Taking A Bad Deal And Making It Worse
by ryanbatty on Oct 19, 2011 4:30 PM MDT
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If at the end of today there is an agreement in place on either of the outstanding items - the additional $100M or the ridiculous need for a non-compete agreement with Northlands - that sees the City investing additional money into this project it will have the distinct look of 30 NHL owners sitting down and bullying the City of Edmonton into a deal. I know some fans will be fine with a deal in any form, but that will leave a very bad taste in my mouth.
I wrote that a week ago in response to the meetings being held in New York between Gary Bettman, Daryl Katz, and Edmonton's Mayor Stephen Mandel. Scott, being the observant guy he is, immediately noted the use of "will" and not "would" in the last sentence, my way of saying that a deal would get done regardless of whether it was a good deal for the City or not.
Jump ahead a couple of days to the update provided to Council and wouldn't you know it, things got decided in New York and the deal got worse for the City of Edmonton. Consider me shocked.
The big "win" that came out of the meetings in New York was the Katz Group dropping their demand for a non-complete agreement with Northlands. Considering that the City has no mechanism to force an agreement between two parties, this makes sense. But even though it never should have been part of the negotiations the Katz Group still managed to get something for nothing. For dropping the non-compete the City agreed to kick in $20M disguised as a sponsorship agreement. Because without that sponsorship nobody watching an EDMONTON Oilers game would know that the team plays in Edmonton. That is a spectacular investment.
Oh but there's more. Do you remember when Katz' original $100M investment was clarified to be for the surrounding development and not the arena? And the uproar that followed until it was further clarified that there was $100M for the arena and $100M for the development? And just like that, problem solved, Katz is a great guy, return to what you were doing. Well as it turns out Katz' definition of an investment and mine differ just a little bit.
Under the new agreement framework the $100M promised by Daryl Katz for the building will now be a cost the City fronts and gets paid back over 30 years. So not only is Katz' $100M really only $80M but he's not putting that money in upfront. For those keeping score at home, the cost breakdown on the day the building opens is as follows: City of Edmonton $350M, Daryl Katz $0, other source (likely the Province) $100M. Not one penny of Katz' money gets spent to build the building. That is a hell of a deal. How can a team employing people capable of achieving a deal this good, also employ Steve Tambellini?
Some on the pro side of this deal would argue that since the City is still getting the full $100M (which is actually $80M remember) plus interest who really cares. Well, we should all care. The City has limited borrowing capability and this is $100M that we won't be able to borrow for another City project, basically because we have a new arena may mean we can't do other things we want, or need, to do. Limiting ourselves in the future is a bad deal for Edmonton.
And then there is the simple fact that a lot of things can change in 30 years. Ownership, the dollar, the economy could all change significantly and impact those annual payments. Say in year 11, after the annual $2M is sponsorship money runs out, Katz (or the current owner) comes to the City and says the team can't afford those $5.5M yearly payments and remain viable? At that point the City is stuck, they've got a building with money left owing and now we're trying to buy a dollar.
Does that seem far fetched? Maybe it is, but the Oilers have argued they're not viable in Rexall Place, a claim accepted by many, if not most, despite zero proof and there being 16,839 butts in the seats 41 times a season. I think history can teach us a lot about the future and if we bought that line this time around what's to say we won't buy a similar line down the road? By structuring the deal like this the City takes on all of the risk, allowing Katz to mitigate his completely. Taking on all the risk is a bad deal for Edmonton.
The process that has brought us to this point has been absurd and now the deal is getting worse for the City. Isn't that just wonderful.
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I think it’s a bit of a misnomer to suggest that $350M comes from the city. The ticket tax is foregone revenue by Katz and the CRL is paid by future development that would not have happened (versus the myth that it would have happened elsewhere).
Also, you’re assuming that the borrowed $100M maxes out the city’s credit limit, which it clearly does not. There’s still plenty of room to make other worthwhile investments so no opportunity cost is lost. Besides, borrowing $100M to kickstart over a billion in development seems to be a pretty fair investment, wouldn’t you think?
If you believe the ticket tax is simply forgone revenue by Katz, why not just scrap it and let him keep whatever you are charging for the tax?
It works out to be a $100 mil interest free loan that the city is arranging payment for.
In theory, there is little difference between practice and theory, but in practice there is!
Tactical contributor to the Copper & Blue and just as boring on the twitters... @dawgbone98
You seem to know more than me about the ancillary developments that have been promised, so I’ve got a quick question: are these developments predicated on the Katz Group owning the arena? I ask because it seems to me that the current deal is a weird one for the City since they don’t seem to gain much by having Katz involved in the process. Why not just spend a bit less (say, $250M for the arena part of the project) and cut the Katz Group out of the deal completely? It would likely cost the city less up front and they’d actually get to benefit from any profits generated by the building.
The biggest fanana of the Havana Bananas.
by Scott Reynolds on Oct 19, 2011 5:35 PM MDT up reply actions
Because Katz can always threaten that he won’t play there.
In theory, there is little difference between practice and theory, but in practice there is!
Tactical contributor to the Copper & Blue and just as boring on the twitters... @dawgbone98
Which means he’d either have to keeping playing at Rexall, build his own arena to compete with the new one the city built downtown, or sell the team. I’d think that moving the team wouldn’t really be an option since it’s almost certain that someone would be fine owning a hockey team in Edmonton with a new arena already built/planned.
The biggest fanana of the Havana Bananas.
by Scott Reynolds on Oct 19, 2011 5:42 PM MDT up reply actions
He owns the team, what could the “new arena” that the city would build have to compete with the Katz group, he owns the Oil Kings and the Oilers no one would play there, just concerts.
I think the Katz group was dumb for trying to get a non compete clause from Northlands, but I also understand why he wants a new arena and why he wants to own it he has BY FAR the worst deal going for owning an NHL team (In terms of the arena).
I don’t know alot about the taxes and everything but I think the city would make their money back fairly quickly or no?
I also understand why he wants a new arena and why he wants to own it he has BY FAR the worst deal going for owning an NHL team (In terms of the arena).
I don’t know if this is true or not. What criteria are you using? Or is this based off of some other study?
I don’t know alot about the taxes and everything but I think the city would make their money back fairly quickly or no?
I don’t know enough about it to speak definitively, but I think it’s safe to say that there’s some rather heavy debate on this point. Some think the arena will create a lot of new economic activity in the City. Others think that the arena will move tax dollars around rather than creating new tax dollars, and if that’s the case, it’s hard to see how the City makes its money back at all, let alone quickly.
He owns the team, what could the "new arena" that the city would build have to compete with the Katz group, he owns the Oil Kings and the Oilers no one would play there, just concerts.
First off, it’s important to note that the City would be the first mover here, so it would be Katz responding to them. As such, I doubt Katz would choose that option. That would be a lot of coin, all coming from his pocket. If he did, I admit that it would be a tough slog for all involved.
