Oilers arena numbers sort of add up, if you squint

A FoS reader finally directed me to the updated Edmonton Oilers agreement on the city of Edmonton website, and it clarifies some of the confusion around who’ll be paying for what. Team owner Daryl Katz’s $5.5 million in annual rent payments, it turns out, are meant only to pay off his original $100 million commitment (at about 3% interest, taking advantage of cheap government loans); this will be increased proportionally to cover an extra $15 million in new costs, so Katz will actually be on the hook for more like $6.5 million a year. As for the $28 million he’d be paying towards a new $53 million pedestrian bridge, the new agreement specifies that he’d indeed be paying that, “amortized over the 35 year term of the lease with interest costs included” — though it doesn’t say whether those would be additional rent payments or what, and whether low-interest provincial loans would be used for those as well. Add it all up, though, and Katz could end up paying about $8 million a year toward the cost of a new arena, which should be just about covered by whatever he gets for naming rights plus the $2 million a year in advertising at the arena that the city has committed to buy.

Though speaking of naming rights, one Edmonton city councillor now wants to reclaim those and use them to fill in the remaining $100 million budget hole that the province of Alberta keeps insisting it won’t be filling:

Councillor Kerry Diotte tells iNews880 the province has said all along that the extra money won’t be provided.

“That has been their stand and I think the only thing to do now is find a plan “b” and it is alarming that we don’t have a plan “b.” explains Diotte. “I would suggest in this case if it is to go ahead it would have to be money from the Katz group.”…

“I’ve been saying for quite some time now with the naming rights it is something that this city should retain,” explains Diotte. “The city is building the arena and we should have a right to name it and make the money from that name. In other markets that could be worth $100-million, indeed in this market it is probably worth about $100-million over 35 years.”

That’s not a bad guesstimate, though of course $100 million over 35 years isn’t going to be nearly enough to pay for $100 million in construction costs right now. But more to the point, Katz is presumably counting on that naming rights money to cover his rent payments (because who wants to have to pay for things out of your own pocket, amirite fellow rich guys?), so it’s going to take another pitched battle if Diotte expects to use it to cover arena costs instead.

Alberta Premier Alison Redford reiterated last week that the province won’t be coming up with any lottery money or anything else to help with the Oilers arena, though she did say that Edmonton could use provincial Municipal Sustainability Initiative dollars if it wants. Except that Edmonton has already used up its MSI money, and no additional funds are expected so long as the Alberta economy continues to be in the tank. (Apparently low oil prices are the problem, so this could always change if the U.S. starts sucking up gasoline like there’s no tomorrow again.) Which means Redford is effectively saying: We gave you all the money we have, if you want to spend it on an arena rather than something else you already planned, that’s your business. Everybody in Edmonton doesn’t really need a sewer, do they?

Share this post: