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Edmonton rejects Oiler [Arena] bid for more taxpayer dollars

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Old
09-21-2012, 02:14 PM
  #151
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Originally Posted by Dado View Post
Edmonton is in a fantastic place to call his bluff. The team has nowhere to move to that isn't a worse arena/revenue situation than what they have now - the Oilers ain't going anywhere.
This might be true but that does not mean that Katz will want to continue to own the team. That is where the risk is to the City. He could simply decide that it is more trouble than it is worth.

Even though the economics for the team are favourable if a new arena is in place, it is not clear that anyone else will step up if they have to also build the arena. When Nichols talks about the sale of the Oilers to Katz from EIG he states very clearly that one of the reasons it went through is that they new a new arean was needed and the group did not have the reasources in place to put much if any money into such a project.

So while the oIlers may not make more money in a place like QC than they would in Edmonton you cannot say with certainty that the best deal Katz will get might not be from someone who wants to move the team. This is why even though the risk of the team leaving is low it is not zero.

You may not buy the fact that a lease can be broken outside of bankruptcy. But if the City is smart enough to write the lease and the loan agreements in a way that gives them as much protection as possible, then they can certainly make it very tough, if not nearly impossible for the Oilers to leave without Katz taking a major hit.

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09-21-2012, 02:31 PM
  #152
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Originally Posted by Gm0ney View Post
My point re: the loan from the city: If Katz were to borrow the money privately, the risk would be on the private lender. Also, Edmonton would still have $100 million available to borrow if the city needed it for another purpose. If Katz runs into financial trouble he can roll out the "moving the team to San Diego" threats to extort further concessions from Edmonton, whereas he wouldn't have any leverage if he were borrowing the money privately. That's just off the top of my head...!
I understand that the City does take on more risk if they finance a portion of the loan. But how does Katz have more leverage this way? In fact, if the loan is private, why would that lender want to do anything to protect the City of Edmonton. All they care about is that they get paid.

Certainly, the City can ask for security as far as the loan is concerned. If anything this can make it more difficult for him to play the relocation card.

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Originally Posted by Gm0ney View Post
The "unicorn petting zoo" is more in reference to the total cost of the project. For $450 million, you better be getting a unicorn petting zoo!
How much do you think a building that makes any sense would cost? Edmonton is a very expensive city to build in and it is getting worse by the day. The Consol energy Center in Pittsburgh cost $350M US. It would be much more expensive to build the same thing in Edmonton today. Are there unicorn petting zoos connected with it?

There might be excess in the current design. But it is not the issue right now.

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Originally Posted by Gm0ney View Post
The MTS Centre is on the site of the old Eaton's building - so while the building was not in use after the financial collapse of Eaton's, the area was/is in use. No question that the MTS Centre has revitalized that part of downtown.

My overall point is that while it's not in dispute that a new downtown arena for the Oilers is a good thing in terms of reclaiming derelict land and spurring development, the threat of losing the franchise is ridiculous. It looked like Katz already extorted a sweetheart deal - and now he comes back to extort more? Call his bluff, Edmonton!
I have no problem if the City sets a line in the sand. As I have previously said I thought the previous deal was workable from both sides. But it is more complicated thaan what you suggest. While Katz may well be offside in asking for more, there is also no doubt that there are players in this that want to delay this as much as possible with the hope that rising costs will skuttle the deal.

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09-21-2012, 02:33 PM
  #153
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I just dont see how anyone can think that Katz is suddenly going to move the team overnight. The City is willing to contribute and build a rink they're just unwilling to give him as sweet of a deal as he wants. In comparison look at Wang with the Islanders, how long has that situation carried on with no end in sight?

Could Katz move with the deal the city has proposed on the table? Possible but very doubtful.

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09-21-2012, 02:45 PM
  #154
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Originally Posted by Halibut View Post
I just dont see how anyone can think that Katz is suddenly going to move the team overnight. The City is willing to contribute and build a rink they're just unwilling to give him as sweet of a deal as he wants. In comparison look at Wang with the Islanders, how long has that situation carried on with no end in sight?

