Category Archives: Edmonton Oilers

Friday roundup: Nashville and Miami stadiums still on hold, cable bubble may finally be bursting, minor-league contraction war heats up

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Happy Scottish Independence Day! And now for the rest of the news:

Friday roundup: Buffalo saber-rattling, Edmonton parking fee shortfall, Chicago music venues go to war against soccer plans

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And in other news of the week:

  • This was actually last week, but I missed it then: Anaheim Mayor Tom Tait has led the city council in voting to conduct a new appraisal of the Angel Stadium property as Los Angeles Angels owner Arte Moreno prepares to opt out of his team’s lease next year. Councilmember Kris Murray, one of the two no votes, argued that this was tantamount to telling the Angels to leave; Tait replied that knowing how much the land was worth would be crucial to any stadium negotiations the incoming mayor will have with Moreno. The Gang of Four is going to miss Tom Tait.
  • The owners of the Buffalo Bills and Sabres have hired consultants CAA ICON and architecture firm Populous to “give us options” for renovating or replacing the teams’ existing venues. This is not necessarily the first step toward demanding new buildings, but it’s more of a step than the Pegulas have taken thus far, so certainly bears watching.
  • The Tampa Bay Buccaneers have been giving away unused tickets for free to their season ticket holders, to try to fill up the seats at their underattended games. Finally something that Los Angeles Chargers fans can point and laugh at! Both of them!
  • The $8.7 million a year that Edmonton was projecting to bring in from parking fees outside the Oilers‘ new arena turns out to be somewhat less: just $2.5 million a year, leaving the city with a roughly $57 million hole in its arena budget. City councillor Jon Dziadyk immediately leaped into action, blaming the reduced parking fees on people not wanting to drive downtown because there are too many bike lanes.
  • Hey, remember that minor-league soccer stadium a major Chicago developer wanted to build as part of a major Chicago development, originally pegged to luring Amazon to town but now with a life of its own? Turns out the whole thing would be funded by tax increment financing kickbacks, and would include three to five new concert venues to be run by the entertainment giant Live Nation that local concert venue operators say would drive their non-subsidized clubs out of business. The Chicago Tribune reports that the fledgling Chicago Independent Venue League “already had its new logo, a peregrine falcon wrapped with a snake, printed on black tee-shirts,” which honestly is going to be tough for any soccer team to top.

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

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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

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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

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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

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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

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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

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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

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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

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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.