The biggest fanana of the Havana Bananas.
by Scott Reynolds on Oct 19, 2011 6:25 PM MDT up reply actions
I also understand why he wants a new arena and why he wants to own it he has BY FAR the worst deal going for owning an NHL team (In terms of the arena).
He doesn’t want to own the arena, just just wants all the revenue from it.
As for having the worst deal in the NHL, not my problem, nor the city’s problem. He knew the deal when he bought the club, why should a private companies issues be the city’s issue?
Does the city care if my boss has the worst deal in his industry? No, and they shouldn’t.
They would if your bosses job was deemed important to the city.
by TigerUnderGlass on Oct 20, 2011 1:14 PM MDT up reply actions
The Oilers aren’t as important to Edmonton’s viability as people would have you believe.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
Who said anything about viability?
Of course the city isn’t going bankrupt without them, but just because we don’t need them economically it doesn’t mean they aren’t important to the city and it’s people.
by TigerUnderGlass on Oct 20, 2011 1:48 PM MDT up reply actions
I agree completely. The Oilers are an important part of Edmonton. Speaking from experience, the Oilers have been (and are) one of the most important ways for me to remain connected to my hometown, and to the people there, a way for me to identify as an Edmontonian even though I don’t actually live there any more.
The biggest fanana of the Havana Bananas.
by Scott Reynolds on Oct 20, 2011 2:08 PM MDT up reply actions
The only reason the Oilers are deemed important to the city is because the mayor is terrified to be the villian of ‘The Oilers leaving’ narrative.
Oh, and Mandel deems it importants because Katz sponsored his last two mayor campaigns. That always helps.
Right. Who cares if a significant portion of the population loves having the Oilers there and wants them to succeed.
The fact that there would even be a villain in the narrative suggests the team is important to the city, otherwise nobody would care and there wouldn’t be a villain.
Notice how Atlanta’s mayor wasn’t a villain when he clearly didn’t care that they were leaving?
by TigerUnderGlass on Oct 20, 2011 1:58 PM MDT up reply actions
The Oilers don’t need another arena to succeed, they need to ice a quality hockey club, which they have emphatically failed at for five years.
The team is important to the sports media in the city, and they would morn the loss. The city itself wouldn’t have any impact however, just as Winnipeg had no negative impact from losing their club, aside from a bruised ego.
Yeah Tiger, didn’t you see the complete and utter apathy that welcomed the Jets when it was announced that they were returning to Winnipeg.
The biggest fanana of the Havana Bananas.
by Scott Reynolds on Oct 20, 2011 2:10 PM MDT up reply actions
That’s not the argument. The argument is that having a professional hockey team to cheer for is something that many citizens of Edmonton (and Winnipeg) find meaningful. I’m shocked that you won’t concede this.
The biggest fanana of the Havana Bananas.
by Scott Reynolds on Oct 20, 2011 3:48 PM MDT up reply actions
Just because people want a hockey team in their city, doesn’t mean they need it or it is in anyway meaningful.
I love the Oilers and dispite their crappiness I can only cheer for them. But that doesn’t mean my life has left meaning if they are gone.
I’ll simply find something else to spend my entertainment on. Them being in Edmonton or not doesn’t affect my personal life in any other way.
Just because people want a hockey team in their city, doesn’t mean they need it or it is in anyway meaningful.
It’s pretty clear that no one needs a hockey team, but it seems equally clear that the Oilers are in some way meaningful to many people in the city of Edmonton. I mean, how can you possibly say “I love the Oilers” and still say, “They are in no way meaningful”. That makes absolutely no sense at all.
The biggest fanana of the Havana Bananas.
by Scott Reynolds on Oct 20, 2011 8:43 PM MDT up reply actions
There’s a difference between a city wanting a professional sports team and being unable to manage without it.
SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there). Link now 100% less broken.
Robertson's Rants - Exceedingly occasional, lengthy ramblings on hockey topics, hosted at Puck Podcast. And no, my name's not Doug.
So far as I can tell, this is a blatant strawman argument.
The biggest fanana of the Havana Bananas.
by Scott Reynolds on Oct 20, 2011 8:44 PM MDT up reply actions
Which… is still a strawman argument. When have I ever said that the city “needs” the Oilers?
The biggest fanana of the Havana Bananas.
by Scott Reynolds on Oct 21, 2011 8:45 AM MDT up reply actions
‘need’, ‘manage without’, ‘meaningful’. Whichever one you intended, if you insist on arguing semantics of my wording.
I’d say that “needing” something is really very different from finding something “meaningful”. Having a good relationship with my parents is meaningful to me, but I don’t need that. Plenty of folks get along fine without having a good relationship with their parents. My church is also meaningful to me, but if I move, I’ll find a new church and life will go on. Now, obviously, those relationships are more meaningful to me than my relationship to a professional hockey team, but that doesn’t mean the hockey team just plain old isn’t meaningful.
The idea that “the only reason the Oilers are deemed important to the city is because the mayor is terrified to be the villain of the Oilers’ leaving narrative” is ridiculous on its face. The Oilers have been a part of the community long before Mandel became the mayor, and given the amount of money many Edmontonians invested in keeping them here in the 1990s, I’d say keeping the team here was pretty important to them. After all, the team was important enough to invest millions for several rich Edmontonians, and thousands for many fans who purchased season tickets. Yes, they could have just spent that money elsewhere. But they didn’t. Because they didn’t want the Oilers to leave. Because… wait for it… keeping them here was important enough to them to spend large sums of money. It’s obvious that the city won’t crumble into nothingness if the Oilers leave, but the jump from there to unimportant is a large one indeed.
The biggest fanana of the Havana Bananas.
by Scott Reynolds on Oct 21, 2011 10:05 AM MDT up reply actions 1 recs
Who cares if a significant portion of the population loves having the Oilers there and wants them to succeed.
An arena has nothing do with the Oilers succeeding. The Oilers make money now, they could spend to the cap if they wanted to. None of that changes with a new arena.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
I’m trying to figure out when I claimed they needed a new arena to succeed.
by TigerUnderGlass on Oct 20, 2011 3:57 PM MDT up reply actions
I misinterpreted the comment preceeding that, sorry.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
If the City builds the arena on their own, again, where will the Oilers play? Rexall? Nope, unacceptable. New City Arena that Katz has no stake in? If that’s unacceptable, then Katz either a) still has to buy his own Goddamned arena, or b) find another city to play in. Good luck getting “B” approved by the BoG.
SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there). Link now 100% less broken.
Robertson's Rants - Exceedingly occasional, lengthy ramblings on hockey topics, hosted at Puck Podcast. And no, my name's not Doug.
So you’re saying the City has some leverage in all of this? To bad they don’t seem to understand that.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
Just like every other city arena deal in the last 30 years.
SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there). Link now 100% less broken.
Robertson's Rants - Exceedingly occasional, lengthy ramblings on hockey topics, hosted at Puck Podcast. And no, my name's not Doug.
Besides, borrowing $100M to kickstart over a billion in development seems to be a pretty fair investment, wouldn’t you think?
