Edmonton rejects Oiler [Arena] bid for more taxpayer dollars
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09-20-2012, 03:50 PM
Join Date: Dec 2006
Location: Waterloo Ontario
Originally Posted by
you just described ottawa. They got it done.
No offense but how did that work out for the individual who built the building. What happened in Vanocuver? Even the Bell Centre ended up being essentially sold for nothing by its original owners.
Edmonton is too small of a market for a private investor to put $650-700M into an arena and hockey team. It makes zero sense. And it would not make sense in Ottawa either.
Originally Posted by
winnipeg did it with private money.
why does katz need public money? You have yet to convincingly answer this.
The MTS Center was built for $133M with $40M in public funding. And the building is owned by the private entity. If they want to sell it they get the money. Katz will be responsible for $100M of the direct costs of the Edmonton arena and will be responsible for the building maintance, but the building will be 100% owned by the City of Edmonton.
There is a ticket tax in both locations. In Edmonton the proceeds are to go to the City to cover $125M of the cost of the building. In Winnipeg this tax money goes to TNSE. Similarly, TSNE receives substantial monies from VLT's and additional tax breaks. All told thses total roughly $11M per year.
I have no doubt that Katz would jump at the Winnipeg funding formula.
I am a big supporter of the new arena. I think it is a sigificant piece of infrastructure for a City like Edmonton. That said these recent developments are both disappointing and disturbing.
Originally Posted by
I was talking about MY plan...who's Katz?
But seriously, what money is Katz ponying up for this arena that isn't borrowed from Edmonton, to be paid back over 35 years at $5.5 million per? That's about a 2.75% rate, btw. So, Edmonton builds a $450,000,000 arena and Katz is out of pocket about $2.75 million/year in interest. But don't worry - if he gets $6 million/year for 35 years for maintenance he won't lose a dime (in fact since it wasn't his money in the first place, he's way ahead!).
The city promised to pay $2 million per year to the team for 10 years for advertising. Another $20 million subsidy.
My mistake on the office lease - I didn't realize he just wanted to help the city out of a tight spot and was willing to take the risk of securing a long term lease with a sketchy tenant like the City of Edmonton. What a guy!
All this under the threat of moving one of the top revenue teams in the league to Hamilton...
In what context should we take this little extortion racket?
No one would expect that Katz was going to throw $100M cash up front into the building. But ask yourself this. What would you think the reaction would be from his private lender if he was to ask for $100M to put towards an asset that he would have $0 equity in. The City will own the building, and they have access to cheap money through a program with the province. Katz has to pay the full cost of funding this portion of the cost so short of a default, there is no risk to the tax payer.
As to the rest, I am curious what you think of the TNSE deal in comparrison. Certainly if you exclude the $6M the value of the Winnipeg funding formual is much greater than what Katz is asking for. The $6M is a new twist to most of us who have followed this for a while so I do not yet know how to completely resolve this. Though as I said above in this Deal Katz is on the hook for the operating costs and future capital costs for the arena. Based on what we know from other buildings I don't think anyone here would suggest that $6M per year is going to leave a lot left over but rather will leave a shortfall in time.
And as far as the team leaving, Katz has never threatened to move the team. But he is under no obligation to remain an owner in perpetuity. And should he decide he wants to sell, it is at least a real possibilty that no local owner would step up especially if the prospect was a $600M investment.
The current building is a significant piece of the City's core fabric. If this arena does not go through the planned alternative is to hand over $200-300M to Northlands to renovate Rexall. All of this is from the taxpayers. There is no fully private option on the table. But the Katz's groups making a mess of the PR for this project. The shame is that in reality this is actually a relatively small risk for a City with nearly a $2B per year budget, and a city that is still growing at a significant rate.
Last edited by Fourier: 09-20-2012 at
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