RX2: THE ARENA DEAL TAKES A POSITIVE STEP

Jason Gregor
July 22 2010 12:37AM

At 1:30 yesterday afternoon, Mayor Stephen Mandel addressed the near capacity audience at a hearing on the proposed Downtown Arena, depicted above in a crudely drawn 2008 mockup from an article outling the equally crude plans by OilersNation own Wanye.

Mandel tried to lighten the mood to start the afternoon's proceedings announcing “for those who haven’t been here before there is no clapping, no cheering or screaming. This will be a very interesting afternoon. Let’s go.”

I’m sure he didn’t expect it to last over four hours, but the Downtown Arena is a hot topic and there were lots of questions. John Karvellas, executive vice-president and general counsel for the Katz group did most of the talking and answered the majority of the questions, but Daryl Katz did address the Mayor and councilors right away.

“I know we haven’t always made it easy and I’ll be the first to apologize for that,” stated Katz in his opening statement. Katz surprised me with how passionate he was when he spoke. I sensed he truly is proud to be an Edmontonian, but he also has a goal to make this arena and surrounding entertainment district world class.

He mentioned that he was approached by the city in April of 2008, before he officially owned the Oilers, about a downtown arena and he has been focused on that ever since. He then committed to putting $100 million towards the rink and another $100 million towards the entertainment district.

I thought Katz was well-spoken and passionate and I bet if he addressed the fans once or twice a year that would help his cause. He doesn’t like the spotlight, and I respect that, but he owns a team that in his words, “Is a major part of the identity of Edmonton ,” so he needs to needs to realize that the fans want to feel like they know the man who runs this “Identity”.

He also mentioned the Oilers would sign a location agreement, meaning the likelihood of them leaving the city is minimal.

However, later in the proceedings Karvelles stated the Oilers and Oil Kings would not play in a refurbished Rexall Place . Their lease ends in the fall of 2014. Ted Tanner, executive director of real estate development of AEG opened up with a promotional video of AEG voice by Morgan Freeman.

It was meant to excite you and make you feel that AEG can build an arena, and the surrounding area, so exquisite that the entire world would want to come see it. The Staples Centre in LA and O2 in London were their prime examples in the AEG portfolio.

No doubt these are world class facilities, and if Edmonton ends up with something similar we’d be pretty ecstatic. The references to hosting the Grammys and being part of great movie production were off-base for this hearing, and I thought the video didn’t add much to the overall conversation.

The other contentious topic brought up by the Katz Group was how the Oilers currently don’t receive any non-hockey revenue at Rexall Place . They are the only NHL team with this agreement and noted this is a major reason why they have lost millions the past few seasons.

Reports suggest they lost four million last year, and then an additional three million went to the NHL subsidy program.

QUESTIONS AND ANSWERS

After the Katz Group was done their presentation each councilor had five minutes to ask questions. Jane Batty went first followed by Don Iveson. Batty showed her hockey knowledge and gave Katz the Lady Byng award for his generous commitment of $4 million (they included his original purchase of the team).

Her questions asked for more clarification on certain points, but Iveson came out swinging. He asked why this couldn’t be privately funded like the previous four arenas that were built in Canada . Bob Black, executive vice-president of sports and entertainment for the Katz Group informed him that only Toronto made that model work, while in Montreal , Vancouver and Ottawa the original investor suffered massive losses. “So you are asking the city to take on most of the risk,” replied Iveson.

I think it is imperative in this process that the city asks the tough questions. I’m in favour of a new facility, and I believe we will get one, but the city needs must do their due diligence and investigate every turn.

A FAIR DEAL. IS THERE SUCH A THING?

My one concern is the thought process that we need a deal that is fair. What constitutes a fair deal?

I am always interested in the notion of “fairness”. Do you think 100 people could ever agree on what is “fair?” Or would fair have everything to do with your point of view?