Could Katz move with the deal the city has proposed on the table? Possible but very doubtful.
I don't think anyone thinks he will move it over night. I don't think he will own a team in another location at any point. But we are 4 1/2 years into this negotiation. He is clearly losing patience. And I say that despite the fact that I think the original deal looked like a very good one for both sides. He may well decide that it is no longer worth the trouble.


Last edited by Fourier: 09-21-2012 at 04:26 PM.
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09-21-2012, 03:10 PM
  #155
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Originally Posted by Fourier View Post
I don't think anyone thinks he will move it over night. But we are 41/2 years into this negotiation. He is clearly losing patience. And I say that despite the fact that I think the original deal looked like a very good one for both sides.
Katz isn't going to move the team if the City does didly squat, his threat to move is simply not credible.

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09-21-2012, 04:25 PM
  #156
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Originally Posted by Egil View Post
Katz isn't going to move the team if the City does didly squat, his threat to move is simply not credible.
I don't think Katz will move the team. I have no doubt that he does not want to own a hockey team in some other location. But what if this thing drags on and he simply says I have no interest in owning an NHL team anymore. Do you have any proof that there is someone waiting in the wings to buy the team and run it in a market the size of Edmonton if they also have to front the bill for a new arena?

The threat comes from the possibility, even if it is at this point remote that at some time down the road he may tire of owning the team and that no local ownership will step up and pay the full price to play, which includes potentially a very sizable investment in an arena.

I get the sense that people feel the Oilers will be viable in perpetuity playing out of Rexall with Northlands in the mix. Personally I don't see this being the case. But you know I respect your opinion so if you want to make the case that I am wrong please do. I'd be happy to listen.

BTW I modified my previous post to make my position clearer.


Last edited by Fourier: 09-21-2012 at 05:26 PM.
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09-21-2012, 04:56 PM
  #157
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Originally Posted by Fourier View Post
The threat comes from the possibility, even if it is at this point remote that at some time down the road he may tire of owning the team and that no local ownership will step up and pay the full price to play, which includes potentially a very sizable investment in an arena.
As they would (and did) say on the Coyotes thread - that's just a sign of a non-viable big league market.

Do you really believe that's the case?

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09-21-2012, 05:25 PM
  #158
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Originally Posted by Dado View Post
As they would (and did) say on the Coyotes thread - that's just a sign of a non-viable big league market.

Do you really believe that's the case?
If the cost of ownership is that the team needs to foot the bill for an arena, then yes I do. With a deal similar to the one that I thought was agreed upon, then Edmonton is not only a viable NHL market but a very good one. This is not just an issue for Edmonton. How many teams in the NHL could be viable if they had to shell out $650M-700M up front to make a go of it?

I don't know if you know the name Bruce Saville. He was one of the key owners in the EIG. He is also one of the City's richest residents and a noted philanthropist. He spoke passionately and very eloquently about the need for a private/public partnership in building an arena not only because he felt that it was needed to keep the Oilers in the City longterm, but also because the arena itself could be a vital part of what makes the City tick.

Unfortunately, too much of this boils down to Katz vs the City. If the Oilers left tomorrow, it would not put the arena question to rest. Rexall is an aging facility and a city with a relatively young and wealthy population that is as isolated as Edmonton is going to want an upgrade to Rexall in the very near future. At the very least you would be looking at a near total facelift of the existing building. But without the Oilers it is almost inconceivable to me that this will be accomplished without almost all of the monies coming from the public purse. And in the end it is quite likely that control will be in the hands of Northlands, with substantial yearly subsidies going towards the maintanance and upkeep of the building.

It is exactly this desire for facilities of this type that make me view a multi-purpose arean as at least in part a piece of public infrastructure. It may not be needed in the strictest sense, but nor are any recreational facilities. Yet my city of 100K can spend $130M on a rec facility that is targeted primarily at kids soccer and despite years of hand ringing few of us noticed the tax increase needed to pay for this. Proportionally, this would be the same scale of project if the Edmonto arena were to cost $1.3B. And even then the Edmonton arena would almost certainly impact a greater proportion of the residents of teh City than the rec center I spoke of does for my town.

