Tag Archives: Edmonton

Who knew? The price of land for new arena more than double of what was predicted!

As highway robberies go, this one surpasses the original deal our city parents agreed to in an attempt to square the circle and revitalize the downtown area. No, the land our city parents purchased won’t cost anywhere in the neighbourhood of $20 to $30 million, as originally mentioned. And please note: even that $10 million discrepancy is money most of us have never seen before (and wont see anytime soon, either).

Now, we find out, the land will cost in the neighbourhood of $75 million, give or take a few million either way once the dust settles.

Not only that: where the amended deal called for a $30 million commitment by the Oilers’ owner to the area development, it turns out that if he decides to buy some of the land back, that amount would count as part of his commitment.

Robert Moylers, the city’s spokesthingie, suggests the additional land purchase will allow the city to control the development that goes in the area in terms of the time, the type, and the form. Gee, one would have thought that’s what development permits were for: tell me what you’re going to build, and if we like it, you’ll get the permit. If we don’t, you won’t.

And even if the Katz group DOES buy back the land it said it was going to buy back (no guarantees there, either), it would still cost you and me a pretty penny to keep the rest: $41 million, give or take a million or two either way, again.

Is THAT the cup of tea even the most ardent supporters of the publicly-funded downtown arena bargained for?

Either our city council is a bunch of rank amateurs whose basic knowledge of economics ranks them close to the primates, or – as some whispers seem to float – not all is well with the entire scenario. Let’s remain optimistic and hope it’s the former rather than the latter. If it is the former, this would call for an immediate recall of the entire council, extraordinary elections, and those should be linked to a referendum with the questions spelt out clearly.

Do you still want to use taxpayers’ money to build an arena, with the cost to the city, and be ready for this, NOT $100 ($125) million, but that amount PLUS interest, and PLUS the cost of the land PLUS interest (and the amounts of interest should be spelt out, too)?

Lest anybody objects to including the interest, here’s a reminder: it’s an amount the city will have to pay as part of its spending, so, might as well include it. Please note: it’s spending, not an investment. Somebody else, not the city, will be reaping the benefits.

As mentioned so many times earlier, this entire plan reeks to high heaven. And, as mentioned so many times earlier, there’s no proof the arena, if and when built, would do squat to stop the bleeding from downtown, turning the trend around and revitalizing the area in the process. What does happen here is that the taxpayers are supposed to carry most of the risks while the Oilers’ owner, even if the downtown revitalization plan flops, will be laughing all the way to the bank: his will be the revenues from everything that takes place under his roof.

On top of all that, we are now the landlords for the Baccarat Casino, an outfit owned by the Burnaby-based company, Gateway Casinos and Entertainment. If that is so, where are the numbers we all have the right to know? Can we see the lease deal so we know exactly how much we are going to pay if we demolish the money-making eyesore and replace it with another money-making machine?

This is irresponsibility at its best.

There are some who maintain that even if the arena deal does NOT go through, it’s fine and dandy for the city to own the land: there will be other developments, and the city will be holding all of the real estate cards.

Perfect rubbish, of course. Civic administration is not, and shouldn’t be, a real estate developer.

Generally speaking, any government’s priorities differ from the priorities dear to entrepreneurs’ hearts. This is not to say which of the two sets of priorities is better. This is to say they are different. Governments have no business making such entrepreneurial decisions as imposing a ticket tax on Northlands patrons just to make the deal fair for another private entrepreneur in whose pockets they are sitting right now. To put it as simply as possible, so that even our city parents understand it: fairness in government has nothing to do with fairness in business. Why not? Simply because business is all about competition. Government isn’t.

Also: Mayor Stephen Mandel intimated not so long ago that if no money for the downtown arena project is forthcoming from the provincial government, he’s got a plan B, presumably to line up private investors. (Let’s hope it’s not to raise our taxes to pay for the shortfall.)

