2012, baby!

      How about 1994? Rexall underwent significant renovation then. Another in 2001. If you want to use a renovation date for MSG, then let’s use one of those for Rexall.

      Why are we replacing a 10 year old hockey rink?

    94. PunjabiOil
      July 22, 2011 at

      My friend goes in law school – Bob Black came to one of his classes.

      Things are moving more quickly behind the scene:

      1. Terry Paranych is working with developers to build two 40 and 50 Storey towers.

      2. Katz is negotiations with the U of A for potential student housing

      3. All retail has been spoken for.

      4. Major hotel in in the works.

      _______________

      If done right, this arena district could work to encourage the locals to move downtown.

      Does Katz benefit? Absolutely. That said, I , as a professional working downtown, and one who hopes to make Edmonton my long-run home, am in support of a project that would lend evidence of progress in the City of Edmonton.

    95. dawgtoy
      July 23, 2011 at

      Completely agree with Punjabioil. Clear progress being made downtown.
      Royal Alberta Museum
      “Provincial officials say the new site – located on the northeast corner of 103A Avenue and 99th Street – will allow space for international exhibits, and will be accessible by LRT and bus routes.”
      This site will be one block away from the arena district! Directly across from the Law Courts and City Hall. The downtown is cleaning up! The arena DISTRICT will be a large part of that. The new Remand Center being built in the North East will allow another eye sore to be removed from downtown Edmonton.
      The City and Province are spending big bucks either way downtown, the arena DISTRICT will increase this process, and that will benefit ALL Edmontonians.

    96. July 23, 2011 at

      Maybe I’m confused because I’ve been mostly avoiding arena arguments – I’ve got no dog in the fight and my interest in Things Oilers has been waning since Cal Nichols made his idiotic comment about Chris Pronger’s not-divorce.

      But.

      I see a lot of people asserting “the $250 million WILL be spent, and it will be either downtown arena or Rexall.”

      What? Why? Why does a quarter of a billion dollars (to steal Mason Verger’s line, “let’s say it with the respect it deserves”) *need* to be spent on one or the other? The City could also:
      a) bank it,
      b) spend it as others have suggested, subsidies for housing,
      c) blow it on consultants to give the opinion somebody wants to hear,
      d) blow it on hookers and cocaine, I’d guess a Bay Street Lawyer might like that one,
      e) return it to the taxpayers,
      f) bribe newspaper reporters to write nice pieces about them,
      g) anybody I missed insulting?

      Obviously some of those choices make a bit more sense than others. But presenting it as A XOR B seems like a false choice to me.

      Did I miss something very obvious?

    97. Woodguy
      July 23, 2011 at

      If Katz is telling the truth about losing money, you can blame the EIG for this – by demanding the price that they did from Katz, he then needed public subsidies in order to survive. In effect, the premium pocketed by the EIG in the form of a price that could not be justified on the basis of the substantial revenues will come from the pockets of Edmonton taxpayers. Swell group of guys. Local heroes.)

      That’s ridiculous.

      So it was up to the EIG to make sure the billionaire who was trying to buy their asset had the proper debt financing to afford the team in the future and not demand a new rink?

      Or when they didn’t want to sell and Katz kept increasing the offer they should have said “no Mr. Katz, well take less so you can afford the team in future”

      Or should have the EIG just not have sold? When they had a chance to turn their illiquid investment into a return beyond their imagination when they first ponied up the dough, they should have just said “no”, just in case Katz couldn’t afford it?

      Bill Butler or Cal Nichols must have run over your dog because I have a hard time believing that you believe what you wrote.

    98. Kris
      July 23, 2011 at

      WG,

      I think your missing the thrust of Tyler’s point because of the ironic way it was put.

      1. The EIG sold the team for a high price, because revenue and future revenue were high. That is to say, the sale price of the team suggests that markets think the team has a strong future here in Edmonton. If the team had been a Coyotes-style mess, the price would’ve been lower, no? (This is the relevant fact.)

      If Katz threatens to leave because of high costs of paying the sale price, it is just definitionally true that he’s having trouble paying the EIG. Now, the fact is that he can pay this and the reason the price was high is that the asset was valuable, so if Katz bitches about it, he’s being dishonest, so it’s a moot point.

      2. The fact that the EIG sold high doesn’t make them bad people, it makes them sound investors. But some people in Edmonton act like the EIG were selfless saints. That view is contradicted by the high selling price. If the EIG were giving a gift to Edmonton in their Oiler investment, they could’ve sold at a lower price to make the team even more viable long term by lowering the debt burden of the new owner. I’m not saying they should’ve done that, but Tyler is right that that’s what selfless saints would’ve done. (The originalEIG act of buying the Oilers probably was selfless, IMO, but I’m not sure.)

    99. FastOil
      July 23, 2011 at

      If history can shed light on the future, history shows us that cities infill and redevelop over time. It also shows us human nature likes to complicate things more often than not, and more than necessary.

      I think it is fair to say that there is value to the city and it’s citizens if a considered and nice development is executed.

