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New Arena deal agreed to by city and Katz group:mod warning #616

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Old
05-13-2013, 05:41 PM
  #1001
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Originally Posted by Lewy View Post
I bet you his line of credit could handle it... considering his net worth is what? Over *pinky finger to mouth* 1 Billion dollars?
Yeah, but don't you realize that most of that is assets and not cash? All the real estate he owns, Rexall Pharmacies, the Oilers etc. All that adds up to be pretty much all what he's worth. That's what people don't understand. If he puts all his eggs in the arena basket, and the dollar goes the way of the 90's then, he's screwed. Just like every other single businessperson on the planet, he's looking out for his interests.

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05-13-2013, 05:57 PM
  #1002
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I can't believe any reasonable thinking person would actually believe that, let alone write it.
Perhaps in 10-15 years after a new arena is built....by some anonymous benefactor of course...
First of all I love how sides in this exchange term opinions as reasonable, or unreasonable based solely on where on this civic issue one stands.

In short I could note that view being unreasonable.

Next, given the history of this org, and indeed the history of pro sports in NA in general, how would I not expect written agreements to be re-written?

Its been par for the course by owners wanting ever better deals leveraged by vague, general, or actually stated threat.

One could say deal breaking has been the mode.

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05-13-2013, 06:01 PM
  #1003
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No, I live in a world where I don't pretend to have in depth knowledge of a situation I'm not privy to.

Pretty realistic place to be, but don't let that stop your ranting...
The poster has taken the effort to substantiate a position using actual reference points. At least acknowledge that effort, and homework even if you disagree with the conclusion.

Katz has hardly gained any credibility in this whole arena saga and even Mandel had some choice words about his "good faith negotiating" after the 6M/per year subsidy request.

I dare say the vast majority of city council had difficulties with that one. True or false?

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05-13-2013, 09:27 PM
  #1004
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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.
You should be a used car salesman. Some of the best masked fear-mongering I've ever seen.

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05-14-2013, 12:48 AM
  #1005
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Originally Posted by smackdaddy View Post
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.
Complete fallacy.
Recommend you read the following:
http://mowatcentre.ca/pdfs/mowatResearch/31.pdf

Page 11:
The Edmonton Oilers are a good example of how a small Canadian market with a high level of interest in hockey can be a better location for a team than a large American city whose residents have only a middling level of interest in the game. All else being equal, a team located in a big American market such as Phoe- nix, Miami or Atlanta should have nothing but ad- vantages when compared to a small-market Canadian team. But all else is not equal. A Canadian city of just over one million has far more hockey fans than a Sun Belt city of more than four million. (See Table 4)

Page 13:
Our analysis controls for the border and we come to a different conclusion: a team’s ability to generate revenues correlates strongly with the population of its home market—so long as you control for the presence of the Canada-US border.

Toronto is a more profitable market than Ottawa and New York is a more profitable market than Buffalo. But a small Canadian city the size of Edmonton is a more profitable market than a big Sun Belt city the size of Atlanta. Levitt, in effect, concluded that because Edmonton is a more profitable market than Atlanta there is no correlation between the size of a city and its profitability; instead he should have concluded that being a Canadian city—even a small one—makes a team much more likely to be profitable.

Consider:
• Canada’s six NHL teams are only one-fifth of the NHL’s 30 fran- chises—yet Canada generates nearly a third of the league’s rev- enues.
• Edmonton, Calgary and Ottawa are three of the smallest markets in the NHL, yet these franchises enjoy arena gate revenues that exceed almost every American franchise.
• The rights to broadcast NHL hockey are the most important deals in the Canadian television market. In the US, the NHL does not even have a proper national network TV deal.

Oh ya, and the rinks in Montreal, Toronto, Ottawa, and Vancouver were built by private investment.

Don't be so naive to think this is as simple as a 'progress v no progress' issue. Scary when uninformed people buy into simple, manipulative P.R. Without the benefit of looking deeper into the heart and reality of the issue.


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Old
05-14-2013, 01:28 AM
  #1006
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Originally Posted by Behind Enemy Lines View Post
Complete fallacy.
Recommend you read the following:
http://mowatcentre.ca/pdfs/mowatResearch/31.pdf

Page 11:
The Edmonton Oilers are a good example of how a small Canadian market with a high level of interest in hockey can be a better location for a team than a large American city whose residents have only a middling level of interest in the game. All else being equal, a team located in a big American market such as Phoe- nix, Miami or Atlanta should have nothing but ad- vantages when compared to a small-market Canadian team. But all else is not equal. A Canadian city of just over one million has far more hockey fans than a Sun Belt city of more than four million. (See Table 4)

Page 13:
Our analysis controls for the border and we come to a different conclusion: a team’s ability to generate revenues correlates strongly with the population of its home market—so long as you control for the presence of the Canada-US border.

