Ex-Edmonton mayor: If I hadn’t given Katz $300m, Oilers might have moved … somewhere

With the Edmonton Oilers‘ new $676 million arena set to open next month, there’s lots of attention being paid to the roughly $311 million that taxpayers are kicking in towards the cost, and whether the public is getting a good enough deal for its money. But former Edmonton mayor Stephen Mandel, who approved the arena plan, tells CBC News that he was negotiating with a gun to his head:

“Anytime I thought that it wouldn’t happen, I was always worried that we’d end up losing a hockey team. … I think it was a big, big card that the Katz Group were able to play. In most negotiations, the city always has the upper hand, because we control the world around us. In this instance, we did not control the world around us. … To take any chance of losing that team would have been a big mistake.”

I’m not sure what Mandel is talking about with “most negotiations” — in pretty much every negotiation with a private business, there’s at least the implied threat that it will leave town, which is how we got into this whole mess — but let’s take a walk down memory lane to see how much of a threat it was that Oilers owner Daryl Katz was going to take his team and walk if he didn’t get $300 million in city cash. Katz flew to Seattle to tour their arena that is too small for hockey, and he mumbled something about needing to secure the team’s “longterm sustainability in Edmonton,” and … that’s about it. Katz’s “big, big card,” if he had one, was certainly never revealed to the public, and if he secretly revealed to Mandel a plan to move the Oilers to Albuquerque if he didn’t get his way, nobody’s telling.

Idle move threats, of course, are incredibly common in sports, for the simple reason that they provide benefits to both sides: The team owner gets a stick to use in negotiations, and the elected officials he’s negotiating with get cover when later accused of giving away the store. (“But we had to approve all that money, or else he was going to leeeeeeeave.”) There’s simply zero evidence, though, that Katz was really going to move the Oilers if his arena subsidy wasn’t approved — he might have thought about it, sure, but finding a better market than Edmonton willing to throw money at his team would have been a tough challenge: Seattle didn’t have an arena to play in (or interest in putting up lots of public funds for one), Quebec is a good bit smaller than Edmonton, Kansas City’s arena manager has no interest in a sweetheart hockey lease, Las Vegas is Las Vegas, etc.

So whatever else you want to say about Mandel’s arena negotiations, he had way more control of the world around him than he makes out — if only because “fine, go play in the street if you like” would have been a perfectly reasonable retort, if only to see what Katz then came back with. (I mean, he came back with flying to Seattle for the weekend to frighten Mandel, but that shouldn’t count.) It’s something that at least a few mayors in other cities have learned to do — come to think of it, CBC News really should have pressed Mandel about this issue, but I suppose self-imposed gullibility is everywhere.

Edmonton fills lingering Oilers arena funding gap, city cost now tops $300m

When last we checked in on the Edmonton Oilers‘ $676 million arena plan a little over a year ago, owner Daryl Katz was about to break ground, despite a lingering $50 million funding gap thanks to putting a line item in the budget marked “put a bunch of money from province here.” Arena construction is now well underway — lookit! — and a source has been found for the money that Alberta will still not be providing. Care to guess who? Everyone guessing “Daryl Katz” can put your hands down:

The city is preparing to pay an additional $32 million toward the downtown arena because money expected from the province hasn’t materialized.

Okay then! For those scoring at home, I think that’s now $311 million that the city of Edmonton has agreed to kick in for the arena project, which is a whole mess of loonies.

The good news, such as it is, is that the TIF district (CRL district in Canadian) created by the city to kick back taxes for use on the project is bringing in revenue faster than expected, meaning the city’s “just assume lots of revenue and hope it comes in” plan might actually work out. Of course, that’s revenue that now can’t be used on providing services for all the new development in the CRL district, or anything else the city might have wanted to use it on in the absence of an arena, but at least they won’t have to sell any hospitals.

Oilers arena clears yet another final hurdle, might actually get built soon despite funding gap

The new Edmonton Oilers arena plan is officially underway, according to Oilers owner Daryl Katz, with contractors having agreed to cover any overruns above the $480 million construction price. (The total cost is $676 million, counting land, a pedestrian bridge, and a new light rail link.) The Edmonton Journal calls this the “final obstacle” in the way of the project, which has been in the works seemingly forever.

It seems like there was something else that needed to be resolved … oh, right, the at least $50 million funding hole. It looks as though Edmonton is happy to just issue an IOU for that and figure out how to pay for it later, however, so it’s safe to break ground. Which is pretty much where we’ve been since last May, but hey, a rich guy held a press conference, it’s gotta be news, right?

Edmonton set to break ground on Oilers arena in March, paying-for-it, schmaying-for-it

The city of Edmonton may still be between $50 million and $130 million short on being able to pay for a new Oilers arena, but that’s not going to stop them from breaking ground:

Edmonton’s downtown arena is on course to meet its $480-million construction cost and should be ready to start construction in March, city manager Simon Farbrother says.

“I would say we’re very close to the end,” he said Thursday.

