Photo via Wikimedia Commons
Yesterday, Edmonton City Council voted in favor of a funding model for an arena (the vote passed 8-5). In that model, the arena's construction would cost no more than $450M. $100M of that money will come from Oilers' owner Daryl Katz, $125M directly from the City's coffers, $125M from a ticket tax to be collected by the city over the life of the building, and $100M from thin air. The hope is that last $100M will come from either (or I suppose both of) the federal and provincial government, but both levels of government have already stated that they wouldn't be putting any money in, so it will be interesting to see if one has a change of heart. The better bet is quite clearly the province, which would no doubt get a similar request from Calgary, but that's about it. The federal government would need to put up well over a billion dollars if they were to partially fund all of the arena and stadium projects across the country, so I doubt we see them putting any money directly into this pot. So for those living near the arena site, don't rejoice about there being no Community Revitalization Levy quite yet since that may well end up being the backup plan.
The other major item is that, although the city will own the arena (and the land), The Katz Group will be the ones operating the arena, the ones receiving all of the revenues, and the ones covering all of the maintenance costs. This means that Northlands has been pushed out, and although Steven Mandel said that, "Northlands has always been about what's best for the city of Edmonton", I've got a feeling that they won't share his jubilation over this deal, especially since he also said that, "The city can't sustain two arenas".
The bottom line is that this is great news for the Oilers and Daryl Katz, and a big risk for the city of Edmonton as their leaders try to revitalize the downtown core by building in what is, for now, an historically-low interest rate environment. There are still many challenges to work out, but I can only hope that the risk pays off for the people of Edmonton.