Oh if only they were borrowing $100M. The running total is $125 for their share, $125M for the ticket tax, $100M for Katz, $20M for the land, and $32M for infrastructure. Is $402M a reasonable investment to help kick-start a billion dollar development?
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
In short, you don’t like it because of 100 million in credit is tied up and the Oilers might request a new deal in 11 years? I agree the deal is mildly worse, but frankly it doesn’t seem a significant change other than your personal distaste for the fact that Katz doesn’t pay his share up front.
I wonder about his financial situation though – it kind of feels like maybe he’s having problems securing the funding, since theoretically it shouldn’t matter to him if he borrows it from the city or another source.
On the subject of the 20 million – Maybe I don’t understand the situation with Northlands correctly, but shouldn’t the new ticket tax on Rexall more than make that back over the time period?
by TigerUnderGlass on Oct 19, 2011 5:20 PM MDT reply actions
I wonder about his financial situation though – it kind of feels like maybe he’s having problems securing the funding, since theoretically it shouldn’t matter to him if he borrows it from the city or another source.
If he borrows money from elsewhere (or gets another investor), he’s got nothing that forces the city to stay in the game with him. If the city has a bunch of money invested, they are going to be willing to do things and make concessions to get as much as they can back in case something goes wrong.
In theory, there is little difference between practice and theory, but in practice there is!
Tactical contributor to the Copper & Blue and just as boring on the twitters... @dawgbone98
I think this is a matter of assigning motivations based on the conclusions you’ve already made. Why can’t it be something as simple as the city having a better interest rate available to them?
I’ve admitted many times to not really taking the time to fully inform myself on the situation since I don’t live in Edmonton or care how their tax money is spent, but that feels like a reach to me. I don’t buy that this decision was made based on the possibility of future concessions, especially given that your reasoning on why concessions would be made applies to most lenders as well.
by TigerUnderGlass on Oct 19, 2011 5:40 PM MDT up reply actions
I think this is a matter of assigning motivations based on the conclusions you’ve already made.
Actually this is the conclusion I always came to when sports teams looked for public money instead of getting finances from other sources.
Why can’t it be something as simple as the city having a better interest rate available to them?
Because it generally isn’t that simple. If it was just a matter of interest rate, we wouldn’t be talkign about ticket taxes and what not (which is being used to bypass a tradtional loan in this case).
I’ve admitted many times to not really taking the time to fully inform myself on the situation since I don’t live in Edmonton or care how their tax money is spent, but that feels like a reach to me. I don’t buy that this decision was made based on the possibility of future concessions, especially given that your reasoning on why concessions would be made applies to most lenders as well.
Except public governments are notorious for trying to salvage things, regardless of the cost.
In theory, there is little difference between practice and theory, but in practice there is!
Tactical contributor to the Copper & Blue and just as boring on the twitters... @dawgbone98
In short, you don’t like it because of 100 million in credit is tied up and the Oilers might request a new deal in 11 years? I agree the deal is mildly worse, but frankly it doesn’t seem a significant change other than your personal distaste for the fact that Katz doesn’t pay his share up front.
And that the $100M is really only $80M. And at this point I don’t even think they “might” request a new deal down the road, I think it’s a near certainty.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
I agree with where you are coming from along with your cynicism for this process, so perhaps I was surprised it wasn’t worse.
Re: the non-compete. I think the Katz group was looking for some leverage throughout this entire process (Oilers won’t play in Rexall after 2014, relocation, loss of opportunity) and the non-compete was the only thing that held.
I did think that the negotiations provided one very significant improvement for the city with the option to purchase the surrounding land if Katz doesn’t move on it. From a “revitalize the core” focus, the ability to drive development in the surrounding area was imperative so that seemed like a pertinent thing for the city to include. I only glazed over the details of this part and I thought maybe others would have thoughts on the condition or details.
by till_horcoff_is_coach on Oct 19, 2011 6:59 PM MDT reply actions
I did think that the negotiations provided one very significant improvement for the city with the option to purchase the surrounding land if Katz doesn’t move on it. From a "revitalize the core" focus, the ability to drive development in the surrounding area was imperative so that seemed like a pertinent thing for the city to include. I only glazed over the details of this part and I thought maybe others would have thoughts on the condition or details.
The City was always going to purchase the land. In the original agreement framework the outstanding $100M was supposed to be in place before that happened. Now, with the deadline fast approaching, the City will be buying the land without that $100M secured. Another dumbass decision that give Katz a ton of leverage to force more out of the City if the province says no to paying that $100M.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
I was referring not to the arena but to the surrounding land.
From the EJ primer:
The city will buy this area from the Katz Group at the price the company has arranged, along with the remaining five acres, which might be used for a community rink (if the two other levels of government pony up) or parking.
It’s owned by WAM Developments.
If the city decides not to go ahead with these other projects, the Katz Group can buy the property back for what the city paid, plus interest, or the property goes on the market.
But that’s not all. The city will also hold half the four-acre parking lot across the street, east of the Greyhound bus station, owned by businessman Cam Allard.
That’s where much of the immediate development is intended to go. While the Katz Group will take the other half, it will sell the city the option to buy it, which the company can later buy back if it wants.
Confusing? The arrangement is seen by the city as a way to ensure the property is developed when and how it wants, rather than continuing to lie fallow.
The bolded section is what I am referring to, and something I thought was very essential to ensuring the arena ensures further development. I’m not trying to say it is a good investment, but that this clause seems to give them more ability to fulfill the goal of driving downtown development. Am I missing something, or do others just view this as a drop in the bucket?
by till_horcoff_is_coach on Oct 20, 2011 12:23 PM MDT up reply actions
I missed what you were referring to. Sorry about that.
Will the arena spur development is a major issue.
I’m not clear as to how owning the land will make development happen though. If the market demand isn’t there how can the City make anything happen on that land? I guess they could give incentives to developers to make it more palatable but then the City would be subsidizing the development that was supposed to be triggered by the first subsidy and my head will explode.
As for this controlling how the land is developed, that already covered in planning documents. Might this give the City a little more clout yes to make sure it’s exactly what we want, yes. Is it big, I’m not sure.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
I agree with where you are coming from along with your cynicism for this process, so perhaps I was surprised it wasn’t worse.
I didn’t want to risk being called overly negative.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
by ryanbatty on Oct 20, 2011 10:32 AM MDT up reply actions 2 recs
Haha – I don’t know if you are being sarcastic because it isn’t a very rosy update, but I thought it was a very realistic look at what changed in the deal instead of just washing the details away.
by till_horcoff_is_coach on Oct 20, 2011 12:25 PM MDT up reply actions
I don’t understand why we have to frame the issue as a purely economic one from the city’s perspective. Year after year cities spend hundreds of millions of dollars on items that don’t make sense financially but do provide other benefits to the city.
Some of the projects are great, and some are idiotic. (As a Calgarian don’t get me started on pedestrian bridges)
Shouldn’t the question be whether or not there is sufficient benefit to the city to justify the cost rather than whether or not this is a good financial investment?