      This issue is not confusing if politics and personalities are left out of it (which of course they won’t be). With limited tax capabilities, COE can only afford so much, and should only take on a certain amount of risk, in order to avoid a sinkhole of generational debt. These two factors are what any decision needs to be based on.

      Decide the number and requirements, stay firm. The city has the upper hand in this situation. Katz wants their money. Of course peripheral changes could be hashed out, but not the core decision. Overthinking and over-negotiating the matter is what leads to clouded poor decisions and being manipulated into them.

    100. Smytty777
      July 25, 2011 at

      Doogie and FACLC: You seem to be implying that a $3.5M renovation (Rexall) and $700M in renovations (MSG) are equivalent? That’s a spin even Staples wouldn’t attempt.

      One is a minor upgrade which all arenas will undergo, the other is the cost of two new arenas. If the City spent $400M to completely update and remodel Rexall would you still refer to it as the third oldest building in the league? That is absurd. Maybe for historical context, but that is not the basis of this discussion. We are talking about the oldest arenas in the sense of whether a new or upgraded arena is required.

      To imply that MSG is “older” than Rexall in this context is ridiculous.

    101. Lee
      July 25, 2011 at

      I was sitting atop a rooftop bar enjoying a vodka martini and the picturesque view of the Montreal skyline at sunset this previous Friday, when the crux of this debate came into very clear focus for me.

      If revitalization of the downtown core is the primary objective of this exercise, it’s important to realize that not only is Edmonton not Vancouver or Chicago or Montreal for the sake of this argument, but Edmontonians are most definitely not the same as their brethren in the bigger metropolises. History has shown us quite clearly with South Common and West Edmonton Mall, that retail and free parking is the winning combination to spur population density in the City of Shoppers (er…Champions).

      If Darryl’s Amazing Technicolour Arena-Plex comes accompanied with ample free parking and lots of shiny new big box outlets to buy the latest Blu-ray player or matching bath towel set from the far east, oh how the masses will flock. These green space laden, cultural meccas, the virtues of which are undoubtedly ample may work well in cities where it’s not freezing bloody cold 8 months of the year. Good old Edmonton? Not so much. It’s my hometown btw so I’m not a hater, but having lived in various other parts of the globe over the last decade, the limitations inherent with Edmonton’s northern climate have become patently obvious to me.

      If Edmontonians really want to compete with Shelbyvilles of this world, what this city needs is a monorail!

    102. July 25, 2011 at

      @Lee

      Great minds think alike.

    103. Lee
      July 25, 2011 at

      Good stuff Jesse. Quite frightening actually how much the Oiler PR engagement on this reminds one of the Lyle Lanley character from that brilliant episode.

    104. Woodguy
      July 25, 2011 at

      Kris,

      1)The price was above market as Nichols and others resisted the sale. Gregg and Butler then tried to buy up 60% of the team on their own and Katz made it too expensive for them to continue. He made the other partners the proverbial “offer they couldn’t refuse”

      2) This part makes no sense:

      But some people in Edmonton act like the EIG were selfless saints. That view is contradicted by the high selling price. If the EIG were giving a gift to Edmonton in their Oiler investment, they could’ve sold at a lower price to make the team even more viable long term by lowering the debt burden of the new owner

      The selfless act was setting money on fire to keep the Oilers in Edmonton. Investing in an NHL in Edmonton in 1998 was not a sound financial investment. 2-3 future cash calls while maintaining one of the lowest payrolls in the league was testament to this fact.

      The fact that a billionaire wanted the team so much he paid above market reflect nothing on the EIG in terms of “selflessness”

      If their main concern was keeping the team in Edmonton, then a local billionaire pledging to spend to the cap, build a new practice facility and extras at the UofA and also pledging $100MM towards a new rink isn’t a bad decision.

      Keeping a billionaire’s debt payments to a minimum wouldn’t have been 100th on the list of things to worry about in the sale.

    105. Abunaylor
      July 26, 2011 at

      Just a quick note about Vancouver, as a resident thereof. This idea that the rink revitalized downtown Vancouver is totally untrue. For one, it is actually located in a part of Vancouver’s downtown that continues to be relatively rough, and it is in close proximity to Chinatown and the Downtown Eastside. I presume, when people reference the revitalization of downtown Vancouver, they are referring to Yaletown, and area that is also reasonably close to the stadium. But Yaletown’s success, such as it is, predates the arena. It occurred because of some of the urban planning suggestions that have been made above, including dense housing and mixed use residential and commercial zoning, as well as parks, traffic-suppressed streets, and public services like libraries and the Roundhouse community centre. More recently, it is also served by rapid transit.

      Also, and this may be true for Edmonton too, Yaletown has a surfeit of wealthy, young, professionals who live there as a statement of their status. Yaletown’s proximity to the corporate heart of Vancouver is important, because getting to downtown Vancouver is a pain in the ass in traffic, but it is ultimately a high-status neighbourhood for yuppies. I’m not sure very many Vancouverites seriously consider it the beating heart of Vancouver life.

      Just a heads up from the west coast.

