Tag Archives: Daryl Katz

The proof’s in the pudding: Columbus arena not such a success, after all

Columbus, Ohio, now there’s a prime example of how downtown revitalization works when wise investors (read: authorities claiming they act on behalf of their employers, read: taxpayers) put money that isn’t theirs into building a professional sports arena, plus an array of entertainment facilities around it.

That’s what supporters of taxpayer involvement in building a new downtown arena for the Edmonton Oilers would have us believe. They have been dismissing case studies collected from all over this continent. Case studies proving the concept just won’t work, they said, were so much old drivel.

Guess what? The Columbus dream of riches seems to be headed to the poor house even now.

Here’s what officials in that fine city managed to come up with: the Franklin County Convention Facilities Authority (read: taxpayers) would buy the arena from Nationwide Realty Investors (read: a private concern), using casino revenues. In exchange, the Blue Jackets would stay put until 2039. Here’s the financing model: the Authority would use state and other loans. It would get part of tax revenues from a casino being built in Columbus.

Meanwhile, thus a WCMH-TV report, Nationwide would invest $52 million in the Blue Jackets and take a 30 per cent interest in the team. That amount won’t even match this season’s salary cap, by the way.

Not a done deal yet, the mayor and county commissioners need to have their say.

A bit of difference, of course

In Alberta, it would be difficult to go for casino money to finance the Oilers’ new arena downtown. The Alberta Gaming and Liquor Commission seems to be willing to give casino licences mostly to non-profit groups so they can finance their worthwhile activities. The AGLC must approve of these activities first, before those groups spend a cent. These groups earn their money from those who are willing to spend it, gambling. So, they don’t have to ask government for support. Relatively fair. Why relatively? Ask the significant others of those who have no issues with feeding the one-armed bandits. But that’s another story.

What caused the turmoil in Columbus? Here’s a verbatim quote from the original report: “The plan was developed amid economic concerns about the district around the arena.”

Of course, what complicates matters is we’re talking about Columbus, Ohio, not Edmonton, Alberta. That’s what we’re bound to hear from the supporters of Oilers owner’s proposition that taxpayers contribute towards building a new and gorgeous arena for his club downtown. For the record: the Blue Jackets have made the playoffs once in their 11 years of existence, and attendance at their games has been declining throughout. In all fairness, the Oilers have not been much better through the last 11 years, the one trip to the Stanley Cup finals notwithstanding, and still, their arena has been sold out throughout.

Bluntly: one set of customers discriminates, the other, not so much.

Also for the record: that same group of supporters of taxpayer support for the poor old Daryl Katz has been singing praises for the Columbus project the last few years. Columbus, they said, was a blueprint, a shining example of how to make such projects work.

And now, their dreams are shattered to smithereens.

But does all this mean putting a new arena downtown makes economic sense? No, it does not. The arena will be crowded 41 nights a season, plus four pre-season games, and who knows how many playoffs games, if any. Will THAT change the structure of downtown? No, it won’t.

If you wish a summary: it’s a risky proposition, at best.

Who knows what to do with downtown areas? Nobody

As mentioned on a number of earlier occasions, the emigration from downtown areas has become a fact of life in North America. Numerous studies have tried to figure out the reasons for the trend. Without knowing ALL of the reasons, we can hardly hope to turn the trend around. Alas, as it is, we don’t seem to know at least half of the reasons. So, how can anybody even begin to pretend they know how to slow it down, stop it, and turn it around? An old word describes them best: snake-oil salesmen.

All of this still hasn’t touched upon the immorality of suggesting taxpayers should be paying for a professional sports club’s digs. It’s a private entity if there ever was one, and one that its owner plans to keep private.

Quite a few people have invested their emotions in the Oilers’ fates. Some have gone so far as to let their emotions wreak havoc on their intellectual abilities. So far as they are concerned, there’s nothing else to live for in Edmonton than to see their beloved Oilers win (or lose) their share of games. If the new arena downtown goes ahead, with or without taxpayer support, most of the supporters won’t be able to afford single tickets, and never mind parking and – possibly – a bite to eat and a sip to drink during the game. You can bet your last dollar on that.