Nobody asks if museums will turn a profit. People rarely question whether a new traffic interchange will pay for itself.
The only reason I can see for framing this in purely financial terms is that people don’t like that Katz has money. How is it relevant?
At least Edmonton accounts for it in their budgeting. In Calgary they would just conveniently leave it out of the budget and hope nobody notices when they borrow the money. Then when someone does notice, they just claim it isn’t part of the budget as a special expense paid for with special funding.
by TigerUnderGlass on Oct 19, 2011 7:08 PM MDT reply actions
The only reason I can see for framing this in purely financial terms is that people don’t like that Katz has money. How is it relevant?
Admittedly, I don’t think that I frame things in purely financial terms, so you may not be addressing me, but whether or not Katz has money isn’t terribly important to me. What’s important is whether or not the city can get a better deal for its citizens to achieve similar goals than what Katz has offered. I think that it’s quite possible that they can by building an arena themselves, and am a bit baffled that they haven’t looked into it (though I grant that it is possible that they have looked into it and decided it was a bad deal and further decided not to speak on it publicly fearing that it would weaken their negotiating position).
The biggest fanana of the Havana Bananas.
by Scott Reynolds on Oct 19, 2011 7:30 PM MDT up reply actions
The city DID look at building their own arena. It was called the “Arena Renovation study” (HOK) and was estimated at about $250M. They’d have Northlands run it and carry on (the city isn’t in the entertainment business).
Problem is, Katz wants nothing to do with Northlands, as has been painfully obvious from the start. Plus, that $250M would be far better spent downtown funding a catalyst project that may lead over a Billion in total investment.
I cannot overstate the angst between Katz and Northlands. I also cannot understate how screwed Northlands will be when this thing finally goes through. If not for this situation the arena would probably have been ready to play in by next fall.
Well, a new arena and a renovation are not the same thing. And as you’ve said, building a new arena at a similar cost where it may be a catalyst for further development makes some sense (although there are some advantages with the current site as well). I just don’t see why the city should feel like they need the Katz Group in order to do the “arena district” plan.
The biggest fanana of the Havana Bananas.
by Scott Reynolds on Oct 19, 2011 10:16 PM MDT up reply actions
Whether or not a better deal is available is definitely a good question and one that should be asked. Maybe even one the city should provide with a response.
The biggest problem is that any deal for an arena requires some measure of cooperation from the Oilers.
A better deal may or may not be available, but we just can’t know. I spent a number of years in a variety of sales jobs, and I always believed that, for any competent actor, the best deal available was the deal they took.
We can certainly question the cities competence, but it’s hard to know what other options are available AND viable.
by TigerUnderGlass on Oct 20, 2011 11:43 AM MDT up reply actions
Whether or not a better deal is available is definitely a good question and one that should be asked. Maybe even one the city should provide with a response.
My biggest issue with the process has been that the City hasn’t been asking these, and other critical questions. Katz has given them some information and they’ve accepted it as gospel rather than doing some fact checking on their own. In any business transaction due diligence is critical and the City hasn’t done that and that is absolutely on them. Katz is doing what any business man would do, get the best deal he can, the City should be trying to do the same.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
This is fair, and right.
I just don’t know what questions the city has been asking. I have to assume some independent inquiries have been made into the alternatives but it is definitely possible that they are completely incompetent and have done no such thing.
by TigerUnderGlass on Oct 20, 2011 1:16 PM MDT up reply actions
If that is the case, then why would the city not just try to buy the team, build the arena, keep the profits/losses from that combination, and if you run at a loss, well, that’s the cost of guaranteeing the team stays – the Oilers are not going to move if the city owns it.
by hockeysymposium on Oct 19, 2011 8:30 PM MDT up reply actions
I’ve wondered this same thing myself.
The biggest fanana of the Havana Bananas.
by Scott Reynolds on Oct 19, 2011 9:56 PM MDT up reply actions
I would imagine they would need Katz’ consent to buy the team from him, and unless they grossly overpay (which would make the city even worse off than building an arena for free) it won’t happen.
They’re talking about a hypothetical scenario in which Katz tries to move the team. Based on precedent, he would be obligated to sell the team to any buyers offering market value before the league would let him move.
I thought they were talking about the city of Edmonton buying the team from Katz. Katz has no reason to move the team and any suggestion of that is nothing more than posturing to get a better deal in Edmonton. It’s just like the numerous MLB teams who used to threaten to move to Tampa before they had a team, or all the NFL teams who would threaten to move to Los Angeles unless their city built them a new arena.
They tried that, it was called the EIG
by One_Roy_Save_On_The_Calendar on Oct 20, 2011 12:51 AM MDT up reply actions
that is running the team at a loss in order to guarantee it stays
by One_Roy_Save_On_The_Calendar on Oct 20, 2011 1:30 AM MDT up reply actions
Shouldn’t the question be whether or not there is sufficient benefit to the city to justify the cost rather than whether or not this is a good financial investment?
Yes it should be. And the answer is no. The economic impact on the surrounding area is debatable at best. The economic impact of sports teams in general is overstated.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
Thanks.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
My comment was concerning the fact that many people want to frame this as a purely economic issue when I don’t believe it is or should be taken as such, so I’m not sure how your response telling me about the economic impact applies.
You may have taken my quote out of context a bit.
by TigerUnderGlass on Oct 20, 2011 11:24 AM MDT up reply actions
What are the supposed benefits to the City? Keeping the Oilers and a revitalized down town. Both those links speak directly to that. The benefits don’t match with the costs.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
What are the supposed benefits to anything the city spends money on without economic return?
You insist on a purely economic analysis when that is not the only consideration.
by TigerUnderGlass on Oct 20, 2011 1:06 PM MDT up reply actions
Roads for example. Roads and interchanges cost money but provide the benefit of moving people, good, and services that drive economic activity. Cost with benefit.
Is there a benefit besides keeping the Oilers and down town revitalization that I’m missing?
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
Let me put it back to you as another question:
Is there more benefit to building art galleries and museums than an up to date arena?
by TigerUnderGlass on Oct 20, 2011 1:18 PM MDT up reply actions
They’re completely different animals. One run for profit, the others aren’t. So they have to be looked at in completely different ways.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
Why?
What is the difference when we are attempting to measure their benefit to the city? How does a non-profit suddenly increase the amount of benefit a project provides? IT doesn’t and it can’t.
This leaves us again with the conclusion that you only care because a profitable business has it’s hand out instead of a non-profit.
There is no correlation between who is asking for the money and the benefit provided to the city through the use of the money.
by TigerUnderGlass on Oct 20, 2011 1:39 PM MDT up reply actions
They have to be considered separately because of the way they operate. Entertainment is a benefit and that could be provided by a hockey team, museum, or art gallery. But when it’s run as a for profit business the benefit is now shared between the profit-taking party and the users, it’s an apple and oranges thing.
