Patrick Laforge, Northlands, and the New Arena

Jonathan Willis
September 12 2009 12:48PM

Rexall

Just came across this rather fantastic quote from Patrick Laforge, the president of the Edmonton Oilers:

"We lost money last year.  We lost quite a bit of money. "I've said all along that we can't count on the largesse of the owner's Visa card to keep hockey in Edmonton, or in Calgary, and the building provides the sustainability model that you need through good times and bad."

That quote appears in today's Edmonton Journal.

Of course, threatening the future of the team in Edmonton was standard behaviour during the EIG years.  Daryl Katz and his group have, up until now, been pretty good about not holding the gun to the heads of hockey fans. 

Until, that is, Northlands chairman Andrew Huntley came out swinging.

It seems that Northlands - the non-profit organization which runs Rexall Place - wasn't consulted when Patrick Laforge held a press conference about the new arena the other day.  Laforge had made comments that were less than decided about Northlands future in regards to the new arena, and so Huntley explained the deal the Oilers currently get from Northlands:

Huntley says Northlands--and Alberta taxpayers--already provide handsome subsidies to the Oilers. Under terms of the team's current 10-year lease at Rexall, which expires in 2014, the Oilers pay a nominal rent of just $1 a year, and cover only a portion of the arena's related operating costs. The actual operating costs exceed the club's $878,166 annual contribution by more than $20,000 per home game, or upwards of$800,000 per year, he says. Recent multimillion-dollar upgrades to the dressing rooms at Rexall were funded through provincial grants. Meanwhile, the Oilers control all ancillary revenues, from food and beverage sales to signage and sponsorship income, plus all suite revenues for every event at Rexall Place.

But it seems that Laforge and the Oilers aren't content with the current deal.  The Oilers want all arena-related revenues to go into their pockets.  Laforge also implied that Northlands simply isn't a big enough fish to run the Oilers' new arena; this despite the fact that under their watch Rexall was named the 10th busiest arena in the world last year, and the 2nd busiest in Canada - behind only the Air Canada Centre.

I don't know what everyone else is going to make of this, but I don't see how Laforge and Co. can expect public money without having a public group run the arena; further, I don't see how Northlands has shown anything but remarkable ability in running the arena.

As it stands, if public money is going into the arena, Northlands should be running it.  Regardless of how often Laforge uses the future of the team as a hostage.

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Jonathan Willis is Managing Editor of the Nation Network. He also currently writes for the Edmonton Journal's Cult of Hockey, Grantland, and Hockey Prospectus. His work has appeared at theScore, ESPN and Puck Daddy. He was previously founder and managing editor of Copper & Blue. Contact him at jonathan (dot) willis (at) live (dot) ca.
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#51 David S
September 13 2009, 12:16PM
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Jonathan Willis wrote:

Particularly since you didn’t bother calculating what the cost would be of abandoning Rexall and losing that tax revenue.

Jonathan - Northlands and the city have a sweetheart relationship. I'd be surprised if they paid any taxes at all to the city for that land. If that were the case, then the forward taxes on Katz' new arena district would be a slam dunk for the city in comparison.

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#52 David S
September 13 2009, 12:23PM
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john wrote:

A private operator wants to build a private facility BUT wants it to be built with public money. That is PLEASE GIVE ME $400 Million dollars and I will turn my drug company into a top notch entertainment entity.

John - where has this been said by the Katz group? All of this public money stuff is well seeded fear mongering on behalf of the arena opponents. Katz group has suggested a casino could finance the balance of the costs. Mandel has floated the idea of forward tax revenues of the new district (which makes 0 taxes for the city right now) financing a development loan. Both local and provincial spokesmen have adamantly said that NO public funds will be used for this project. What part of this don't you get?

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#53 David S
September 13 2009, 12:24PM
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^ and Katz has committed $100 Million of his own money.

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#54 John
September 13 2009, 02:28PM
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Dave

"John – where has this been said by the Katz group?

How is that 6000 arena coming along at the U of A? Wait, you say it is not proceeding.:-)) But I am sure it was reported by your employer 15-18 months ago that it was going to be built by the Katz group. Let me know when your investigative report on that topic is printed.

$100 miilion? ...... personal seat licenses and prepaid luxury suites will fund much of that $100 million

The concept is not an arena but a much larger entertainment complex. Cost ....$1 billion dollars???? and the developer has $100 million to contribute, good thing the financial markets are really strong in both Alberta and in North America and credit is easy to get because borrowing $900 million dollars might be a wee bit tough to do with 10% down.