But, again, this is just one of the many practical angles.

The overwhelming angle is simple: as even the Columbus case has shown, no, downtown revitalization using professional sports arenas and entertainment areas just does NOT work.

Why should Edmonton’s taxpayers pay to see yet another proof, this one closer to home?

More questions than answers in Katz Group’s explanatory statement

So, the Katz Group has come up with an explanation why they need to have the arena deal closed, sealed and delivered by Halloween.

No, no, no, it wasn’t blackmail, you can read between the lines of a statement put out under the name of company vice-president John Karvellas. The company has had pure business reasons that have led them to making the demand.

The Katz Group has exhausted its right to extend the option on the land, the statement said. Besides, even if the first hole were dug today, it still would be close to impossible to see the new arena ready by 2015. That would make it one year AFTER the Edmonton Oilers’ lease for Rexall Place expires. The Oilers’ owner is on record as saying his club won’t play there after the lease has expired in 2014. Indeed? Pray tell: where will the club play in the meantime?

Another open-ended question, not answered in John Karvellas’ statement: “Soon we will lose the opportunity to be in a new arena for the 2015 season. And construction costs are rising, as we have feared they would.”

Indeed. Is he indicating the cost for the entire project will be higher than the planned $450 million? The rest of the statement seems to say that, without even hinting at potential budget overruns. Who will cover those?

The most galling part of the statement: it takes for granted the idea that taxpayers ought to contribute. Why? Well, because it’s the best way. Best way for whom, pray tell? For taxpayers who will see a part of their taxes go towards building a professional sports club’s new digs, and that part would be withheld from the province of Alberta – nyanyanyanahnah? It’s money that is supposed to help pay for such minor, inconsequential services as education. Let’s get it straight: they ARE minor and inconsequential. Compared to what? Compared to a megalomaniac dream of making Edmonton’s downtown a new Acropolis, or something to that effect.

By even agreeing to talk to the Katz Group council is confirming it doesn’t know what its job is. Their conversation should have been brief: you want to build a new arena downtown? Fine. Why don’t you apply for a development permit? We promise to process it with all speed. No, you can’t get a discount on the fee. Don’t provoke us or we’ll slap you with a higher fee, for fast-tracking your request.

As it is, the city spends millions like drunken sailors on shore leave, just to pay for legal and consulting help.

The Katz Group statement also lists its own expenses, saying that combined with those, the final cost of the project would be more than the much-ballyhooed $450 million. More by at least $100 million. And where is it supposed to get the money to cover this shortfall? Money doesn’t grow on trees, after all.

No, money doesn’t grow on trees. It seems the Katz Group, aware of this strange biological phenomenon, would like to get access to an alternative source: taxpayers’ pockets.

The gall! The chutzpah, even! We haven’t got what it takes to do it on our own, help us, or we’ll take our toy and go elsewhere. Do you not remember the fact-finding missions to Quebec City and business missions to Hamilton? Where have we seen this movie before? Oh yes, do you remember Peter Pocklington, drummed out of town for precisely the same antics the Katz Group is showing us now?

Or, how about this deal: fine, the City of Edmonton will pay for the entire arena, and the Katz Group undertakes to pay for the upkeep of the city’s infrastructure, including basic services? Fair enough for you?

But joking aside: this city’s administration shares a bit of the guilt for the fact Edmonton’s downtown now looks and feels the way it does. They did all they could to discourage investment in the area, to discourage commuting to the area (and parking there). This, added to other reasons that influence the North American trend of downtown deterioration, has made our downtown a basket case.

Economic case studies from other North American cities that have gone down a similar path are unanimous: building professional sports and entertainment complexes does not stop or reverse the trend of emigration from downtown cores. Yes, it does slow them down for a few years, in what is known as “novelty effect,” but once this effect wears off, the numbers go back to previous levels. Nobody has bothered to show why Edmonton, of all places, would be different.

The only thing we see is that a grasping billionaire doesn’t want to commit to a project, and tries to keep a loaded gun aimed at his community’s collective head. He doesn’t say it’s robbery. But that’s precisely what it is.

