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July 23, 2010
Katz Group: Oilers are gone in 2014 without new arena
Edmonton Oilers owner Daryl Katz told the Edmonton city council on Wednesday that he'd contribute $100 million toward a new arena and $100 million toward surrounding development if the $1.4-billion-dollar project is approved. Katz also apologized for making the process difficult, and promised that any new arena would be owned by the city.
According to SLAM! columnist Terry Jones, though, Katz's henchmen were less conciliatory:
The Katz Group told council that under no circumstances would the Edmonton Oilers play in Rexall Place, especially a renovated Rexall Place, when their lease runs out in 2014.
The Katz Group also made it quite clear that there was no way they would be party to any plan where Northlands has anything to do with running a new downtown arena, period.
The Katz Group intends to be a big player in that business not just here but in Hamilton and elsewhere, and run it themselves. ...
It was also made quite clear that while the City of Edmonton would "own" the building, Katz wants all the income from all the events held in the building.
Or as Edmonton councillor Tony Caterina put it: "To my mind, you're telling us if you don't get what you want, you're not staying. You want us to put in the money and you want all the revenues."
Councillors also asked Katz Group VP Bob Black why the team couldn't just build an arena themselves, and were told: "Four were built in Canada with private funding, three of those failed shortly after they were built and the developers of those buildings lost both the buildings and the teams."
So let's get this straight: Because the Oilers have lost "several million dollars" (according to the team CFO) in each of the last two years, the city of Edmonton should build them a $450 million arena that would be a money-loser for any private entity, and let Katz keep all the revenues. That seems a bit like killing mosquitoes with a laser gun — without even the side benefit of fighting malaria.
Neil, every time Katz & co open their mouths they just make things worse. They have managed to turn a council (and a good part of a city) that was "pro Arena" to begin with into a group that rightly questions their motivation and veracity. Katz hired AEG to 'help' with the process. I can't imagine he's been listening to their advice, as this has become a complete fiasco.
Jones is actually a Sun Media columnist, but he's been shilling for local sports teams for ages. No surprise there. He does at least call out Katz' methods, which is something.
Of the "three failures" in private arena financing Black mentioned, only one was an actual failure - the arena in Ottawa. And it was built miles out of the city at the end of a two lane road... as part of a real estate play by the then owner. As often happens, the real estate play foundered, followed by the owner and arena. The others (in Vancouver and Montreal) were not bankruptcies. Arthur Griffiths took less than a decade to run his father's business into the ground, and sold out to the McCaws at a significant haircut. The Molson family in Montreal sold both the building and the Canadiens to George Gillett at less than construction cost. The family has since bought back the 80% of the Habs & Arena that they sold.
All three of those are just poor business moves, not 'failures'. Kind of like Katz' decision to buy a $135M hockey team for $200M, then complain that he's 'losing money', which he isn't, honestly. I'd bet dollars to donuts that his $9M annual losses include a debit item that's basically "owner's ROI" at 12-15%. Of course, they have refused to open the books to Edm city council to prove their point. Huge surprise...
But hey, even if it isn't profitable, that just means he overpaid for a money losing business 2 years ago. The remedy for that is a quick sale, not an ongoing massive public subsidy...
Hey John, just wondering where you got that $9M in annual losses from? I've never seen that number before.
Thanks,
Andy
Posted by Andy Grabia on July 27, 2010 05:57 AM
Hi Andy;
It was a number thrown out by reporters after the last meeting with council. You might find it by searching Edmonton newspaper sites, I don't have a link at present but will do a quick search myself to see if I can find it again.
Thx.
Thanks.
Posted by Andy Grabia on July 27, 2010 09:19 PM