Casino...all casinos in the province, outside of indian reservations, see the casino operator paid a set fee for its operations and ALL PROFITS shared by the provincial government and the volunteer organizations that work the casinos.. From its share of the casino revenue, the provincial pays out a further $250 million annually to worthy causes.

Logic would dicate that if a casino paid for building a new arena that it would ask for and get to keep ALL of the profits that are earned on its Casino to pay for its outlay of building costs. So the charitable groups who currently work casinos would get NOTHING, the province would get NOTHING and Mr Katz's arena would be subsidized by the public.

Next funding trial balloon the Katz groups wants you to report on?

Great articles in the journal though and I truly do mean that. Best quote though was the chair of Northlands and I paraphrase " if a private company wants to build a private facility with private money, he can do so". That is most decidely not what we are talking about

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#55 David S
September 13 2009, 03:11PM
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First - NOT David Staples. Although I do agree he writes great stuff.

Second - You'd be surprised how many real estate developers break ground with not a cent of their own money at stake. Katz wants to put in $100M of his own money, which will be about 20% of the arena's cost. I suspect the rest will be raised through private partnerships, private financing placement and whatever the city comes up with that won't involve direct public funding - and don't kid yourself, they do want to be involved.

Seriously. If it works out that joe public isn't going to get his pockets picked, what's the problem? Sure there's a ton of logistical issues to be resolved, but let's focus on the big picture for a change. This is a huge opportunity for the city to develop a dead part of town that will (hopefully) benefit the whole city in one way or another in the long run.

How about we let the Katz group come to the table with the specifics before we jump all over this with our typical small town negative attitude.

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#56 Deep Oil
September 13 2009, 05:24PM
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john wrote:

@ Deep Oil: This is not difficult to understand. A private operator wants to build a private facility BUT wants it to be built with public money. That is PLEASE GIVE ME $400 Million dollars and I will turn my drug company into a top notch entertainment entity. Oh, by the way….Rexall is terrible at acting as our landlord and as the concert/event promoter notwithstanding being #10 in the WORLDto date. Not sure when your rent is already subsidized to the tune of $2 million dollars….. looks kinda ridiculous to slag an entity that so far as done a very good job running Rexall The other hilarious statement made by Laforge is that the Oilers are losing money. They are not. So quit trying to blow smoke up our butt. Simply taking 16500 sets and multiplying that paid attendance by $100.00 average ticket price, the Oilers have ticket revenue of $72,000,000.That does not include the Oilers broadcast revenue, radio, board advertising, jersey sales etc. They would not have a total 50 man roster payroll of $62,000,000. So my guess is they are making $20 million profit Oh yeah, if Katz tries the old build me a new arena or I will move the team………. I know where we could buy a very good young team with no horrible contracts for $140,000,000 LMAO

Listen Up.....

Your ticket average is too high

john wrote:

@ Deep Oil: This is not difficult to understand. A private operator wants to build a private facility BUT wants it to be built with public money. That is PLEASE GIVE ME $400 Million dollars and I will turn my drug company into a top notch entertainment entity. Oh, by the way….Rexall is terrible at acting as our landlord and as the concert/event promoter notwithstanding being #10 in the WORLDto date. Not sure when your rent is already subsidized to the tune of $2 million dollars….. looks kinda ridiculous to slag an entity that so far as done a very good job running Rexall The other hilarious statement made by Laforge is that the Oilers are losing money. They are not. So quit trying to blow smoke up our butt. Simply taking 16500 sets and multiplying that paid attendance by $100.00 average ticket price, the Oilers have ticket revenue of $72,000,000.That does not include the Oilers broadcast revenue, radio, board advertising, jersey sales etc. They would not have a total 50 man roster payroll of $62,000,000. So my guess is they are making $20 million profit Oh yeah, if Katz tries the old build me a new arena or I will move the team………. I know where we could buy a very good young team with no horrible contracts for $140,000,000 LMAO

A financial loss could be incurred with the INTEREST on the loan from CIT and possibly outside sources such as McKesson. If you take $12million in interest costs, this becomes a factor, in terms of a admin loss. Doug MacLean has mentioned on PTS, that you have to earn $100mm to break even as an NHL franchise. I do not believe that the Oil receive $1million per game in TV revenue, as the Leafs get that from Rogers Sportsnet.

Oiler Nation will back me up, that Northlands is not an option, and running it privately FORCES Rexall to look at personal seat licenses, combined with TIF.

