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The Official New Arena Thread: Part 4

View Poll Results: What is the best choice?
Give in Katz's request for public subsidy 38 35.85%
Katz will drop the public subsidy and honour the October 2011 framework 53 50.00%
100% public funding with Katz as the Oilers owner and the city gain some profit 6 5.66%
100% public funding with (my suggestion) propose ownership of Northlands and City as NHL owners 9 8.49%
Voters: 106. You may not vote on this poll

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Old
09-26-2012, 02:33 PM
  #1
dnicks17
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The Official New Arena Thread: Part 4

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Quote:
Originally Posted by Fourier View Post
I am looking for more info to clarify these numbers but if one looks at page 63 of Northlands 2011 annual report it lists the operating expenses for Rexall to be $30.2M which is up from $25M in the previous year.

http://blog.mastermaq.ca/2010/12/10/...y-the-numbers/

The only other info in this respect I found were numbers Northlands presented to the City based on the 2009 year. They are

■$5.8 million is the base cost of operating Rexall Place each year
■$10.9 million is the cost of operating Rexall Place if you include hockey
■$17.1 million is the cost of operating Rexall Place after including all other events
■$1.1 million is the amount the Oilers contribute towards those operating costs
■$2.2 million is the amount the City of Edmonton contributes toward those operating costs each year (adjusted for inflation)


This suggests that the $6M that Katz is asking for might cover the cost of operating the building withut any events.

Based on the annual report from Northlands it seems the costs of running a facility this big in Edmonton are increasing at a significant pace.

As such if Katz is contributing $5M per year for the building debt, 7% or so of the revenue in ticket taxes, and covering all the costs above $6M to operate the place then those who suggest that he is getting the building for free might be off base. Hi net transfer to the City including operating costs could well be over $20M.


Last edited by Bryanbryoil: 09-26-2012 at 04:44 PM. Reason: Adding Fouriers post fromm the last thread
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Old
09-26-2012, 02:35 PM
  #2
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And folks lets stay away from the personal insults. I know it's tempting to want to throw in a personal shot (we've all been there ...) when the discussion is about as something as heated as this, but stick to making your point rather than insulting someone.

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09-26-2012, 03:11 PM
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I don't understand how anyone who is asking for more money from council can refuse to stand in front of them and explain themself. You are asking for millions but don't have the decency to do that. Millions from the taxpayers of Edmonton who supported a crappy product for the past six years. Through thick and thin, the residents have always supported the Oilers. I know it's business and so is not going to Rexall stores to make your purchases. This stunt could cost the guy millions more over the long term. GIVE RESPECT. GET RESPECT. The citizens and their representatives deserve better.

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09-26-2012, 03:15 PM
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Kentucky Cowboy.

The city was supposed to help with the casino and dropped the ball, lol at you thinking our politicians are even halfway competent
Given that the city has nothing to do with Casino's and that they never included a mention of it in the Framework they agreed to last year, plus the fact that Katz hasnt made a call to the AGLC to inquire about a Casino licence it looks much more like Katz and co are the incompetent ones.

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09-26-2012, 03:22 PM
  #5
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Quote:
Originally Posted by cpnfantstk View Post
I don't understand how anyone who is asking for more money from council can refuse to stand in front of them and explain themself. You are asking for millions but don't have the decency to do that. Millions from the taxpayers of Edmonton who supported a crappy product for the past six years. Through thick and thin, the residents have always supported the Oilers. I know it's business and so is not going to Rexall stores to make your purchases. This stunt could cost the guy millions more over the long term. GIVE RESPECT. GET RESPECT. The citizens and their representatives deserve better.
Well it's not like he isn't working with the City, he just isn't going in front of council which I was okay with.

The thing is Katz really is hurting himself when it comes to future projects and getting city council on his side, which may seem small now but who knows what the future holds.