Guess what: if he were to show this unfinished piece of what is supposed to be a business plan to any shrewd entrepreneurs, they would do their due diligence, and once they’re done, they would chase him down their corridors with a whip cracking.

This is not to suggest we should apply such corporal punishment to the guy. This is to suggest we should demand, as mentioned, an immediate recall of the entire council, a new election, and a binding referendum.

If the majority of voters still say they want to proceed, highway robbery notwithstanding, let’s rename this place a City of Masochists.

And remember: this is NOT about shining visions. This is all about a perfect crime. Why fleece us one by one when you can fleece the entire city in one fell swoop?

A fair deal? Why not call it highway robbery?

As sellouts go, this one is close to being perfect. The Katz Group drops the no-compete clause demand it wanted to get from Northlands, the city will buy the land, etc., etc., and new arena supporters are ecstatic.

They’ve been taken for a ride and let’s hope the province will not be as foolish. After all, it’s got a strong incentive not to be: if there’s $100 million coming to Edmonton to build this new ice palace, guess what? Next thing you know, Calgary will demand (and justifiably so) that same amount to replace the Saddledome.

The Katz Group won’t be seeking the no-compete clause, and that’s a victory for the city? You’ve got to be kidding: that demand has been illegal from the get-go, and it dawned on the Katz Group leadership at long last that this might end up in court, where they would lose, plain and simple. Some victory, that.

The chutzpah our city parents will show if they approve this deal is endless. So, they will tax Rexall (or whatever it’s going to be called post-Oilers) tickets to help pay for their fancy. If THAT is not an attempt to cut Northlands’ legs under them in order to make the place less competitive, pray elucidate what it is, then.

Let us set aside the argument that putting professional sports facilities in downtown areas in attempts to revitalize those areas has failed all over the place. Yes, even in Columbus. Yes, even in Los Angeles.

The city will make sure nobody will be willing to park downtown, given the fees. They are shamelessly high as it is, and they will go higher still. And that to our enlightened council seems to be the way to drum up custom for downtown.

NHL Commissioner Gary Bettman did what his job description dictates him to do. But our Mayor is neither an NHL employee, nor an NHL flunky.

This nonsense that without a new arena the Oilers would move is something we’ve heard before. Peter Pocklington got run out of town because of it. Why the difference? Veiled threats to similar effect are cricket just because Daryl Katz claims he’s an Edmonton patriot? How foolish can our council members be? How short are their memories?

Just an aside: it was that same Peter Pocklington who brought the NHL to Edmonton in the first place.

But let’s get back to the main topic: anyone equipped with basic knowledge of economics will tell you that private and public money do not mix. The good old oil and water story. The two have different reasons for their existence, hence, they have different priorities. Or, at least, they should have.

If Daryl Katz is so convinced that his club’s arena downtown is going to be the proverbial goose that lays golden eggs, he should go for it. Himself, with outside (but private) help, doesn’t matter. But not with a cent of public money.

Of course, if he asks other entrepreneurs for help, they will want to know what makes him so sure that the plan will work in Edmonton when it hasn’t worked anywhere else. For whatever reason, our city parents have swallowed his pitch whole, never asking the hard questions.

Gary Bettman, in his spiel, mentioned it was a matter of economics for Daryl Katz to seek public support. Gary Bettman should stick to his knitting. It had nothing to do with economics. It had everything to do with business. These two terms have different meanings. Business propositions – if the outcome is ideally positive – work for the business entity that is involved. Economics are about society as a whole. Not only that, but economics also take a longer-term view, something many business people tend to forget.

If one were to start pointing out in individual detail where the city has been had and where Daryl Katz must be laughing, it would be a pretty long list.

But the most serious matter here is this: this council seems unable to provide the city with basic services. And yet, it is willing to go ahead and waste money that would be better (and more usefully) spent elsewhere just to satisfy a billionaire who has just found an easy way how to become even more affluent. Would if all of us were so lucky as to have our mortgages paid by other taxpayers.