    106. Kris
      July 26, 2011 at

      The EIG were refusing to sell until Katz offered a fortune.

      The team was a sound investment when purchased at roughly 70MM. If Edmonton as a hockey market (the dollar, the oil patch, etc.) didn’t improve, you can sell the team to an investor to move it to Houston. (Gelb offered 85mm, if I remember even at the time, and the price of franchises was ever increasing)

      But even then it was reasonable to bet that Edmonton would improve as a hockey market making the investment worth more. Few people saw that but it was true.

      I think the EIG had good motives, but they weren’t risking as much as some say they were.

    107. vishcosity
      July 27, 2011 at

      If revitalization of the downtown is actually the key interest, maybe the Portland model (no development outside a boundary for 10 years) could work as well here as it did in Oregon. No tax dollars involved, total success, still I’ve never heard it mentioned.

      Imagine spending 250M for the 166 community leagues so each league gets a covered rink. I suspect this may be a bit better for those who actually pay local property tax.

      Somehow I’m not sure this is actually about returning value to tax payers.

    108. July 29, 2011 at

      There’s no point agonizing over dollar values of renovations. Renos for stadiums, like houses, are not done with a goal of spending X dollars but rather to bring the building up to a certain level. The amount spent is the amount spent, and if a series of $3.5M renos is all a facility requires we probably shouldn’t be worrying too much about it.

      Likewise the size of Rexall shouldn’t bother us too much: Katz rejected a 21,000 seat Montreal-style stadium (and Staples and Co. seem content to let THAT issue drop as well, despite bringing up the size every femtosecond or so), so if there’s only 1,000 seats in play here something can be figured out.

      Of course, I was being charitable when I brought up Madison Square Garden. I could just bring up Fenway or the old Yankee Stadium, and then politely point out that the Rexall bashers should go piss up a rope and inhale the steam.

    109. Dennis
      August 2, 2011 at

      will they also have Gallagher as the guest celeb?

    110. Dennis
      August 2, 2011 at

      also, terry jones is the second most attractive person in that photograph.

    111. GRETZ99
      August 3, 2011 at

      There are many good arguments for and against

      My problem with this deal is Katz gets 100% revenues!

      The city owns the rink and Katz pays no property tax

      I could go on and on, there is many more details that don’t pass the smell test, they out right stink!

      If we do the deal, we should get some percentage of revenue, shouldn’t we, David Staples and John Mackinnon!

      The CRL will take years to develop to pay off, and Katz will now contribute building in the area only if he deems market conditions to be favorable, huh?

      So much for the original Katz proposal, 100 mill arena, 100 mill building contribution to promote CRL area!

      Not to Mention Northlands Loss and viability,
      they operate many buildings for the city, functions that if they didn’t exist, the city would have to run.

      Northlands also has big existing loans with the city for development of that convention area, which is needed in any city to function.

      What a way to treat a tremendous Landlord for the Oilers,the investors group wanted no responsibility of running rexall place, because it was a financial loser. Northlands changed that, to make it what it is today, the 31st most booked arena venue int the world!

      So the city negotiates a deal with the tenant for a new arena, despite Northlands partnering with the EIG to save the Oilers in the first place since that was the deal to buy the team from Pocklington. Now Katz comes along and Northlands is shut out, wow, hows that for thanks for helping keep the team here, classy.

      If We take away their concert business, how are they going to pay off to us, the taxpayor, their city loans?

      And Katz current proposal is the deal is off, if Northlands decides to compete in the concert business, are you kidding me?

      If public money is used, A fair deal should be a goal, shouldn’t it?

      The devil is in the details, and they’re absurdly all in favor for Katz, on virtually every account

      A fair deal by NHL standards?

      Oh what standards are those? Use public money to pay for the majority of the arena cost, and get zero Revenue, and property tax for it, wow what a deal, and that’s fair? LMAO

      Let’s see, the cost break down is this:

      125 mill by the city, 125 mill in ticket tax (by us, the people, public money David Staples, not private, don’t call that private money David staples, that’s public money essentially!)

      It also can’t be assumed a ticket tax prevents the Oilers to charge more for tickets,
      someone paying $5000 – 10,000 dollars in season tickets is not going to balk at paying more, by what $250, $500, $800 etc..

      As for the rest of the folk that don’t pay that insane rate for season tickets, if they can’t afford them, in this crazed hockey market someone else will.

      Even if you believe Katz can’t charge more due to a ticket tax, it can’t be assumed that it’s a dollar for dollar reduction by whatever the ticket tax amount is.

      Isn’t it amazing, that if don’t get into the details, and just keep generalizing, you can make this arena deal look good, yet when you look at it, it makes no financial sense, just pure corporate welfare.

      Especially when you consider the city also has to buy Katz’s land and there’s been no public disclosure how much that amount will be?

      Heck, Katz might even make an instant profit by selling the land! That would then be his total financial contribution, making the Arena 100% publicly funded yet handing over 100% of the revenues

      Wow great deal, let’s do more of these, BOHICA BABY!

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