In the end, I still remain very confident that a deal gets done and the arena gets built. But I think to dismiss the possiblity that if it goes sour that the team may not be in Edmonton a decade from now is naive.

Finally, I think that applying too many of the lessons from the Phoenix situation to Edmonton can be wrong minded. Glendale and Edmonton are extremely different in so many ways as to make the comparison almost meaning less. Perhaps most importantly, the Edmonton economy is 11 times the size of that of Glendale. So even if the demand for hockey and/or the arena was similar, the scale advantage Edmonton has means the risk to the tax payers is at least one order of magnitude less.

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09-21-2012, 05:36 PM
  #159
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As an aside. From what I can tell there are 6 billionaires associated with Alberta. Five live in Calgary with two being owners of the Flames. The only other one is Daryl Katz who these days spends a lot of time outside of the province.

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09-21-2012, 06:14 PM
  #160
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As someone who follows the Oilers because of my family who lives there, I hope the team stays there. I think they'll figure something out.

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09-21-2012, 06:51 PM
  #161
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LOL if the city of Edmonton does not realize they are in the driver's seat.

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09-21-2012, 07:58 PM
  #162
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Originally Posted by tony d View Post
As someone who follows the Oilers because of my family who lives there, I hope the team stays there. I think they'll figure something out.
They will. They'll just realize that the cost is too high so they'll have to trim some of the fat (ie winter gardens and other filler projects like that) and that Katz needs to front most of the money, not the taxpayers.

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09-21-2012, 08:17 PM
  #163
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What exactly is a winter garden anyways?

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09-21-2012, 08:22 PM
  #164
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They will. They'll just realize that the cost is too high so they'll have to trim some of the fat (ie winter gardens and other filler projects like that) and that Katz needs to front most of the money, not the taxpayers.
..And in that case, it just won't be built.

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09-21-2012, 08:28 PM
  #165
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This project is turning into a real headache with all of the delays. I hope a deal can be reached soon, I would hate to see the Oilers leave Edmonton.

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09-21-2012, 08:29 PM
  #166
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What exactly is a winter garden anyways?
A waste of my money.

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09-22-2012, 12:18 AM
  #167
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$100M exposure to an entity with a $34B per year opperating budget with the power to borrow at very low rates is much less significant. This is especially true when one take into consideration that 1) the Province recognizes the significance of the project, 2) that they would recoup a fair bit of their investment from taxes during the construction of the whole project, 3) the Oiler pay $6M+ per year in income taxes alone and that number will only go up in time.

That leaves the City of Edmonton with a $125M dollar exposure for a project that involves a multi-use arena that will be one of the most widely used facilities in the netire city. This is where the Coyotes situation is nothing like the Edmonton deal. Glendale is a tiny city with a civic budget of about $168M annually. Compared that with Edmonton's $1.88B dollar budget and a much bigger tax base.
A note about some differences...
As you mentioned, the province collects oodles of income tax. And unlike the USA, cities do not get to levy income and sales taxes (e.g. the Glendale sales tax referendum). The city of Edmonton gets none. All the "hidden benefits" go to the province.

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You also mention the city owned and will own the stadium. You do realise that the City of Edmonton will be the owner of this arena as well. Katz will have no equity despite a $100M invesment in the building.
Big deal. If the place was an office development or a bunch of condos, they'd at least get property taxes. As the owner, they get to run a money-losing operation (think HECFI), whilst paying Katz several million dollars per year "to advertise Edmonton". Sorry, I can't sine off on your analysis, Fourier.

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09-22-2012, 12:30 AM
  #168
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As an outsider, I think that the Oilers will eventually lose this standoff. After all, if not at Rexall Place, where else would they play? The only other suitable arena in Canada is probably in Quebec City...I could see Bettman forcing a sale of the Oilers if push comes to shove.

A city does not exist for the purpose of corporate welfare. The city holds almost all of the cards.

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As an aside. From what I can tell there are 6 billionaires associated with Alberta. Five live in Calgary with two being owners of the Flames. The only other one is Daryl Katz who these days spends a lot of time outside of the province.
Aren't the Ghermezian brothers (owners of the West Edmonton Mall and the Mall of America) associated with Edmonton?