If you want to compare them strictly on attendance that’s fine but the new arena should only get credit for the incremental increase from 16,839. After all those people are already benefiting from an arena.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
They have to be considered separately because of the way they operate. Entertainment is a benefit and that could be provided by a hockey team, museum, or art gallery. But when it’s run as a for profit business the benefit is now shared between the profit-taking party and the users, it’s an apple and oranges thing.
Nonsense. The fact that a business also benefits from a project has absolutely no bearing at all on how much benefit is provided for the public. You don’t subtract from the public enjoyment of a facility because you don’t like who runs it.
If you want to compare them strictly on attendance that’s fine
I never spoke of attendance. You asked what benefits an arena provides aside from financial considerations and I pointed to museums and galleries as facilities providing similar intangibles. Is this premise incorrect? You never addressed my actual point.
After all those people are already benefiting from an arena.
Nobody benefited from attending an event at Rexall. It’s just one more run down facility that people point to when discussing what a crappy city it is. I was joking when I wrote that, but suddenly realized it was true.
by TigerUnderGlass on Oct 20, 2011 4:17 PM MDT up reply actions
Nonsense.
Well clearly we disagree.
I never spoke of attendance. You asked what benefits an arena provides aside from financial considerations and I pointed to museums and galleries as facilities providing similar intangibles. Is this premise incorrect? You never addressed my actual point.
Provide me a way to measure benefit besides attendance? I can’t think of one.
Nobody benefited from attending an event at Rexall. It’s just one more run down facility that people point to when discussing what a crappy city it is. I was joking when I wrote that, but suddenly realized it was true.
I really want that to be a joke because if you, or anyone else equates a building like Rexall (which is a perfectly fine place to watch a hockey game by the way) with the overall quality of the City of Edmonton they’re just so off base it’s hard to believe.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
Provide me a way to measure benefit besides attendance? I can’t think of one.
I never really thought of trying to quantify it. At some point the juice is no longer worth the squeeze. When I’m negotiating a purchase and the price isn’t good enough I don’t buy it. I keep hoping the city is competent enough to know the difference.
I really want that to be a joke because if you, or anyone else equates a building like Rexall (which is a perfectly fine place to watch a hockey game by the way) with the overall quality of the City of Edmonton they’re just so off base it’s hard to believe.
I was joking, but it’s pretty common knowledge that few people outside of Edmonton think much of it as a city. It isn’t so much that people equate Rexall to Edmonton but that they see Rexall, among other things, as an example of the state of Edmonton.
I love Edmonton and years later I still consider it my home, but I would have to think long and hard about moving back.
by TigerUnderGlass on Oct 20, 2011 4:52 PM MDT up reply actions
I lived in Ontario and came back, and whether the Oilers were here or not had zero impact on my decision either way.
My wife and I always consider going back to Ontario, and still, the Oilers have no impact on that decision.
A hockey team and an arena simply do not make or break a city as being classified ‘world class’.
Do you even read the comments before you respond?
by TigerUnderGlass on Oct 21, 2011 7:53 PM MDT up reply actions
The fact that a business also benefits from a project has absolutely no bearing at all on how much benefit is provided for the public. You don’t subtract from the public enjoyment of a facility because you don’t like who runs it.
No, but if it’s a profitable venture, as the Edmonton Oilers Hockey Club is, that should reduce/eliminate the public subsidy, unless quantifiable public benefit (i.e. return on investment) can be demonstrated.
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Why?
Say we could measure public happiness, and the city decides to spend dollars based on a happiness ratio.
If a $500M project brings 5 times as much happiness as another $100M project and neither one makes the city any money they should have the same value in the city’s assessment. How does the fact that another party may profit from the venture change this calculation?
Obviously this is a vague and super simplified video game type framework, but it does demonstrate the point.
by TigerUnderGlass on Oct 20, 2011 5:18 PM MDT up reply actions
What is the happiness lost if the City doesn’t pay for the arena? The Oilers won’t be moving anytime soon, especially if they start actually winning hockey games.
SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there). Link now 100% less broken.
Robertson's Rants - Exceedingly occasional, lengthy ramblings on hockey topics, hosted at Puck Podcast. And no, my name's not Doug.
What is the happiness lost if the city doesn’t pay for a new art gallery? It’s an irrelevant point. The city doesn’t only spend money on things because people will be miserable without them.
by TigerUnderGlass on Oct 21, 2011 7:56 PM MDT up reply actions
Traffic interchanges improve traffic flow, make the city more efficient, and in theory, safer. Moreover, it falls within the city’s mandate to keep their infrastructure up to date. It does not fall within the city’s mandate to build a new facility for a multimillion-dollar corporation owned by a multi-billionaire to operate out of.
SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there). Link now 100% less broken.
Robertson's Rants - Exceedingly occasional, lengthy ramblings on hockey topics, hosted at Puck Podcast. And no, my name's not Doug.
Traffic interchanges improve traffic flow, make the city more efficient, and in theory, safer.
What do museums and parks do?
it falls within the city’s mandate to keep their infrastructure up to date.
Yet people complain that the city is paying for the infrastructure upgrades related to the arena. I should also mention that a local governments mandate goes well beyond infrastructure and economics.
for a multimillion-dollar corporation owned by a multi-billionaire
This is the crux of it all. Cities spend piles of money on new facilities all the time and never recoup their expenses, but this one happens to be at the request of Katz.
by TigerUnderGlass on Oct 20, 2011 11:38 AM MDT up reply actions
What do museums and parks do?
Parks encourage outdoor activity, to the health benefit of the community members nearby. They are also a green space that can process CO2 from the atmosphere and produce O2, which is again of health benefit to community members nearby. ;) Museums are part of an overall infrastructure designed to educate and enlighten the community, and depending on the kind of museum, attract the interest of children into a field of study or work that is of future benefit to society.
Yet people complain that the city is paying for the infrastructure upgrades related to the arena. I should also mention that a local governments mandate goes well beyond infrastructure and economics.
I have no problem with paying for infrastructure upgrades to prevent massive traffic snarls after Oilers games. I have a problem with paying hundreds of millions for a facility of uncertain economic benefit. Key distinction.
This is the crux of it all. Cities spend piles of money on new facilities all the time and never recoup their expenses, but this one happens to be at the request of Katz.
When a facility provides a benefit of some other kind to a community, it’s in their interest to collectively pay for that even if it doesn’t turn a profit. To borrow an example from my own city, paying to extend Metis Tr from 80 Ave to Country Hills Blvd isn’t going to make the City of Calgary a nickel directly, but it’ll improve the commute of thousands of Calgarians, reduce traffic, etc.
SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there). Link now 100% less broken.
Robertson's Rants - Exceedingly occasional, lengthy ramblings on hockey topics, hosted at Puck Podcast. And no, my name's not Doug.
I’d just like to point out that this was all a foregone conclusion.
Editor of The Copper & Blue, and leader of The Cult Of Hartikainen.
That was an excellent editorial.