Many who oppose the arena, and even some who support it, keep stating there has to be a fair deal. “If Katz puts up 25% of the arena cost, then he should only get 25% of the revenue,” is a statement I’ve heard on my show numerous times the past few months.

In a very general and simplistic fashion that could be considered fair, but I don’t think it is that simple. What is the true value of the Oilers to Edmonton? Can we put an accurate value on how much having an NHL team helps the economy? I’ve yet to see an exact report, but if you ask people in Winnipeg they say it is significant.

Some think it isn’t fair if Katz makes too much money off of this deal, but what is too much.

The fact is Katz owns the Oilers. He paid $200 million for them and he has the right to make as much money as he can.

That is how it works in our capitalist society.

Some of you will say that is fair, while others will claim it isn’t. And what is this automatic assumption that business is unfair, always takes unfair advantage of people, and if you have made a lot of money you must be a crook. What’s up with that? This thought process really stumps me.

I honestly believe if Katz addressed the fans they would naturally trust him more, and after listening to him today I think he would come across just fine once or twice a year. I don’t think he has to be front and centre all the time, and it isn’t in his personality to do so, but if he had done so in the past I guarantee some fans wouldn’t be so hesitant to believe in his downtown arena vision.

FAR FROM OVER

Near the end of the hearing on Wednesday, City Council agreed to enter into negotiations with both the Katz Group and Northlands on the financing and operations of a Downtown Arena and entertainment district. However, these discussions must exclude increases in property taxes.

Council also informed city administration to set up a community consultation process and prepare a report on the financial impacts the new downtown site would have on Northlands. And Northlands will be allowed to respond to this report at a future hearing.

HOCKEY SNIPPETS

  • Oilers netminder Nikolai Khabibulin’s court case was postponed again on Wednesday.  He and his agent have two options now. They can stand before a judge with no jury in late August or wait until September 29th and face a jury. All this does is muddy the goaltending waters of the Oilers. Regardless of what happens in his case, the probability of both Jeff Deslauriers and Devan Dubnyk coming to camp seems likely.
  • And who was the arbitrator in the Clarke MacArthur arbitration ruling??? MacArthur was granted a one-year, $2.4 million contract after a scoring a career-high 16 goals and 35 points. One year with 35 points gets you $2.5 million? Was Mike Milbury ruling on this case? Gilbert Brule tallied 17 goals and 37 points last year, and he is two years younger than MacArthur. I bet the Oilers try even harder to get him signed before his August arbitration date, unless they want to pay him $2.5 million or more.
  • And I wonder what Mason Raymond is thinking right now. The Vancouver winger goes to arbitration on July 26th. He tallied 25 goals and 53 points last year. If this ruling is any indication he’ll be worth $3.6 million. Absolutely ridiculous.
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One of Canada's most versatile sports personalities. Jason hosts The Jason Gregor Show, weekdays from 2 to 6 p.m., on TSN 1260, and he writes a column every Monday in the Edmonton Journal. You can follow him on Twitter at twitter.com/JasonGregor
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#51 Crash
July 22 2010, 09:46AM
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Ender wrote:

I'm not Gregor but I'll attempt to respond to your question anyway.

In the first place, there's no way Khabi gets 6 months. That's the maximum penalty and I can't see him drawing that. The minimum penalty if he is found guilty is 30 days, and that might be more realistic.

Either way, though, any conviction is going to impact Khabibulin's ability to play games; in that scenario the question isn't if he'll miss starts, but simply how many. In addition, if he is found guilty the hurting doesn't stop for him once his time is served; he'll be left with a criminal record in the United States which could make it very difficult for him to cross the border for a long time, thus making Khabibulin potentially unavailable for all road games in the States.

For both of these reasons, if Khabibulin is convicted the Oilers will likely file with the NHL to have Khabibulin's remaining deal voided for breach-of-contract. While publically they might lament the tragic necessity of parting with their 'MVP', privately I'm betting ownership would be dancing a little jig around their offices. I admit that I'd be the first to join them.