It sounds like Oilers and city representatives have been working with contractors to ensure that the project won’t bust its $480 million budget ($605 million counting land and infrastructure), which would leave it just $50 million short, plus however much the city will end up needing to dig in its pockets for if the local Community Revitalization Levy (aka a Canadian TIF) only produces the amount of revenue the city expected in the first place, and not the amount it decided to project when it suddenly realized it had a funding hole to fill.

The city is apparently still hoping to apply to the province for funds for at least another $25 million — which has never worked before, but can’t hurt to keep asking, right? — but if it doesn’t get it, it can always shuffle some money around and figure it out later. Because that’s worked out so great elsewhere.

Oilers’ “big announcement” is just selling naming rights to nonexistent arena for undisclosed sum

The Edmonton Oilers‘ “big announcement” on their planned new arena has been announced, and it is:

Rogers Communications has now acquired the naming rights for Edmonton’s future downtown arena.

Calling it a “moment of pleasure and joy for everyone involved,” Edmonton Oilers president Patrick LaForge told a Tuesday news conference the naming rights agreement moves the $480-million arena in downtown Edmonton “closer to reality.”

Hey, I guessed it!

How much the Canadian TV giant will pay to name the as-yet-nonexistent hockey venue “Rogers Place” — not to be confused with Rogers Centre and Rogers Arena — is unknown: Even Edmonton Mayor Don Iverson said he doesn’t know the dollar figure. In fact, it may be unknowable without fancy accounting tricks, as the naming-rights deal is just an expansion of Rogers’ sponsorship deal for the Oilers’ TV broadcasts, website, and mobile app.

Not that any of this matters much, since according to the Oilers’ deal with Edmonton, all naming-rights money goes into the pocket of team owner Daryl Katz, who’s already said he’s spending as much as he’s gonna towards the $676 million arena project. That means the $50-130 million funding hole is still empty. So the arena is only “closer to reality” in the sense that there’s now a corporate name to put on the renderings — which is kind of a shame, as I was looking forward to pictures of the Your Brand Here Centre.

Edmonton Oilers to announce some damn thing about long-stalled arena plans today

The Edmonton Oilers are set to make a “big announcement” regarding their downtown arena plans today, according to their house TV broadcaster Tom Gazzola. Which could mean … jeez, pretty much anything, given what passes for major announcements these days.

But it’s a slow news day, so sure, let’s take a guess. When we last checked in, the $676 million Oilers arena project was still $50 million short of full funding, even after getting more than $300 million in commitments from various levels of government. Plus it’s likely the arena construction will cost $80 million more than has been projected, and I’m pretty sure there’s still no deal in place to cover cost overruns.

So … hmm. It’s pretty unlikely Oilers owner Daryl Katz would voluntarily announce that he’s chipping in more money to cover any of these gaps, given his past behavior, even if he could pay for it out of just the increased value of his franchise thanks to the promise of the new arena and the NHL’s new TV deal that made pretty much every NHL team jump 50% in value this year. If it’s not about construction money, then, and the design of the place has long been set, I’m going to guess it’ll be the announcement of a naming-rights partner, or some other “prime sponsorship” kind of deal. Tune in later today to see if my exciting wild-ass guess was correct!

Edmonton arena funding could be even shorter of 100% than we thought

University of Alberta sports economist Brad Humphreys has chimed in (at The Sports Economist, natch) with his analysis of the Edmonton Oilers arena deal, and if anything, he’s even more pessimistic than I was yesterday. Among Humphreys’ concerns:

  • The current construction cost estimate for the arena (not counting land and roads and bridges and other needed infrastructure) is $480 million, up from a $450 million estimate in March 2008. But given the actual inflation rates since then for steel, concrete, and labor costs, the actual cost in 2013 dollars is more likely to be $517.5 million.
  • In her new book with the really long title, Harvard planning professor Judith Grant Long estimates that the average sports facility deal comes in at about 25% above the stated cost estimate. That would make the expected Edmonton arena cost $562.5 million.
  • Filling in the gap by increasing the projections of revenue from the Community Revitalization Levy — future increased property tax revenues from the project, aka a TIF — is awfully dodgy, since “if they could have raised an additional $15 million from the CRL when it was proposed as part of the financing package years ago, why wasn’t the CRL contribution higher back then?”

In other words, the funding gap may still be pretty large — though it could be the kind of gap that doesn’t show up until you’ve already agreed to build the project and suddenly realize that there isn’t enough money to pay for it. Man, this really is the week for that, isn’t it?




Edmonton declares Oilers arena deal “100%” done, still not actually 100% done

The NBA owners’ vote to reject the relocation of the Sacramento Kings wasn’t the only big arena-related decision yesterday: The Edmonton city council also voted to approve a new funding plan for the long-in-the-works Oilers arena. The council voted 10-3 to commit a series of different public funding sources to a now-$604-million arena, with Mayor Stephen Mandel declaring triumphantly, “This is actually 100 per cent.”

Of course, Mandel has said that before, but this time he apparently means it. So, how did the city finally fill that pesky $100 million arena funding hole? Let’s refresh ourselves on where the arena plan stood back in January:

That’s $676 million, but the old arena cost estimate was $601 million, not counting the $75 million in land costs, so it all adds up. Except for the part where $114 million was unaccounted for.