The whole issue is caused by the fact that Edmonton needs the Oilers more than Katz needs Edmonton, and knowing this he will push to get as much as he possibly can even when there is exactly 0 probability of the team leaving.
Katz could always choose the nuclear option and start producing a bunch of ‘Quebec Oilers’ or ‘Houston Oilers’ merchandise and piss everyone off to strong arm the city into paying for the arena and taking all the risk. Jerry Reinsdorf did it 20 years ago threatening to move the White Sox to Tampa, and suddenly Chicago city council decided to fund his new arena.
Is that so? How is Katz going to convince the BoG that moving out of one of the most profitable markets in the NHL is a good idea?
SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there). Link now 100% less broken.
Robertson's Rants - Exceedingly occasional, lengthy ramblings on hockey topics, hosted at Puck Podcast. And no, my name's not Doug.
Yeah the idea that the Oilers could move on a whim is ridiculous. Does relocation not require 75% approval? If you’re a team getting money through revenue sharing would you vote to move a team that pays into revenue sharing out of that market? If you’re the NHL and you have any clue about your demographics would you really want to public relation nightmare of a Canadian team moving when you’re bending over backwards to make Phoenix work?
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
by ryanbatty on Oct 20, 2011 11:39 AM MDT up reply actions 1 recs
Yeah, so why does Mandel seem to be held hostage by the Oilers? The NHL holds the hammer here, they’re gonna say no, so the Oilers can’t do shit. This isn’t 1998.
SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there). Link now 100% less broken.
Robertson's Rants - Exceedingly occasional, lengthy ramblings on hockey topics, hosted at Puck Podcast. And no, my name's not Doug.
Leverage is a strange thing. When the Oiler have leverage with an RFA they overpay. When the City has leverage in arena negotiations they bend over. Is the concept that hard to understand?
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
Not sure exactly.
What we know is this:
After all this money is put in place, Katz is then responsible for all maintenance costs.
Katz also controls the venue for 48 out of 52 weeks to do whatever he chooses to.
The city gets the venue for 4 weeks per year for whatever they choose to do with it.
In theory, there is little difference between practice and theory, but in practice there is!
Tactical contributor to the Copper & Blue and just as boring on the twitters... @dawgbone98
Bah, all these fucking trade-offs. I feel like they’re used strictly for obfuscation. Has anyone just done a straight-up present value estimation (in public—I’m sure the Oilers have)? I think that would make it much more clear for those of us who can’t weigh 70 things in their head at once.
-the city’s present-value expenses would be (cost of stadium)
-the city’s present value revenue would be (some stream of income from their four weeks + some stream of income from Katz?)
-Katz’s present-value expenses would be (stream of payments for upkeep+stream of payments to City)
-Katz’s present-value revenue would be (stream of income from 48 weeks)
Can we estimate values for any of these things? And am I missing anything (eg naming rights, advertising)?
by Passive Voice on Oct 20, 2011 9:31 AM MDT up reply actions
The City in all situations will own the Arena. Also I’m starting to wonder if you guys are a website about the city or the Oilers….Getting really lame in all the slagging, and I think we have all discussed this enough, We get it Ryan" no matter the deak if the city invests 1$ your gonna be pissed. However your fine with the art gallery and museum that less than 16k will go to in their history.
Yes this year the Oilers will make money, Credit to the value of the dollar otherwise they would lose. Yes they do have the worst arena deal in the league, even if they turn some black this year. Yes they could fill a 23k seat arena if we had one. Yes this will put jobs in the economy. So where’s the real issue?
There have been so many “other” deals made to benefit lesser organizations why harp on this one, especially since this is a website devoted to the team, surely you can see past the money because if this arena isn’t build your gonna be discussing how they dont plow the roads, and wondering why Edmonton isn’t mentioned in the same breath as Toronto, Montreal, Vancouver and yes Calgary….It’s a big world look around.
This is a website about the Oilers. They write about issues relating to the Oilers. One of the biggest off-ice issues is the arena deal. I’m not sure why you’re surprised that they are covering it with the same vigour with which they cover the team.
Yes this year the Oilers will make money, Credit to the value of the dollar otherwise they would lose. Yes they do have the worst arena deal in the league, even if they turn some black this year. Yes they could fill a 23k seat arena if we had one. Yes this will put jobs in the economy. So where’s the real issue?
It would be interesting to get some proof of the first couple of statements beyond just blindly accepting the word of a man who it suits to cry poor.
surely you can see past the money because if this arena isn’t build your gonna be discussing how they dont plow the roads
If the City doesn’t give away the farm to Katz they’ll have MORE money to plow the road.
However your fine with the art gallery and museum that less than 16k will go to in their history.
Just a shot in the dark but it’s likely because in those cases the capital investment is smaller and it isn’t being done so that a BILLIONAIRE can step in and scoop up all of the profits. Just a guess though. Funny how many people will argue until they are blue in the face to defend and placate millionaires and billionaires.
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Also I’m starting to wonder if you guys are a website about the city or the Oilers….Getting really lame in all the slagging, and I think we have all discussed this enough
You don’t think this is an issue of interest for Oiler fans? Should everyone pro arena also stop discussing the issue on their blogs, on the radio, and in newspapers?
We get it Ryan" no matter the deak if the city invests 1$ your gonna be pissed.
Not ture. If the deal is a good one for the City then I’m fine with investment. This wasn’t a good deal and it’s getting worse.
However your fine with the art gallery and museum that less than 16k will go to in their history.
Art galleries and museums are not for profit operations. I don’t see much relevance to a discussion regarding subsidies to a multi million dollar company owned by a billionaire.
Edmonton isn’t mentioned in the same breath as Toronto, Montreal, Vancouver and yes Calgary….It’s a big world look around.
An arena won’t make Edmonton world class. When people talk about those cities do they ever mention the arena as the primary reason they’re great? A vibrant down town would be good for advancing the image of Edmonton but it doesn’t require an arena to happen and an arena doesn’t guarantee it will happen.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
Go visit the Staples Centre in LA, walk around for 5 minutes and then re-type this comment
by One_Roy_Save_On_The_Calendar on Oct 20, 2011 12:58 PM MDT up reply actions
Only if you go Newark and check out the Prudential Center. My point is there are no guarantees that the development will happen. Just too much evidence to the contrary.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
the league did a study sometime in 06-08. They wanted to find out how much money is spent in the various areans per capita. Edmonton came out on top, with the average person with a ticket spending close to 100$ per game……the next closest was calgary, around 40$…..isn’t it obvious how much gravity the oilers command in this market?
by One_Roy_Save_On_The_Calendar on Oct 20, 2011 1:12 PM MDT up reply actions
Without some more information on that study I have a very hard time believing that fans in Edmonton spend 150% more when attending a game than fans in any other city.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
Is it higher than Calgary? I pity you all if that’s the case, I wouldn’t have thought it possible.
by TigerUnderGlass on Oct 20, 2011 1:59 PM MDT up reply actions
It’s $8 bucks for a beer. Think that’s comparable to Calgary.