As was mentioned on Gregor's show yesterday during a discussion between Gregor and Spector...

Spector believes that if the Oilers were to use an option to terminate Khabibulin's contract the backlash on Edmonton by the NHLPA and it's members would be dramatic and would make an already difficult situation of attracting players here even more difficult...this may or may not be true but is it worth it to tempt it?

I wouldn't be so quick to say that is likely the Oilers would file with the NHL to have what's left of Khabibulin's deal voided for breach of contract.

My guess is the Oilers organization would more likely go the route of support and forgiveness than the hard line route of termination of his contract.

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#52 ubermiguel
July 22 2010, 09:47AM
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Sandy wrote:

In the early 80's Triple Five asked Jan Reimer's Council to give concessions to build the world's largest mall on the rail yards connected to their "Eaton" Centre, and they said no deal so Triple Five said fine and moved to some farm land on the out skirts of town, effectively moving the down town to 170th and killing down town for the next 20 plus years. This deal could fix that blunder, make the city's down town something to be proud of!

Gregger, I agree with chat on your show yesterday, councilors connected to Northlands should obstein from all discussions as a conflict of interest.

Go Oilers Go

A few factual errors:

- WEM opened in 1981, which means they started planning it years before - Jane Reimer was elected Alderman in 1980 and was Mayor from '89-'95, so she had little to do with WEM's creation

Regardless, I agree that downtown needs something to be proud of. An arena district would be great, but not paid for by the people for the benefit of Katz.

On a related note we can't believe the "it will create jobs/revune" argument. These large projects simply shuffle jobs/revenue from one location to another. If I didn't spend $100 at an Oilers game I'd simply spend it somewhere else in town.

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#53 Fresh Mess
July 22 2010, 09:48AM
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Capitalism means you make the investment and assume the risk Gregor, that's not what Katz is proposing.

Any supposed losses the Oilers suffered are their own fault.

Kevin Lowe 'President of Hockey Operations' $1 million US. Pat Quinn 'Senior Hockey Advisor' $1 million US. Steve Tambellini 'General Manager' $1 million US. Patrick Laforge 'President' $1 million.

I'd submit that two of those positions are not needed, especially at that price tag. The Oilers were also paying MacT's salary last year @ $1 million.

There is $3 million wasted right there. We won't even get into spending $51 million in salart on a 30th place team.

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#54 Cru Jones
July 22 2010, 09:51AM
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@Crash

The Oilers aren't moving. They are a team spending to the cap that didn't make the playoffs and they basically broke even last year in a league where most teams hemorrhage money like the Flames hemorrhage draft picks. The arena is more than full almost every night, and it's located in the country that the NHL seems to have finally realized is crucial to the continued success of the league as a whole. The Oilers aren't moving.

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#55 Ender
July 22 2010, 09:52AM
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Completely off-topic:

Eric Stephens of the ORANGE COUNTY REGISTER is reporting that the Ducks would like to bring in Vancouver's Kevin Bieksa for their blueline. While you might not care about that, you might be interested in knowing that their Plan B should that fail might be trading forward Jason Blake to the Oilers for Sheldon Souray. What thinks you of them apples?

So you don't have to look it up, Blake is 36 years old, a $4M cap hit, and signed through the end of 11-12. Last season he went 16-25-41 with the Ducks and played all 82 games. The big thing; his last name isn't Souray, so . . .

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#56 Cru Jones
July 22 2010, 09:52AM
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@Crash

The Oilers aren't moving. They are a team spending to the cap that didn't make the playoffs and they basically broke even last year in a league where most teams hemorrhage money like the Flames hemorrhage draft picks. The arena is more than full almost every night, and it's located in the country that the NHL seems to have finally realized is crucial to the continued success of the league as a whole. The Oilers aren't moving.

That wasn't meant to be directed at anyone, other than silly people.