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09-26-2012, 03:29 PM
  #6
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Quote:
Originally Posted by cpnfantstk View Post
I don't understand how anyone who is asking for more money from council can refuse to stand in front of them and explain themself. You are asking for millions but don't have the decency to do that. Millions from the taxpayers of Edmonton who supported a crappy product for the past six years. Through thick and thin, the residents have always supported the Oilers. I know it's business and so is not going to Rexall stores to make your purchases. This stunt could cost the guy millions more over the long term. GIVE RESPECT. GET RESPECT. The citizens and their representatives deserve better.
Meh. I don't think it was neccisary for the City to ask the Katz Group to have a public city council sit down. Katz Group said that they have too many things to iron out and a public meeting would not be productive. I agree with that stance. They are at a point right now where they have to get things done, not play politics. And you know as well as I that politics and chest pounding/how far can I piss will be on the agenda for some councilors.

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09-26-2012, 03:41 PM
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Quote:
Originally Posted by Halibut View Post
Given that the city has nothing to do with Casino's and that they never included a mention of it in the Framework they agreed to last year, plus the fact that Katz hasnt made a call to the AGLC to inquire about a Casino licence it looks much more like Katz and co are the incompetent ones.
Katz I think already has his ducks in a row there. The Baccarat is in stage 3 of the paperwork for doing expansion/renovation (which can mean anything from a few extra machines to a whole new building). I think what he may be looking for there is help getting the owner of the Baccarat to sell maybe.. I'm not 100% sure. I do know the Casino industry very very well however, and know that the owner of the Baccarat wouldn't have wasted the money on the application process and the things that are necessary for it if he didn't have a fair idea of what they were expecting to go on.

Literally from day 1 of trying to get an arena, Katz was on the move on the Casino front. Everyone in the industry was very aware of it, and his people were seen in every Casino in the province getting to know the management staff and possibly doing a little early scouting into who they wanted in their upper management.

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09-26-2012, 03:42 PM
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Quote:
Originally Posted by Dorian2 View Post
Meh. I don't think it was neccisary for the City to ask the Katz Group to have a public city council sit down. Katz Group said that they have too many things to iron out and a public meeting would not be productive. I agree with that stance. They are at a point right now where they have to get things done, not play politics. And you know as well as I that politics and chest pounding/how far can I piss will be on the agenda for some councilors.
Good point and great post but lets be honest. Katz and Co going to Seattle and releasing the statement that they did was about as productive as the NHL's first offer to the PA.

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09-26-2012, 03:45 PM
  #9
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The sub-headline for this fourth thread should be "NHL Armageddon."

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09-26-2012, 03:46 PM
  #10
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Quote:
Originally Posted by cpnfantstk View Post
I don't understand how anyone who is asking for more money from council can refuse to stand in front of them and explain themself. You are asking for millions but don't have the decency to do that. Millions from the taxpayers of Edmonton who supported a crappy product for the past six years. Through thick and thin, the residents have always supported the Oilers. I know it's business and so is not going to Rexall stores to make your purchases. This stunt could cost the guy millions more over the long term. GIVE RESPECT. GET RESPECT. The citizens and their representatives deserve better.
I thought the trip to Seattle was a low blow. But other than that this is abusiness deal where both parties are trying to leverage for more. And because its public money and our beloved Oilers are at stake we are seeing some folks take this very personal. I don't begrudge Katz and believe in the long run he is still our best chance/owner at running a successful franchise. Get er done!!

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09-26-2012, 03:46 PM
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The city should build the entire thing itself. It can keep all the profits and it removes the "building the arena for a billionaire" stigma.

I don't know how long it would take to recoup the $100M though.

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09-26-2012, 03:46 PM
  #12
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Quote:
Originally Posted by molsonmuscle360 View Post
Katz I think already has his ducks in a row there. The Baccarat is in stage 3 of the paperwork for doing expansion/renovation (which can mean anything from a few extra machines to a whole new building). I think what he may be looking for there is help getting the owner of the Baccarat to sell maybe.. I'm not 100% sure. I do know the Casino industry very very well however, and know that the owner of the Baccarat wouldn't have wasted the money on the application process and the things that are necessary for it if he didn't have a fair idea of what they were expecting to go on.

Literally from day 1 of trying to get an arena, Katz was on the move on the Casino front. Everyone in the industry was very aware of it, and his people were seen in every Casino in the province getting to know the management staff and possibly doing a little early scouting into who they wanted in their upper management.
So then what exactly was the owner of the Bacarrat expecting when KAtz bought all that land for said arena? Did he just want to expand the casino for the friendly people of Epcor?