I don't get it, Rexall is running away from the government trough (Federal and Provincial),avoiding the slow dinosaurs called Northlands, with only the city to partner with via Casino revenues (AKA PITTSBURGH MODEL), and you are getting angry and paranoid.

I knew this would happen, but not this early.

PSL's are a last resort, to have a chance at the good life in Downtown Siberia. Right now PSL's that were purchased years ago for $25k a seat are selling for $45K a seat, fake equity revenue, owner gets a free ride while the season ticket holder buys a membership in the "club", resaleable in the future when you die, do not become a season ticket holder etc. Similar to a carbon credit scheme.

Funny now, how there is all this talk about the arena and how we are going to fund it, and I was bringing this to the table last year, and was told I was a conspiracy theorist....... right.

www.fieldofschemes.com

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#57 Deep Oil
September 13 2009, 05:30PM
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David S wrote:

^ and Katz has committed $100 Million of his own money.

10 PERCENT - To control a $1billion dollar project, that will eventually become his..... similar to Skydome as past precedent prevails. The challenge is where is he going to get the $100million since Rexall Sports - Katz had to borrow $100mm and possibly secure other funding to purchase the Oil.

Not bad to control a project in this economic times for 10 percent of the play.

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#58 Deep Oil
September 13 2009, 05:34PM
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David S wrote:

First – NOT David Staples. Although I do agree he writes great stuff. Second – You’d be surprised how many real estate developers break ground with not a cent of their own money at stake. Katz wants to put in $100M of his own money, which will be about 20% of the arena’s cost. I suspect the rest will be raised through private partnerships, private financing placement and whatever the city comes up with that won’t involve direct public funding – and don’t kid yourself, they do want to be involved. Seriously. If it works out that joe public isn’t going to get his pockets picked, what’s the problem? Sure there’s a ton of logistical issues to be resolved, but let’s focus on the big picture for a change. This is a huge opportunity for the city to develop a dead part of town that will (hopefully) benefit the whole city in one way or another in the long run. How about we let the Katz group come to the table with the specifics before we jump all over this with our typical small town negative attitude.

Then why have a "Seinfeld" press conference about nothing and stir the pot. This was a shot across Northlands BOW, with Rexall leaving the nest, the same week as it was staging it's own concert at Telus Field, instead at Northlands Telus Stage.

Katz didn't even bother to show up at this much ado about nothing, how much paper and internet bandwidth was wasted on a press conference that did not reveal the location, funding, architect, timeline, and so on.

COME TO THE TABLE WITH SOMETHING, rather than NOTHING.

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#59 David S
September 13 2009, 09:09PM
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Deep Oil wrote:

COME TO THE TABLE WITH SOMETHING, rather than NOTHING.

If you know half as much about Katz as you say you do, you'd recognize that the presser was about two things -

1) Begin the task of positioning Northlands as yesterdays news. Again - you should know why Katz wants to do this.

2) Position Laforge as the Rexall mouthpiece for this project. I'd bet that using Laforge as the sayer of doom was the only reason he's still around. From all accounts, Laforge was out the door the moment Katz got the keys. My guess is that Laforge cut Katz some sort of deal to the effect of letting him (Laforge) take the heat, knowing damn well Katz hates the limelight.

BTW - sounds like some arena specifics will be released very soon. I wouldn't be surprised to hear that the Katz group has exercised the land options since the location has pretty much been revealed.

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#60 charlieangels
September 13 2009, 09:34PM
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Lots of great stuff on this topic. Let's face it, Katz is here to make money, that is why he is in the position he is in. A downtown arena makes good sense and he is prepared to put in $100m. But we must remember if it is forward looking revenue tax stream that is going to pay for this little barn, that is tax revenue not going to the city and the city is made up of me and you. I knew Northlands was going to get upset being left out. This isn't over by any means. It will get ugly to say the least. LaForge saying Oilers lost big money is a sad statement. I don't think many people believe this and it makes him look very very sad. He should come back and either back that statement up or regret he ever made that statement.

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#61 Rob
September 13 2009, 11:08PM
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Oh yeah. Another ugly public quarrel over money in Edmonton. 'Twas ever thus. Why can't these corporate pinheads learn to keep the back room stuff in the back room? If every tree hugging left wing nut is allowed to affect this decision, which no doubt would be of inestimable benefit to Edmonton, then I think Edmonton's general populace will continue to be thought of as a bunch of retro-thinking yokels. You might as well bring back Jan Reimer and let her handle things. She would do a bang up job I'm sure.

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September 28 2009, 08:18PM
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