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#57 Crash
July 22 2010, 09:54AM
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ubermiguel wrote:

A few factual errors:

- WEM opened in 1981, which means they started planning it years before - Jane Reimer was elected Alderman in 1980 and was Mayor from '89-'95, so she had little to do with WEM's creation

Regardless, I agree that downtown needs something to be proud of. An arena district would be great, but not paid for by the people for the benefit of Katz.

On a related note we can't believe the "it will create jobs/revune" argument. These large projects simply shuffle jobs/revenue from one location to another. If I didn't spend $100 at an Oilers game I'd simply spend it somewhere else in town.

Your $100 might be spent somewhere else in town but like I mentioned my $100 would now not be spent in Edmonton...that sounds like lost revenue to me...

Also the teams that come into Edmonton spend $$ in the city that would no longer be the case without the Oilers..

My guess would be that many of the charities around the city would rake in far less without the Oilers around as well...

I think you're fooling yourself if you really believe that all that would happen would be a shuffling of revenue spent on something different.

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#58 VMR
July 22 2010, 09:55AM
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Ogden Brother Jr. - Team Strudwick for coach wrote:

I suspect Katz is going to give the AEG some sort of exclusive rights to the events that happen when the Oilers aren't playing. I really don't know who has them now, but I could see that being their intrest. Especially if Rexall is as busy as stated.

I wouldnt be surprised if that is what they are getting out of it and it begs the question, why do we want them getting that money and not a locally based non-profit organization that supports events in the city? I'm not fully behind Northlands but I'd rather they get some money out of the deal(even if the complaints of mismanagement are true) than AEG get a penny.

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@Ender

So I wonder like the Witt scenario if the Oiler buyout Blake? I kinda doubt it at 2mil for 2 years a 1mil for 2 years.

Either way I guess it gets rid of a problem.

Edit: read the story seems to be more of an opinion article then anything.

If the Ducks are unable to land Bieksa, would they consider taking a flier on oft-injured, big-salaried Sheldon Souray if they can get Edmonton to take streaky, big-salaried Jason Blake?

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#60 Crash
July 22 2010, 09:57AM
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Cru Jones wrote:

The Oilers aren't moving. They are a team spending to the cap that didn't make the playoffs and they basically broke even last year in a league where most teams hemorrhage money like the Flames hemorrhage draft picks. The arena is more than full almost every night, and it's located in the country that the NHL seems to have finally realized is crucial to the continued success of the league as a whole. The Oilers aren't moving.

That wasn't meant to be directed at anyone, other than silly people.

I would suspect you are correct mostly because I do think that this arena downtown will end up being built...but if for some reason the city and it's citizens end up playing real hardball and force Katz to play out of Rexall then I think you just could see a movement happen...

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@VMR

I'd be curious to know what that non-profit company cost us a year. While I agree to some degree with keeping it local, Katz has obviously went a different route.

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#62 Archaeologuy
July 22 2010, 10:00AM
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Ender wrote:

Completely off-topic:

Eric Stephens of the ORANGE COUNTY REGISTER is reporting that the Ducks would like to bring in Vancouver's Kevin Bieksa for their blueline. While you might not care about that, you might be interested in knowing that their Plan B should that fail might be trading forward Jason Blake to the Oilers for Sheldon Souray. What thinks you of them apples?

So you don't have to look it up, Blake is 36 years old, a $4M cap hit, and signed through the end of 11-12. Last season he went 16-25-41 with the Ducks and played all 82 games. The big thing; his last name isn't Souray, so . . .

2 years left @ 4 million Cap hit (only 3 million actual salary)

He has only topped 20 goals once in the last 3 years, but he might be a decent fit to play on the 3rd line with Horc.

I would have prefered (like everyone else) a younger player but he would be easy to bury in the minors in his final year if he didnt retire.