Toronto is a more profitable market than Ottawa and New York is a more profitable market than Buffalo. But a small Canadian city the size of Edmonton is a more profitable market than a big Sun Belt city the size of Atlanta. Levitt, in effect, concluded that because Edmonton is a more profitable market than Atlanta there is no correlation between the size of a city and its profitability; instead he should have concluded that being a Canadian city—even a small one—makes a team much more likely to be profitable.

Consider:
• Canada’s six NHL teams are only one-fifth of the NHL’s 30 fran- chises—yet Canada generates nearly a third of the league’s rev- enues.
• Edmonton, Calgary and Ottawa are three of the smallest markets in the NHL, yet these franchises enjoy arena gate revenues that exceed almost every American franchise.
• The rights to broadcast NHL hockey are the most important deals in the Canadian television market. In the US, the NHL does not even have a proper national network TV deal.

Oh ya, and the rinks in Montreal, Toronto, Ottawa, and Vancouver were built by private investment.

Don't be so naive to think this is as simple as a 'progress v no progress' issue. Scary when uninformed people buy into simple, manipulative P.R. Without the benefit of looking deeper into the heart and reality of the issue.
Scary when you realize that all the owners that built rinks were forced to sell and declare bankruptcy. Yea, that's a model I want to see the Oiler's owner taking. And what about a big city with hockey interested fans? I can almost guarantee a team goes to Seattle if they build a new arena.

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05-14-2013, 07:17 AM
  #1007
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Originally Posted by raab View Post
Scary when you realize that all the owners that built rinks were forced to sell and declare bankruptcy. Yea, that's a model I want to see the Oiler's owner taking. And what about a big city with hockey interested fans? I can almost guarantee a team goes to Seattle if they build a new arena.
A lot of other factors contributed to Ottawa and Vancouver's owners having to sell. The loans for Scotiabank were called in because Enron croaked and they didn't have the capital to pay them right out. Vancouver had overruns on the arena, lost revenue on the 94 lockout and paying the expansion fee for the Grizzlies might have tipped the pot. Building a rink was not the reason for the bankruptcies and shouldn't scare off people wanting to build arena's privately.

Building the arena is exactly what this city needs, but I don't agree with the financing. The way I see it, Katz can pay for the arena and the city can pay for the infrastructure. I'm not Katz, but I would like to think if I was in his position I would try and get the financing privately to build this arena for my hometown.

I understand owning a NHL franchise is not some hand over fist money generating machine and he has already helped Edmonton out by buying the Oilers. However, end of the day if this arena gets built that value and asking price for the Oilers increases to Katz benefit.

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05-14-2013, 07:41 AM
  #1008
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A lot of other factors contributed to Ottawa and Vancouver's owners having to sell. The loans for Scotiabank were called in because Enron croaked and they didn't have the capital to pay them right out. Vancouver had overruns on the arena, lost revenue on the 94 lockout and paying the expansion fee for the Grizzlies might have tipped the pot. Building a rink was not the reason for the bankruptcies and shouldn't scare off people wanting to build arena's privately.

Building the arena is exactly what this city needs, but I don't agree with the financing. The way I see it, Katz can pay for the arena and the city can pay for the infrastructure. I'm not Katz, but I would like to think if I was in his position I would try and get the financing privately to build this arena for my hometown.

I understand owning a NHL franchise is not some hand over fist money generating machine and he has already helped Edmonton out by buying the Oilers. However, end of the day if this arena gets built that value and asking price for the Oilers increases to Katz benefit.
Nice post.

You could go into a lot more detail I'm sure but you captured the argument. Some confusion abounds around events, results, and retrospection which leads to fictions commonly being created around this issue.

For instance the notion that funding arena's causes its owners to go broke. While people may or may not be invoking causality in that interaction they most clearly are arguing on that behalf as if its something an owner should steadfastly avoid lest they succumb to going broke on the basis of partially funding an arena.

Heres an instance where the pro arena at any cost side is clearly utilizing fear mongering as a means to try to sway favorable opinion on any nature of deal.