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LOL if the city of Edmonton does not realize they are in the driver's seat.
This, and there's a reason why businesses favor Calgary.


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09-22-2012, 08:59 PM
  #169
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Originally Posted by Egil View Post
Katz isn't going to move the team if the City does didly squat, his threat to move is simply not credible.
It is since anyone with half a brain knows he doesn't have to move the team himself.

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09-22-2012, 09:06 PM
  #170
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This, and there's a reason why businesses favor Calgary.
Because they have city councils who don't dither on such projects.

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09-24-2012, 01:43 AM
  #171
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http://prohockeytalk.nbcsports.com/2...ns-relocation/

Oilers twitter account makes it seem as though team philosophy is to relocate if arena deal does not go through.

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09-24-2012, 03:14 AM
  #172
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http://prohockeytalk.nbcsports.com/2...ns-relocation/

Oilers twitter account makes it seem as though team philosophy is to relocate if arena deal does not go through.
Relocating the Oilers - one of the few profitable teams in the league - just because the owner isn't gifted an arena (and paid to operate it) would be an affront of unimaginable scale to Canadian hockey fans. I think such a move would do lasting damage to the league in Canada, certainly in the West.

In 1979 there was a Canada-wide boycott of Molson products in support of the WHA's Jets, Oilers and Nordiques joining the NHL (Montreal, owned by the Molsons, had voted "no" to the merger - so had the Leafs and Canucks, but Molson was an easy boycott target). I think moving the Oilers would bring down a ****storm on the league. I wouldn't bet against the Federal government stepping in - this is bigger than Potash!

Anyway, Canada would rise up against such an injustice, so don't worry Oiler fans...your team isn't going anywhere.

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09-24-2012, 08:46 AM
  #173
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Originally Posted by Fourier View Post
I don't think Katz will move the team. I have no doubt that he does not want to own a hockey team in some other location. But what if this thing drags on and he simply says I have no interest in owning an NHL team anymore. Do you have any proof that there is someone waiting in the wings to buy the team and run it in a market the size of Edmonton if they also have to front the bill for a new arena?

The threat comes from the possibility, even if it is at this point remote that at some time down the road he may tire of owning the team and that no local ownership will step up and pay the full price to play, which includes potentially a very sizable investment in an arena.

I get the sense that people feel the Oilers will be viable in perpetuity playing out of Rexall with Northlands in the mix. Personally I don't see this being the case. But you know I respect your opinion so if you want to make the case that I am wrong please do. I'd be happy to listen.

BTW I modified my previous post to make my position clearer.
Edmonton is making top 10 revenues in the League (at worst top 15) in a crappy arena, with a city willing to chip in some money for a new one. Furthermore, the market is one of the fastest growing areas in North America (and if you ever added in a High Speed Rail link to the oilpatch....).

Even with no new arena, this is slam dunk NHL market, and there is no "better" place to move the team at the price that Katz would demand and adding in the NHL relocation fees. It is really this price that is the protection from moving the team, as Edmonton would cost a prospective owner $100mil+ more than Phoenix or Florida.

So in short, Katz is bluffing on the threat to move (and likely to sell, but who knows), and the city is right to call him on his ****.

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09-24-2012, 08:52 AM
  #174
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It is since anyone with half a brain knows he doesn't have to move the team himself.
So he is going to sell the team for the price of say the Florida Panthers (selling the team to move it essentially values your market at $0 in the sales price)? Edmonton would cost, and Katz would require a good $100 mil more than Florida or even Phoenix would sell for. Throw in the required relocation fees, and....

Furthermore, the City seems willing to put some money in for an Arena (I don't agree with that, but whatever), so a new Owner would be able to negotiate a new arena anyways. I would also think that a new Arena in Edmonton (especially with a Northlands demolition) with a NHL tennant is a profitable investment without public funds, so I also don't think that is a credible threat either.

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09-24-2012, 10:00 AM
  #175
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What a load of bs. Everyone talks about the owners taking risks, and this clown wants to use taxpayer dollars to fund an arena for his business.

****ing crook.

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