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New Arena deal agreed to by city and Katz group:mod warning #616
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05-13-2013, 12:51 PM
Join Date: Apr 2007
Originally Posted by
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.
Nonsense you are simply totally buying into the woe is me they are going to relocate so we have to bribe them with public funds to make sure they don't move. As Replacement said in another post it doesn't matter what happens now because if things do sewer the NHL: team will be coming back hat in hand.
I would say the bigger concern about an economic downturn is all the rosy predictions of how much development and thus tax revenue the city will get.
You simply can't have it both ways and no matter what the economy does the city is still way more at risk than the hockey team. The city is fronting all most everything so if things go south and we don't get the kind of development everything is being based on the city loses 1st and foremost.
I'll make one very very easy precondition righto now, as easy as the prediction made a year or more ago that provincial infra money would be used for the missing $100 million.
All of this development will start off slower than hoped and the city will have to give 'incentives' for people wanting to develop in the way of lower taxes.
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