But what’s spent in the arena doesn’t mean there will be a market demand for development outside the arena. If you’ve got $50 to spend and you want beer at the game you won’t be spending it in the arena district before the game.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
Oh I wasn’t arguing here, I was agreeing with you.
On the other hand, don’t most people go out for dinner or drinks before games?
The Saddledome is more or less downtown and everyone I know meets somewhere downtown for dinner or drinks before any event. It’s sort of part of heading downtown for the night. It’s usually more convenient for people to meet in the area. I don’t know if this is how most people do things or just the people I know though, so who knows. I know if there were options near the arena most people would go there instead.
by TigerUnderGlass on Oct 20, 2011 4:25 PM MDT up reply actions
If there were options closer to the arena people probably would meet there. But people only have so much income and if they’re now meeting for a pre game meal that they weren’t before, there must be something else they’re no longer doing. That is why the CRL won’t work as it’s described as is a tax shift more than new tax revenue.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
True. The theory though it that the shift is guided and intentional. I don’t think the idea is to create new revenue, it is to shift bits of it from all over the city to the core in the attempt to revitalize the area.
If new services become available due to the project and the area becomes more desirable as a home then you have a real chance to increase total revenue by increasing total population.
It’s obviously pretty theoretical though. I believe it has worked in some places and not in others.
by TigerUnderGlass on Oct 20, 2011 5:02 PM MDT up reply actions
i agree with this….it may take money away from a restaurant on ellerslie road….
by One_Roy_Save_On_The_Calendar on Oct 20, 2011 6:44 PM MDT up reply actions
in nashville, a ticket costs 27$ and comes with a free beer and free hottog, so nashville fans spend around -4$ per person
by One_Roy_Save_On_The_Calendar on Oct 20, 2011 6:42 PM MDT up reply actions
Monsieur Batty.....
Well as it turns out Katz’ definition of an investment and mine differ just a little bit.
Well katz is a billionaire….i’m not surprised that your definition of investment differs from his
By structuring the deal like this the City takes on all of the risk, allowing Katz to mitigate his completely
Katz has almost a quater BILLION dollars “invested” in the Oilers….how has he completely mitigated his risk exactly?
It should be a well known fact that governments wether municipal, provincial or federal, have access to heavily discounted loans that are not available to the private sector.
Say in year 11, after the annual $2M is sponsorship money runs out, Katz (or the current owner) comes to the City and says the team can’t afford those $5.5M yearly payments and remain viable?
This i’m not sure about, but i assume that if the city is loaning katz millions of dollars that they will be the primary creditors….and if katz can’t afford the payments, the city will seize ownership of the arena and maybe part of the team. Similar to how the Alberta Treasury Branch took the oilers from Pocklington during his bankruptcy proceedings… the difference here is that the municipal government was powerless to stop ATB from dealing the team to Houston, the courts however were able to temporarily delay the sale.
I’ve also recently learned that the province has spent 300+ million on a museum in downtown Edmonton?? How the fuck is a museum going to get 20000 people downtown 41+ 16 nights a year (assuming we win the cup every year)…..where are all the naysayers for this project.
Speaking of the Alberta government…our new Premier has selected her cabinet…and appointed a new minister of finance…..and the word on the street is that he’s shockingly under qualified. The MINISTER OF FINANCE of the richest province in Canada hasn’t even taken econ 101. He graduated high school, went to broadcasting college….and now has the final say balancing multi-billion dollar
THanks for listening
by One_Roy_Save_On_The_Calendar on Oct 20, 2011 1:27 AM MDT reply actions
budgets…multi-billion dollar budgets
by One_Roy_Save_On_The_Calendar on Oct 20, 2011 1:32 AM MDT up reply actions
If we are talking pure people, 2500 visitors to the museum per day over 363 days per year is almost as many people as 20000 per night for 57 nights.
And you’d have people griping more about it if they built the museum, then basically handed the keys to someone else.
It’s also assumed that the previous museum, over it’s history, has been a benefit to the city and province as a whole, which is why the money is being put towards it.
Personally speaking, I don’t have an issue with public money being used, if the facility would then be publicly owned.
In theory, there is little difference between practice and theory, but in practice there is!
Tactical contributor to the Copper & Blue and just as boring on the twitters... @dawgbone98
I also feel as long as the ownership issue is fair, the city will come out ok with the investment. As for the arguments for or against whether the development generates more economy, the construction of it will, but I don’t know (and no one seems definitive on the matter) if after that it creates anything new. I do think the facility in itself has value for the city.
It seems to me that a well done development around hockey and the arena might help with the team’s prestige amongst the players around the league, which might be a benefit in signing players in the future. I like that idea.
As for the city holding the bag for Katz by getting the funding, the city would be less impacted carrying that amount of credit than Katz’ company and as was said would get a better rate. Banks aren’t making credit easy right now, and I am sure Katz would rather not tie up his company’s own borrowing ability. Such is life with big business.
As for the city holding the bag for Katz by getting the funding, the city would be less impacted carrying that amount of credit than Katz’ company and as was said would get a better rate. Banks aren’t making credit easy right now, and I am sure Katz would rather not tie up his company’s own borrowing ability. Such is life with big business.
No doubt that you’re right.
But.
Should the City care? Imagine the owner of a chain of Edmonton-area movie theaters came along and announced he needed money in order to add 3D screens and glass facades, and that it would be really great if he could get that money at the City’s rate. Should the city also do that?
What about me? I’ve got all my money tied up in emerging market mutual funds. I’m making a killing (at least before this last month or so), but dammit, I have no $ for groceries. Will the City of Edmonton lend to me at a steep discount so I can buy a sandwich while keeping my own money in a more profitable venture?
by Passive Voice on Oct 20, 2011 11:40 AM MDT up reply actions
You’re right, no other business or individual would ever be treated like this.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
This is patently untrue. I have seen first hand many situations where municipalities have made significant financial contributions to benefit profitable corporations because it also benefited the municipality. This does not automatically entail financial benefit either.
by TigerUnderGlass on Oct 20, 2011 1:10 PM MDT up reply actions
Over $400M to a non sports team? Where?
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
That’s a different topic.
He was talking about amounts to cover things like 3D screens and groceries and you agreed no other profitable business would be treated so. You didn’t mention an amount when you agreed with him. Why the moving target?
by TigerUnderGlass on Oct 20, 2011 1:46 PM MDT up reply actions
It’s not a moving target, not all municipal investment to help facilitate development is the same. At this scale it is almost non comparable.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
It is when I address a specific point and you switch to a different one for convenience.
by TigerUnderGlass on Oct 20, 2011 4:26 PM MDT up reply actions
You misinterpreted “this” above to mean strictly mean no municipality has ever invested in any developments ever. That isn’t what I meant and I’ll try to be more clear to avoid confusion but I wasn’t switching the point to meet my need.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
Fair enough. My mistake.