Katz will not go broke on the basis of contributing an extra 50-100M on an arena. An owner with multibillion in assets that has recently leveraged a subtantial amount of that into liquid assets through sales is arguably in a position to not only fund an arena, but do so without loan (not recommending this as a course of action, just saying)

Nobody at this point is looking at a massive change in relative contribution. But for Katz to go 50/50 with the city to make up any outstanding amount that is owing is feasible, and lets make it clear, Katz could easily enough do that if he wished.

Aside from what the Katz team itself may say through vested interest about "losing money on the Oilers" (theres no independent substantiation of this and none provided even though the city has asked several times) its quite clear that this becomes a matter of how much, or if, Katz wants this development to continue.

The request for a 6M/yr subsidy in an already one sided deal gave indication not too long ago that Katz was not bargaining in good faith.

It is curious why it falls on the city to fund and front each extra means as shortfalls come up. I could add shortfalls that are now increasingly politically unpalatable to fund due to specific actions Katz and his team have taken, which have been recently outlined on this thread.

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05-14-2013, 08:08 AM
  #1009
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Originally Posted by raab View Post
Scary when you realize that all the owners that built rinks were forced to sell and declare bankruptcy. Yea, that's a model I want to see the Oiler's owner taking. And what about a big city with hockey interested fans? I can almost guarantee a team goes to Seattle if they build a new arena.
Is that right?

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05-14-2013, 08:09 AM
  #1010
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Originally Posted by Peter Zezel View Post
A lot of other factors contributed to Ottawa and Vancouver's owners having to sell. The loans for Scotiabank were called in because Enron croaked and they didn't have the capital to pay them right out. Vancouver had overruns on the arena, lost revenue on the 94 lockout and paying the expansion fee for the Grizzlies might have tipped the pot. Building a rink was not the reason for the bankruptcies and shouldn't scare off people wanting to build arena's privately.

Building the arena is exactly what this city needs, but I don't agree with the financing. The way I see it, Katz can pay for the arena and the city can pay for the infrastructure. I'm not Katz, but I would like to think if I was in his position I would try and get the financing privately to build this arena for my hometown.

I understand owning a NHL franchise is not some hand over fist money generating machine and he has already helped Edmonton out by buying the Oilers. However, end of the day if this arena gets built that value and asking price for the Oilers increases to Katz benefit.
Well if I'm Katz and I'm not getting the arena I'm selling off the Oilers and putting my money into a better investment. Or I'm building my own arena in one of the surrounding counties like strathcona, parkland, or sturgeon for significantly cheaper and letting edmontons downtown rot.

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05-14-2013, 08:28 AM
  #1011
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Well if I'm Katz and I'm not getting the arena I'm selling off the Oilers and putting my money into a better investment. Or I'm building my own arena in one of the surrounding counties like strathcona, parkland, or sturgeon for significantly cheaper and letting edmontons downtown rot.
So perhaps you're engaging in projection here rather than accurately reflecting the present deal, and issue at hand.

Its unfortunate you have this opinion, and I'm not sure how its derived, but it seems quite negative.

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05-14-2013, 08:29 AM
  #1012
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Well if I'm Katz and I'm not getting the arena I'm selling off the Oilers and putting my money into a better investment. Or I'm building my own arena in one of the surrounding counties like strathcona, parkland, or sturgeon for significantly cheaper and letting edmontons downtown rot.
Well, considering he owns a bunch of that land adjacent to the arena and stands to profit off it big time if his little extortion attempt is succesful, I really doubt that is in his playbook.

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05-14-2013, 08:31 AM
  #1013
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Is that right?
Not exactly but close, Molson was forced to sell 80% of the Canadians to Gilette in 2000 which they bought back in 2009. And John Bitove who started the ACC in Toronto ended up selling the raptors to MLSE. It should be noted that the teachers union who was a 66% stake holder in MLSE sold in 2011 to Bell and Rogers.

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05-14-2013, 08:38 AM
  #1014
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So perhaps you're engaging in projection here rather than accurately reflecting the present deal, and issue at hand.

Its unfortunate you have this opinion, and I'm not sure how its derived, but it seems quite negative.
Have you not seen how this deal has been mismanaged on city councils side as much as Katz's side? Or how the citizens of Edmonton continue to ***** about how they're getting screwed over by a billionaire. If I'm Katz and this doesn't go through I build in the out lying area and have a half decent facility worth around roughly 250M. Then I don't have to deal with city council, and I'm not called a thieving billionaire for the rest of my life by half of edmonton. The best part is that if he did build an arena that the city would probably build and LRT line out to it worth 200-300M.