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09-26-2012, 03:50 PM
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Quote:
Originally Posted by Reimer View Post
So then what exactly was the owner of the Bacarrat expecting when KAtz bought all that land for said arena? Did he just want to expand the casino for the friendly people of Epcor?
From my understanding he thought he was going to get a prime location inside the arena complex. Now, I'm not sure if he thought it was going to be his casino, or if he was going to sell to Katz, or if they were going to be partners.

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09-26-2012, 03:55 PM
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Quote:
Originally Posted by AUAIOMRN View Post
The city should build the entire thing itself. It can keep all the profits and it removes the "building the arena for a billionaire" stigma.

I don't know how long it would take to recoup the $100M though.
And who's going to run it?

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09-26-2012, 04:14 PM
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Originally Posted by molsonmuscle360 View Post
From my understanding he thought he was going to get a prime location inside the arena complex. Now, I'm not sure if he thought it was going to be his casino, or if he was going to sell to Katz, or if they were going to be partners.
So what is the city supposed to be doing about this? I dont understand how Katz's business dealing with the owner of the Baccarat are on council or why they should be on the hook for $6 milliion if he cant get it. Sounds like it's his private business dealings and asking the City to guarantee his income on it is like asking them to guarantee he'll make money on the office tower he's building.

Fourier's information near the end of the last thread about the operating costs at Rexall was interesting and suggest he might have a case for subsidizing the operating costs but really he has to come forward and make the case before council.

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09-26-2012, 04:17 PM
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Quote:
Originally Posted by Reimer View Post
Good point and great post but lets be honest. Katz and Co going to Seattle and releasing the statement that they did was about as productive as the NHL's first offer to the PA.
True. Both sides on this deal are being, how shall i say, Dickish?

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09-26-2012, 04:20 PM
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And who's going to run it?
If that day ever happened we all know who would run it. I'd rather not give them the free advertising though.

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09-26-2012, 04:24 PM
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Originally Posted by Reimer View Post
If that day ever happened we all know who would run it. I'd rather not give them the free advertising though.
That's just it, it would probably end up costing just as much as they'd want something for doing it.

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09-26-2012, 04:33 PM
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Quote:
Originally Posted by Halibut View Post
So what is the city supposed to be doing about this? I dont understand how Katz's business dealing with the owner of the Baccarat are on council or why they should be on the hook for $6 milliion if he cant get it. Sounds like it's his private business dealings and asking the City to guarantee his income on it is like asking them to guarantee he'll make money on the office tower he's building.

Fourier's information near the end of the last thread about the operating costs at Rexall was interesting and suggest he might have a case for subsidizing the operating costs but really he has to come forward and make the case before council.
I'm not entirely sure what the deal is involving the city in the Casino thing. It might have been something that has been talked about all along that the city would try and help out in some way or another.

And yeah, Fourier's post was interesting indeed. I think that is exactly the type of info Katz should be putting forward instead of just saying I need this, this and this.

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09-26-2012, 04:42 PM
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Quote:
Originally Posted by Soundwave View Post
And folks lets stay away from the personal insults. I know it's tempting to want to throw in a personal shot (we've all been there ...) when the discussion is about as something as heated as this, but stick to making your point rather than insulting someone.
The last thread was given a bit of leeway because this whole ordeal caught us all by surprise so I (and I'm sure at least some of my fellow mods) let a bit more go than usual because of how frustrated many of us are. However, it's time to cut the personal crap and this thread will not be allowed anywhere near the leeway that the last one was. There are some posters from the last thread that will be on very short leashes in this thread. If you make things personal then you will be removed from the discussion and dealt with appropriately.

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09-26-2012, 04:46 PM
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I like the personal insults. Makes things more entertaining. lol

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09-26-2012, 05:14 PM
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The annual report I quoted above is here:

http://www.northlands.com/annual/annualreport2011.pdf

Sorry the link was missing. The data is on p63.

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09-26-2012, 05:17 PM
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Quote:
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So what is the city supposed to be doing about this? I dont understand how Katz's business dealing with the owner of the Baccarat are on council or why they should be on the hook for $6 milliion if he cant get it. Sounds like it's his private business dealings and asking the City to guarantee his income on it is like asking them to guarantee he'll make money on the office tower he's building.