Call 911.

It sounds like blackmail, it stinks like blackmail: what is it?

Daryl Katz imposes a Halloween deadline for a new arena deal in Edmonton

It’s trick-or-treat, or else?

That’s what it seems to be, according to the news that the city’s favourite son and best-known pharmacist, a.k.a. the Edmonton Oilers owner Daryl Katz, wants to have his deal to get public money to build a new arena for his club signed, sealed and delivered by October 31.

He might have his reasons, and one of them might be perfectly valid: he’s put an option on the land where he would like to build the arena, and it’s going to expire soon.

Now, according to what has become known, council heard Friday a bit of what was going on so far as the negotiations are concerned. That’s fine. So far as it goes.

They heard the most important parts behind closed door. And that makes it no longer fine. It makes it downright disgusting.

And now there have been rumblings council might vote on the issue not really knowing some of the major details. Preposterous or preposterous? Let’s hope it’s both the former and the latter. Keeping this council’s record in mind, one’s not so sure. But they should be made aware that as they debate the Oct. 31 deadline, their reply should be: don’t tell us what we should be voting on and when.

If council requires any reminder, here it is: it is public money you’re talking about, not yours. If you wish to put up the $100 million out of your own pockets, be Mr. Katz’s guests. But if you want to touch taxpayers’ money, you can’t be doing it behind closed doors.

Besides, and in council’s eyes this seems to be a minor detail, the aforementioned millions are not nearly enough. There’s also an estimated $57 to $72 million to buy land for a new LRT station, build the station itself, and, if spirit moves them, a pedway on top of it. Of course, the LRT extension itself will cost a pretty penny too, but that one has been debated in council chambers earlier, in different contexts. Still, in the name of ethics, the LRT extension cost should have become a part of the arena debate, also. If in no other sense, then at least by saying, this project would have to be advanced by so-and-so many years to accommodate the new arena, and that might add so-and-so many of your dollars to the cost.

Oh yes, certainly we’re being assured, council will inform the taxpaying public. When? As soon as it sees fit. That’s not good enough. You’re negotiating with a private concern about public money. Guess what? You will have to keep both the doors, and the books, open throughout.

As mentioned so many times before, public money and private business do not mix. Use your own oil and water example here, if you wish. A government’s role and priorities differ from an entrepreneur’s role and priorities. This is not to say which one is better. This is to say they are – in the most thorough meaning of the word – incompatible. Let’s put it simply: the government goes about re-distributing somebody else’s money, while an entrepreneur goes about making and spending her or his own money.

But, given where we are now, the fact remains: this city’s government has got itself involved in talks that have, thus far, at least, led nowhere. It has not felt an absolute obligation to keep its employers (the taxpayers) informed on each turn and twist of negotiations that deal with a substantial chunk of money. Money that many are convinced can be of more use elsewhere. For that reason alone our city parents should be impeached.

Even if this latest ploy is not an attempt to blackmail city council into submission, and from the outside looking in, it definitely looks, smells and sounds like one, there are several options open to Mr. Katz. If he still persists in his view taxpayers owe him something, then, he should let taxpayers decide whether they wish to honour his demand on their own time. The options on the purchase of the land can be extended, too. No? Well, that’s life. If Mr. Katz still persists his club can’t survive without a new arena, then, he could either interest some other entrepreneurs to join him in the project, or he can proceed down the same path most of us have when we wanted or needed something but couldn’t afford to pay for it in cash. We either had to learn to live without it, or we went to a financial institution to convince it we’re worthy of their credit.

It looks Mr. Katz must be getting the worst public relations advice available. Of course, he might be getting the best advice, but is choosing to ignore it or, even, act against it, but let’s give him the benefit of the doubt. Even if we forget about the pure economic nonsense he is proposing, there is this thing called perception. What do people see, and what do people think about what they see? If Mr. Katz is perceived as a Satan, then, alas, he is one, even if, in his heart of hearts, he was an Archangel.

But we won’t know until council keeps its doors open.

Or, better still, if only it had the guts to say, OK, we’ve wasted enough money on this, let’s turn our attention to something more useful.