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#63 Tyler
July 22 2010, 10:00AM
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But in the Cup run in 2006 some bar owners told me that they made their six months of sales in those two months. It does have a pretty big impact on certain sectors.

Sure but that money has to come from somewhere. If people are spending more in bars watching the Oilers, they're spending less anywhere else. The evidence is pretty overwhelming that it moves money from one pocket to another.

People were in a better mood. You weren't here to take part in that so it might be hard to grasp exactly what it meant to people in Edmonton. Whether we like it or not, the Oilers are the one thing that can rally the entire city for a few months. Of course it might only happen once every 20 years, but when it does it gets people through the next few crappy ones...I.E 2007 to now.

I don't know about it getting people through crappy years - what do you think that the last few years would have been like without the memories of 2006 to draw on? Something like Escape from New York? I'll accept the first part though - even the ex-pat communities were having a good time with it in places like Toronto.

Did the reports state how much potential business a city would lose in the future by having companies re-locate or never want to come to Edmonton. Just curious on that aspect.

I seriously doubt that this matters much one or the other. Like I say, tons of economic impact studies have been done by serious people and found nothing to suppport this sort of spending.

I can't get the books on the Oilers so I only report what they say they lost. No one is completely sure how much they lost or what caused it.

Fair enough. We know though, that they financed with a lot of debt, spent about as much money as possible on players and then missed the playoffs. It's not rocket surgery.

Those cities/owners lost money on their sale, but now Van, Mon and Ott seem to be doing fine. So there has to be a model that works and hopefully the negotiations between the city and Katz Group uncover that.

The "model" is that someone takes a huge loss, whether it's the owner or the city. John McCaw lost a lot of money on the Canucks. Rod Bryden and the creditors lost a lot of money in Ottawa and then Melnyk got a great deal. I'm not sure that Black has his facts right on Montreal, to be honest.

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#64 wangtaco
July 22 2010, 10:03AM
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@ubermiguel

It really surprises me that this Northlands angle hasn't been blown open a bit more - I mean, the Edmonton Journal gnashes it's teeth when the arena project is mentioned, and that's fine (and we won't bother mentioning the other paper....which, frankly, is a joke), but the clear conflict of interest with Northlands is something to be addressed.

If I understand it correctly, the councillors that sit on the Northlands board represent the city, and should theoretically have no interest or ties to the success of Northlands (correct me if I'm not correct in that interpretation). However, let's not kid ourselves, ol' Caterina, the mobster that he looks like, is probably going out for dinners and golf trips with his fellow board members. So when we talk abotu a conflict of interest, I know that in my profession, even if the conflict is merely perceived, it should be avoided. That means whether a true conflict exists or not, if a third party could interpret the relationship (correctly or not) as a conflict, I would excuse myself. Why are these councillors not being grilled on why they are still sitting on these hearings? As far as I know, the Rexall Group doesn't have a former employee on city council...

This post is already almost too long; I won't even get into the job creation and public funding debate.

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#65 BBOil
July 22 2010, 10:03AM
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@ubermiguel

RE: Regardless, I agree that downtown needs something to be proud of. An arena district would be great, but not paid for by the people for the benefit of Katz.

At the same time it shouldn't just be Katz and friends build an arena district, and the city benefits. It will benefit both sides and should be a partnership.

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#66 bdaZZler
July 22 2010, 10:05AM
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This city is full of deadbeats! A born and raised Edmonton Billionaire provides a vision for the future, and all we hear is old people complaining about their tax money.Hockey would only occupy that entertainment complex 42 days out of the year. It's the rest of the days that are important. I am a 28 year old who has watched all my childhood friends leave Edmonton for other places because this city is BORING. Our councillors would rather spend money on "MUSICAL TRASH CANS" then invest in revitalizing downtown. People on hear comment that the tax money should be used for cleaning up our city, well maybe if the younger generation had something to occupy themselves with around here it wouldn't be so bad

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#67 Crash
July 22 2010, 10:08AM
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Tyler wrote:
But in the Cup run in 2006 some bar owners told me that they made their six months of sales in those two months. It does have a pretty big impact on certain sectors.