One of the nicest gimmicks: the city will demand that the Oilers commit to staying here for another 35 years.

Let’s forget some warning signs that professional sports have been losing their spectator appeal the last few years and nobody knows if anyone will care some 15 years down the road that they even exist. Judging by the price hikes, the Oilers will price themselves out of the general market pretty soon, anyhow. The funniest (or saddest?) part is that professional sports clubs owners are of the view that their facilities become obsolete once they hit the age of about 30 years. That means we’ll be at this same point we’re today 30 years hence. A nice perspective if there ever was one.

To sum up: the murder capital of Canada, a provincial capital with the worst infrastructure in the entire country, a provincial capital that says it can’t afford to provide basic services, will have a shiny new arena for one of its professional sports clubs, all that paid using taxpayer money.

In Europe, they’re now so down economically, just because of follies like this, they have expanded their taxation base to demanding fees from farmers for bovine flatulence. Yes, and it wouldn’t be the insanely bureaucratic European Union if it didn’t come up with quotas: the rate is higher in Bulgaria than in Denmark. Why, nobody knows.

Is that where we want to end? Or what else will the city have to tax to help it pay for something private citizen Daryl Katz thinks he needs?

In addition to being a murder capital, we’ll become a laughingstock. Nice, is it not?

Summons to Big Apple a sign of bad manners

If there ever was an example of bad manners, this is it: NHL Commissioner Gary Bettman invites Edmonton Oilers’ owner Daryl Katz and Edmonton mayor Steven Mandel to drop by for a chat about the downtown arena issue, and the two hicks accept and go, one of them, presumably, at public expense. No, wait, make it two of them: city manager Simon Farbrother is going, too, and nobody can expect him to pay for his flight, room and board.

Why bad manners? On two grounds.

Gary Bettman is Daryl Katz’s employee. He should be coming to see his boss. Not the other way ’round.

And Gary Bettman wants something from Edmonton’s council. Not the other way ’round. Again, he should be coming to Edmonton, hat in hand, and wait in the reception area until council is ready to hear him out.

Other than that, Gary Bettman is doing what he should be doing: trying to push his employer’s point of view. But, as a good employee, one would have expected him to do his homework first.

Even if city council gives in and binds taxpayers (its employers) to paying $100 million, there is still the minor issue of no commitment from the province. Without that particular commitment, everything’s been just so many puffs of hot air. And it doesn’t seem the province is in any spectacular hurry to commit a cent towards the project.

The other issue is much more simple: Daryl Katz is demanding a firm commitment from Northlands that what is known today as Rexall Place won’t compete with however the new downtown arena is called. There exist laws that specifically forbid such behaviour. Ever heard of anti-trust legislation? Not that such legislation pleases anybody who’s all gung-ho for free markets, but still, it’s on the books.

Gary Bettman, as mentioned, is Daryl Katz’s employee. He can’t be ordering his boss around, but he can offer him advice. Wise advice. Here’s what its gist should be: don’t waste your time looking for public money. If you want a new arena, build it. Downtown Edmonton, any of Saturn’s rings, wherever tickles your fancy. If you’re not a member of the proper clubs where moneybags gather for afternoon siesta, I could introduce you to some that have for their members people for whom your fortune is their weekly allowance. You can talk to them and ask them if they would want to chip in. You can also go and see your friendly neighbourhood bank manager about mortgage. But stop feeling you’re entitled to getting public money. You’re not entitled to anything. The period of overwhelming demands for social and financial entitlement is behind us. Live with it.

Both Messrs. Mandel and Farbrother should decline Mr. Bettman’s invitation. If they don’t, the mayor should reimburse us all for his and his city manager’s Big Apple extravaganza. The realization they can’t be doing as they please will only happen when our elected politicians become personally and financially accountable for all of their decisions. That’s when they might begin to see the foolishness of their ways.

In the meantime, they need to be reminded they are our servants, we’re not their serfs.

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?

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.