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05-14-2013, 08:39 AM
  #1015
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Well, considering he owns a bunch of that land adjacent to the arena and stands to profit off it big time if his little extortion attempt is succesful, I really doubt that is in his playbook.
What land does he own adjacent to it? I had heard that he had only bought the land for the arena district.

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05-14-2013, 08:52 AM
  #1016
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In my opinion, the Oilers are the smaller part of Katz's investment concerns, it's more about the real estate development around the arena, than the team inside of it. Selling the team means he is accepting a lot less profit than opportunity presenting itself.

And so, I think this is where they need to be looking for the extra capital. Since, I don't like the concept of certain private industry gaining competitive advantage over other private industry through actions of a government, those who look to benefit in the long term should do so with additional offsetting payments. Don't be taxing those people who have started building, before an arena is off the ground, charge those who are waiting until that competitive advantage is in place. Which is a group larger than Daryl Katz.

New hotel, anchored by arena, is built, it is required to charge a $5 a night surcharge (not charged at the Delta or Sutton Place...) on each room for ten years. New business tower, anchored by the arena, is built, each square foot of leased space has a surcharge for the first term. I'm sitting in a shiny new seat, in a building that I think I can escape from in the case of an emergency, I pay $N per ticket for N years...


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05-14-2013, 08:56 AM
  #1017
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A lot of other factors contributed to Ottawa and Vancouver's owners having to sell. The loans for Scotiabank were called in because Enron croaked and they didn't have the capital to pay them right out. Vancouver had overruns on the arena, lost revenue on the 94 lockout and paying the expansion fee for the Grizzlies might have tipped the pot. Building a rink was not the reason for the bankruptcies and shouldn't scare off people wanting to build arena's privately.

Building the arena is exactly what this city needs, but I don't agree with the financing. The way I see it, Katz can pay for the arena and the city can pay for the infrastructure. I'm not Katz, but I would like to think if I was in his position I would try and get the financing privately to build this arena for my hometown.

I understand owning a NHL franchise is not some hand over fist money generating machine and he has already helped Edmonton out by buying the Oilers. However, end of the day if this arena gets built that value and asking price for the Oilers increases to Katz benefit.
Owners in Ottawa were already broke by 2002 trying to keep up with the arena debt payments while dealing with a hostile government at the time. The Enron scandel was just the straw that broke the camels back, not the cause. They owed 360 million dollars, 200 million of it on the arena when they went under.

http://www.cbc.ca/archives/categorie...-bankrupt.html

Arther Griffins was forced to sell the Canucks due to overextending on the building of GM/Rogers place, though the Grizzlies did play a part.

http://www.theglobeandmail.com/news/...rticle7310812/

http://en.wikipedia.org/wiki/Vancouver_Canucks

Quote:
From 1988 to 1997, the Vancouver Canucks were owned by local businessman and philanthropist Arthur Griffiths, who had inherited ownership from his father, Frank. However, he was forced to sell his majority interest in the Canucks after overextending his resources trying to build a new arena, GM Place (currently known as Rogers Arena). As a result, he sold his majority share to American billionaire John McCaw, Jr.
Montreal is harder to nail down due to how long ago it was, but poor on ice results, inability to fill the brand new arena, a bottomed out Canadian currency, and poorly run internal financials all played a major role in the Molson brothers selling the majority stake. Add in that there were no local owners, and the team was barely breaking even, there was a very real possibility that the Canadiens wouldn't keep playing in Montreal at the time.

You can't really pin it on the arena itself, but it does show that no franchise is safe if the economy drops off again.

All three situations are very much cautionary tales for anyone who is looking to protect their financial investment over the long haul(10 - 30 years), which Katz has been doing right from the start.

Not sure why people get so down on Katz anyways, he's a billionaire businessman looking to get the best deal possible for himself. If anyone has a real issue with the deal, they should take it up with their publicly elected officials who have spent the majority of the negotiations working for Katz instead of representing their electorates, it's like hating Horcoff for the contract the team offered him.

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05-14-2013, 09:22 AM
  #1018
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Nice interesting bit about the Brooklyn arena that Mandel and the crowd were visiting the other day. They were talking about all the planned development around the arena and how it was supposed to be on a 10 year schedule....which then got pushed back to a 25 year schedule. And thus all the 'promised' development looks like vapor ware. They also said for the Edmonton deal they have no time table at all and no independant person to oversee and make sure things are going as promised.

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05-14-2013, 09:50 AM
  #1019
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New thread is up

http://hfboards.hockeysfuture.com/sh....php?t=1429171

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