By Own work (Own work) [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons
An economist weighs in on Edmonton's arena deal. He doesn't like the deal at all.
In the debate surrounding the City's decision to help fund the Oilers new downtown arena I've been asked by some on the pro side of the argument why I think I'm smarter than Council. A fair question since I'm an engineer by trade and not an economist. But, as I like to point out, neither are the people on Council who are making this decision so it's just as possible that they're the ones who don't know what they're talking about.
Luckily for everyone, Mike Moffatt, an assistant professor at the Richard Ivey School of Business, has decided to weigh in on the arena deal reached by Council and the Katz Group last week.
As far as deals go, this may be among the worst in Canadian history. Study after study after study shows that sports teams and arenas generate little economic benefit. While lots is spent at the arena this is almost entirely money that would have likely been spent elsewhere in the local economy. The net benefit is minimal. The City of Edmonton is on the hook for $219M in this deal and even the most generous of economic assumptions doesn’t get you one quarter of this back in benefits.
Mr. Moffatt goes on to question the idea of the province funding more than $100M of the project costs despite running "an astronomically large deficit." He even manages to reference the disaster that has become the Maimi Marlins new tax-payer funded stadium which is the worst case scenario for stadium deals. It's a 1:14 long video that won't leave you feeling good if you're an Edmonton taxpayer.
I understand those that want to believe that Council has done a good job in striking this deal but the evidence indicates that they probably haven't.