Fourier's information near the end of the last thread about the operating costs at Rexall was interesting and suggest he might have a case for subsidizing the operating costs [B][U]but really he has to come forward and make the case before council.
Katz is his own worst enemy right now. He has screwed up the PR so badly that any merit to his case is completely lost in translation. If this deal does go sour this might well be the reason why it happens.

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09-26-2012, 05:40 PM
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Originally Posted by Fourier View Post
Katz is his own worst enemy right now. He has screwed up the PR so badly that any merit to his case is completely lost in translation. If this deal does go sour this might well be the reason why it happens.
It definitely seems like a lot less hassle to tell the media in Edmonton to look at that Northlands report on operating expenses rather than fly to Seattle and make an implied threat that he will move the team. It came out after the City agreed to the framework and it does show that his expenses could be increasing, of course their same statement shows they made almost $35 million in Revenue off of Rexall place so you'd think he should come out ahead in a brand new arena which should have less maintenance costs and be able to draw better crowds. Either way that is a position worth standing up and making before council.

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09-26-2012, 06:09 PM
  #25
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A major part of my job involves coming into failed projects and either doing a post mortem assessment or (much more often) mediating between organizations and coming up with a clear and pragmatic roadmap to a successful and mutually beneficial outcome. This usually involves a few standard tactics:
  • Drop the religous / ideological arguments - we don't live in an ideal world. If you fixate on the way things "ought" to be, you are setting yourself up for failure. Frankly, idealogues should never be a part of any negotiation.
  • Try to remove personality conflicts from the equation - most easily accomplished by replacing stakeholder representatives (probably not an option here)
  • Draw a line and agree to leave past transgressions in the past - whatever happened previously, it's done and this is where we are now.
  • Establish each side's core requirements
  • Get each side to acknowledge the other's immutable constraints
  • Get everyone to agree to an exclusive focus on "how to get there from here"
With this in mind, it seems to me that the real crux of the argument is whether one accepts the estimates of how the CRL is expected to perform over the next 20 years. I haven't looked into it to any depth, but according to Staples (Link) both sides agree that the proposed $584 marginal benefit is a conservative estimate. If these numbers are reasonable and supportable (and even better - underestimated), then I think the rest becomes an unproductive bun fight based largely upon personality conflicts and ideological differences.

In purely pragmatic terms, if the CRL estimates are accurate, then the Edmonton taxpayer stands to gain significantly in excess of the initial buy-in cost, regardless of how much Katz makes off the deal (and keep in mind, this is the marginal benefit that I'm referring to - not the estimated incremental benefit. I.e. it doesn't happen if the arena isn't built). So the net result is that pumping $X public funds into this project will return $X+N in recovered public funds that would not have otherwise been realized. To me, that is the only salient point - the fact that Katz would also benefit tremedously is irrelevant, if admittedly somewhat distasteful. This kind of investment is meant to grow the size of the pie for everyone; to add significant additional revenue to the city's long term balance sheet. If a private stakeholder has to benefit in order for that to occur, then so be it (and perhaps doubly so in this case, since as the owner of the Oilers, Katz is the only dance partner anyway).

The same thing goes for the angry and otherwise emotional responses to Katz himself. They are definitely understandable and he has certainly not made any friends in Edmonton over the last 2 weeks, but it's ultimately an extended personality conflict and just a red herring that keeps everyone from finding pragmatic solutions.

As for Katz, I think he can help matters significantly by offering to mitigate some of the City's risk in exchange for the additional funding. Maybe following Hansen's example in Seattle would help - guarantee the city's debt beyond a certain amount in order to account for the possibility that the CRL doesn't work out as estimated. Admittedly, that's a big concession but if he believes in this as much as he says he does then it's a way of putting his money where his mouth is. Now, Katz may not like the suggestion, but he opened the door to comparing the Edmonton deal to the Seattle proposal...

There's a way through this, it just requires everyone to back off a bit, cool off, ignore the distractions and refocus on the end result.


Last edited by rec28: 09-26-2012 at 06:24 PM.
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