: News Article:
New Arena deal agreed to by city and Katz group:mod warning #616
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05-13-2013, 12:29 AM
Join Date: Nov 2006
Originally Posted by
Behind Enemy Lines
He was just part of a labour war over a $3.3 billion pie. A second within ten years designed to implement a salary cap to ensure parity cost wise for all teams. It is irrelevant what Edmonton pays Fistric a strange point you may several times. All teams have a cost floor and ceiling. How they choose to distribute the wealth their prerogative. That they can't help themselves to overspend is a recurring issue and no reason public purse should be involved.
Your point is beyond flimsy for subsidizing a $3.3 billion entertainment industry.
Billionaires are the first to decry the free enterprise system when cutting jobs and gaming the stock market. Sadly they are also first to manipulate public will for subsides such as arena debates in North America.
Katz has one of the most profitable NHL franchise in monopoly conditions on the backs of ticket buyers. Now he's being given the keys to the kingdom with abroad new arena, ridiculous concessions including all revenue streams for all events therein inclusive of naming rights, other advertising, concessions, and parking. I say again for ALL events not just Oilers hockey.
There is no risk to him and anyone who thinks über competitive markets like Seattle would bare these high ticket prices and sell merchandise like Edmonton are simply delusional.
Katz stalked the previous ownership to buy this team. He knows the existing ROI and public sentiment around this team to curry up an amazing revenue machine based on the gullibility that other municipalities have been shown to do.
And we should place the issue at the feet of hockey scrubs like Mark Fistric trying to carve out his value on the short time he has to earn ludacrise money as an 'entertainer'?
A new rink may be needed. A new rink for the prime tenant who gains all control of revenue and its operations is just bizarre.
EDIT: a takeover of London Drugs would be more contentious as private shareholders fight tooth and nail for direct return on their investment. For an arena, wrapped around a city's virtual blind love of its sports team, he's waged a PR battle on this sentimentality with one part threat to move, fear of being unable to compete, and spurious economic value the team brings this city and non measurable prestige for having an NHL hockey team.
The salary cap isn't the great equalizer the league makes it out to be. Unfortunately you still need to generate revenue to cover the salary. That means that certain markets, such as Philadelphia, NY, Boston, Toronto, have a distinct advantage when it comes to profitability. This allows them to spend to the cap freely, and at levels that would make small market teams cringe. The salary cap helps offset this, but as we've seen since the last lockout, the cap will continue to rise.
The Oilers might be making a profit now, and have been for the previous 6 years or so but that does not guarantee that this franchise will continue to profit. Our salary has been kept quite low during the rebuild, and as you should know, profit is what's left over after your costs have been covered by your revenue. Costs include salary.
To illustrate a point, if the Oilers right now in Rexall are making a $10M profit with a $40M payroll and the salary cap is raised to $50M, that means if they want to compete with the other teams such as Vancouver, Toronto, Chicago or Boston, they have a couple options: Use the model the EIG used, IE field a bunch of players with the most bang for the buck and watch as talent leaves as we wallow away in 1st round purgatory, or spend to retain that talent and remain competitive. If we don't move forward, eventually the cap floor will be unprofitable.
And that's what this all really comes down to. This notion that Edmonton is some lucrative money-making market where you make money hand over fist is a delusion. We're a small market that is still utilizing a 1980's NHL economic model that is just not sustainable now and assuredly not 10 years from now.
You might not like the idea that Katz has the control over all the revenue streams associated with this project, but that's just the reality for an NHL city in this day and age. No longer is the NHL a backwater 2nd rate league like it was in the 80's. It's becoming huge and it's going to be squeezing a lot of tiny markets like Edmonton's out in the very near future if things continue the way they are.
At the end of the day, it comes down to some very stark realities. Either the City of Edmonton as a whole ponies up for a good sized portion of the arena or the Oilers are literally on relocation notice. You can't have your cake and eat it too. If Katz cannot obtain a feasible economic structure suited to match the economic reality the present-and-future NHL, he'll sell the team. And he even said as much when he bought it off of EIG. That the future of the Oilers hinges on the construction of a new arena.
Edmonton has to decide if they want to move forward as a city with the Oilers as the NHL moves from a 2nd tier to a 1st tier sport. If you feel the Oilers are not worth having in Edmonton, then yeah the arena deal stinks. But all you're doing is damning this city to a slow death. Face it, the Oilers are the biggest thing Edmonton has going for it. And for once the Oilers and the new arena are poised to offer more than just a world class arena, but a catalyst for modernizing the city as a whole. It's really a great time to be an Edmontonian because backwards anti-progress thinking such as yours and others on this board are on the way out after 30 long years. Can't wait, personally.
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