I can say that no, I haven’t seen $400M invested, but in terms of percentage of budget I’ve seen more.
by TigerUnderGlass on Oct 20, 2011 4:41 PM MDT up reply actions
Really? I work closely with a lot of municipalities and I can’t comprehend them touching an investment in the neighbourhood of $500 per resident for a private development. If you’ve got different experiences can you point me in their direction I would love to sell them some engineering services.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
If you’ve got different experiences can you point me in their direction I would love to sell them some engineering services.
Should clarify, that’s a joke. Mostly.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
I can’t get very specific, but imagine a scenario where a municipality badly wants a development to happen but developers don’t want to touch it because the margins are low. The town agrees to front the money for the development to make it happen and the developer gets to pay back the town at the town’s rate of interest rather than their own to help fix the margin issue.
by TigerUnderGlass on Oct 20, 2011 5:11 PM MDT up reply actions
so you play lots of sim city?
by One_Roy_Save_On_The_Calendar on Oct 20, 2011 6:46 PM MDT up reply actions
It seems to me that a well done development around hockey and the arena might help with the team’s prestige amongst the players around the league, which might be a benefit in signing players in the future. I like that idea.
Winning will help get players here. I doubt the arena will have any impact.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
Katz has almost a quater BILLION dollars "invested" in the Oilers….how has he completely mitigated his risk exactly?
He has mitigated his risk in the city of Edmonton to 5.5Million a year, not 250million.
The difference between the museum and arena is that anyone can go to the museum when it is open and there is no limit to when and how many visit. For the arena, only a limited amount of people can enter the building at each event.
The city also keeps all revenue from the museum and owns it, whereas for the Arena, the own it, but the revenues are intended to got to Katz.
Well katz is a billionaire….i’m not surprised that your definition of investment differs from his
Do you define investment as zero dollars down?
Katz has almost a quater BILLION dollars "invested" in the Oilers….how has he completely mitigated his risk exactly?
Interesting emphasis on billion, makes the statement a little misleading at first glance. Say a run of health breaks out and Rexall is in trouble meaning Katz has to sell the Oilers. Is it easier to sell the team with or without $225M worth of debt outstanding on an arena. It’s always a good idea to spend other peoples money but in this case we are those other people.
This i’m not sure about, but i assume that if the city is loaning katz millions of dollars that they will be the primary creditors….and if katz can’t afford the payments, the city will seize ownership of the arena and maybe part of the team.
I’m not saying he’ll default, I’m saying he’ll tug at the heartstrings of Oiler fans saying he wants to make it work but he just can’t do it and he needs to restructure the deal.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
zero dollars down? fronting the money? you sound like a used car dealer / drug dealer.
Katz bought the team for 200 million in 08 from the EIG….how is that zero dollars down?
Is it easier to sell the team with or without $225M worth of debt outstanding on an arena
This certainly affects the debt to equity ratio, as long as the assets being built with the 250$ are worth more than the debt upon completion of the project, or generate enough revenue to create a reasonable return on equity….having that much good debt can be very healthy from a corporate standpoint
by One_Roy_Save_On_The_Calendar on Oct 20, 2011 1:09 PM MDT up reply actions
Katz bought the team for 200 million in 08 from the EIG….how is that zero dollars down?
What does the purchase price of the Oilers have to do with anything? Katz didn’t buy the Oilers for the good of Edmontonians he bought them for himself. That’s not a commitment to the City of Edmonton. What he paid is not an investment in this city in any way.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
Just Curious
I wonder if the same level of angst would be present if it was the EIG pitching this deal instead of Katz.
If the deal was bad for the City yes. This has nothing to do with the owner of the team only the deal. I don’t hate Katz for trying to make money, that what he should be doing. Doesn’t mean the City should make a bad deal just to make him more profitable.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
I’m going to assume all your argument points are valid for the moment. So let’s take a worst-case scenario where the city commits $400M to this project. The projected development spinoff is said to be in the neighborhood of +$1 Billion just in the immediate district. That’s a 2.5 leverage before you start talking about tax revenues generated in and around the district, increased densification (a stated city objective), increased public pride AND they own the arena.
And let’s be clear here, the same development would not happen if this district didn’t come to fruition or the city would have just dumped the cash into incentives a long time ago.
This may not be the perfect deal but it’s far from having any upsides.
Yes if you follow the logic provided by Katz then it’s a good deal but I don’t believe will be the case. I don’t think all those rosey development predictions will come true.
Bottom line, this agreement framework now in place is better for Katz and worse for the City of Edmonton than the previous version. I don’t think you can argue that.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
I get where you’re coming from Ryan but I know for a fact at least two big-time local real estate developers are chomping at the bit waiting for this thing to go through. I’d be willing to bet there’s more in the shadows. You have to expand your vision past the arena itself and consider the overall possibilities.
Alternatively, maybe you could table an alternate idea that would encompass the same magnitude without said risk to the city. I’m open to your suggestions.
I get where you’re coming from Ryan but I know for a fact at least two big-time local real estate developers are chomping at the bit waiting for this thing to go through. I’d be willing to bet there’s more in the shadows.
To be fair you’ve this claim before and there is no point in arguing with a vague claim of “I know”.
Alternatively, maybe you could table an alternate idea that would encompass the same magnitude without said risk to the city. I’m open to your suggestions.
Some other suggestions, not from me but they’re all good. Perhaps you have to expand your vision past the arena at whatever cost.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
Well we all know one is Terry Paranych and the other was visibly present at the Arena District presentation at the AGA. I can’t go any further on this site.
As far as providing housing incentives, nice thought but that won’t work until you create a downtown people will actually want to live in. And low-income alternatives are great and all but they won’t provide the economic boost to the core because you need urban professionals with disposable income to generate vibrancy . And the reality is that Alex is looking at the $100M from a micro perspective. The arena district is a macro project far beyond adding some regional upgrades and cheap housing.
I’m not looking at the arena “at any cost”, but it would seem to me the costs involved have the opportunity to provide mutually beneficial outcomes. I have no problem with entrepreneurs working the system to maximize their advantage. It’s how things get done whether you like it or not. Katz isn’t the first nor will he be the last in this regard. Singling him out because he’s successful seems a bit myopic to me.
I have no problem with entrepreneurs working the system to maximize their advantage. It’s how things get done whether you like it or not. Katz isn’t the first nor will he be the last in this regard. Singling him out because he’s successful seems a bit myopic to me.
I’m not singling Katz out, I said that in response to you above. Katz absolutely should be trying to get the best deal possible I have no issue with that, it’s the system we have and I don’t have any issues with that. But that doesn’t mean the City shouldn’t also be trying to do the same and maximizing their benefit. As a taxpayer I’m on the City side of the equation here and I don’t like the deal. That has nothing to do with who is on the other side of the table, it’s a bad deal for the City of Edmonton which is all I have ever said.
Everyone knows rock attained perfection in 1974. It's a scientific fact.
Writer for The Copper & Blue and a frequenter of the time waster that is Twitter.
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