And the new plan:

  • $279 million from the CRL, parking fees, and the like.
  • $125 million from the ticket surcharge.
  • $184.4 million from Katz, including an extra $15 million that the owner agreed to kick in yesterday.
  • $25 million from the provincial Regional Collaboration Program.
  • $7 million from the province of Alberta.
  • $7 million from the federal government.

That adds up to … $627.4 million. So it’s actually still $50 million short of where things were in January. Maybe the city is no longer counting its land costs as part of the deal? It’s hard to tell from the documents released by the city, and press coverage that includes offenses to math like “$23.69 million in third party funding ($25 million from the provincial Regional Collaboration Program, and $7 million each from the province and the federal government)” isn’t likely to help much either.

Basically what appears to have happened yesterday: Katz agreed to kick in some extra cash; the city gave up on raiding its Municipality Sustainability Initiative fund and is instead just assuming the CRL will raise more money; and the remaining gaps were filled in by flat-out assuming the cash will come from the provincial and federal governments.

That’s a whole lot of assumptions, and pretty much still amounts to “we’ll borrow the money and figure out how to pay for it later” — in particular, just flat-out upping the projected revenues from the CRL increases the odds that new revenues will fall short, and end up eating the lunch of the general fund, as Greg LeRoy of Good Jobs First memorably put it. Plus the RCP money still isn’t approved, and lord knows where those $7 million contributions from the province and feds are supposed to come from.

Still, Mandel and the council say it’s a done deal, so it looks pretty likely that this is a done deal, and any shortfalls will be worked out later. (Because that always works out.) Which means that Edmonton taxpayers are now going to be on the hook for more than half of the cost of a new arena for the 7th-most-profitable team in the NHL, owned by Canada’s 11th richest man. It’s still not the worst arena deal in history, but that doesn’t make it a good one.

Edmonton council could vote today on Oilers arena, still no word on how they’ll pay for it

Today could be the final vote to determine the fate of … ha ha, you thought I was going to say the Sacramento Kings, didn’t you? (Because you, um, don’t read headlines. Yeah, that’s it.) No, I’m talking about the Edmonton Oilers arena project, where the Edmonton city council has called a special meeting for 1:30 pm today to discuss the $480 million project and how to fill a persistent funding gap that’s either $30 million or maybe $44 million or maybe a lot more than that, but who can be bothered with trifling details like “numbers” when there’s an arena to be built?

Coun. Bryan Anderson confirmed the meeting will deal with the arena, which still needs $30 million out of the required $480 million in construction funding.

“It sure as hell wouldn’t have come forward this quickly if there wasn’t a solution on the remaining money,” Anderson said.

Anderson, who knows the details but wouldn’t discuss them, said he has talked to several of his colleagues and thinks the proposal will be approved.

Meanwhile, an Edmonton resident plunked down $5,000 of her own money to poll her neighbors on whether they think the arena deal is a good one, and got a resounding “no”: In a poll of 300 randomly selected city households, with a 5.6% margin of error, 61% say no taxpayer money should be used on a new Oilers arena, 83% oppose the city taking on half a billion dollars in arena debts (some of which would be repaid by Oilers owner Daryl Katz, but by no means all of it), and 71% think the city should go back and renegotiate a better deal.

And also meanwhile, Edmonton apparently did get neighboring communities to agree to kick in $25 million in government-capacity-building money toward the arena last Friday, though apparently only by not actually recording the votes for and against the proposal:

Board CEO Doug Lagore said he recorded the vote as 17-7, which just meets the threshold to pass under the board’s regulations.

However, Lagore said St. Albert Mayor Nolan Crouse “didn’t complete the roll properly. I don’t know what he did.”

An Edmonton Journal audio recording of the proceedings suggests one vote cast against the arena was missed and accidentally counted in support. If eight of the 24 members vote against a motion, it fails.

Man, today’s council meeting is going to be just awesome.

Edmonton still trying to raid every available fund to cobble together Oilers arena subsidy

Give Edmonton elected officials credit: They’re not giving up on finding ways to shovel more arena money at Oilers owner Daryl Katz just because the province of Alberta won’t give them any and because it’s a pretty terrible idea. The latest plan: Get the neighboring communities on the Capital Region Board to ask the province to kick in $25 million from its Regional Collaboration Program, which is supposed to be used for capacity-building programs for local governments, but hey, potato, potahto, right?

Alberta Minister of Municipal Affairs Doug Griffiths responded (in the CBC’s paraphrase) that “he is glad to see the region working together to support the arena project, however, he added it could be months before the province makes a decision on the matter.” If Alberta does approve this money, after adding in $45 million from the city’s Municipal Sustainability Initiative fund it would only leave Edmonton $30 million short on its $100 million arena funding gap … or $44 million short if it’s really a $114 million funding gap … or more than that short if it’s true that Katz isn’t really putting in as much money as he claims he is. The CBC reports that Edmonton Mayor Stephen Mandel “said he has some ideas where the city will make up the cash, but would not yet give any details.” Can’t hardly wait!