Sure but that money has to come from somewhere. If people are spending more in bars watching the Oilers, they're spending less anywhere else. The evidence is pretty overwhelming that it moves money from one pocket to another.

People were in a better mood. You weren't here to take part in that so it might be hard to grasp exactly what it meant to people in Edmonton. Whether we like it or not, the Oilers are the one thing that can rally the entire city for a few months. Of course it might only happen once every 20 years, but when it does it gets people through the next few crappy ones...I.E 2007 to now.

I don't know about it getting people through crappy years - what do you think that the last few years would have been like without the memories of 2006 to draw on? Something like Escape from New York? I'll accept the first part though - even the ex-pat communities were having a good time with it in places like Toronto.

Did the reports state how much potential business a city would lose in the future by having companies re-locate or never want to come to Edmonton. Just curious on that aspect.

I seriously doubt that this matters much one or the other. Like I say, tons of economic impact studies have been done by serious people and found nothing to suppport this sort of spending.

I can't get the books on the Oilers so I only report what they say they lost. No one is completely sure how much they lost or what caused it.

Fair enough. We know though, that they financed with a lot of debt, spent about as much money as possible on players and then missed the playoffs. It's not rocket surgery.

Those cities/owners lost money on their sale, but now Van, Mon and Ott seem to be doing fine. So there has to be a model that works and hopefully the negotiations between the city and Katz Group uncover that.

The "model" is that someone takes a huge loss, whether it's the owner or the city. John McCaw lost a lot of money on the Canucks. Rod Bryden and the creditors lost a lot of money in Ottawa and then Melnyk got a great deal. I'm not sure that Black has his facts right on Montreal, to be honest.

"Sure but that money has to come from somewhere. If people are spending more in bars watching the Oilers, they're spending less anywhere else. The evidence is pretty overwhelming that it moves money from one pocket to another"

Yes but the pocket that the money moves to could very well be in another city and not in Edmonton.

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#68 Cru Jones
July 22 2010, 10:12AM
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Crash wrote:

I would suspect you are correct mostly because I do think that this arena downtown will end up being built...but if for some reason the city and it's citizens end up playing real hardball and force Katz to play out of Rexall then I think you just could see a movement happen...

I just can't see it. People forget that the Jets and Nords were having problems with attendance, and that the Canadian dollar would only get a you a small ball of belly-button lint in the US at the time. With the dollar having been at close to par for sometime now, and with the Canadian economy still making its American Cousin look like the poorly run lemonade stand that it is, I don't think - barring some rather cataclysmic events - that we'll ever see the day when the Oilers move.

The City of Edmonton will eventually come to their senses and realize it's far more profitable to have a state-of-the-art arena and all the accoutrement that follow on a site bringing in tax dollars than a empty parking lot and get on board.

As for Northlands, I seriously don't understand how they have any say in this matter at all. The only part of that regime that should remain affiliated with the Oilers is the Coliseum name. I always preferred that to arena or place or some other less-than-grandiose nonsense. We treat these guys like gladiators, let's have them play in a arena with a fitting name, and not the 1-800-ASK-GARY Amphitheatre.

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#69 Tyler
July 22 2010, 10:12AM
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Yes but the pocket that the money moves to could very well be in another city and not in Edmonton.

Good luck finding an economist to agree with you.

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#70 Zamboni Driver
July 22 2010, 10:13AM
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@bdaZZler

Well there ya go.

Not only would a new arena revitalize downtown, it will stop litter!

I think we can pretty much call this issue settled, can't we?

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#71 Crash
July 22 2010, 10:16AM
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Tyler wrote:

Yes but the pocket that the money moves to could very well be in another city and not in Edmonton.

Good luck finding an economist to agree with you.

I don't need an economist to tell me that the money I spent in that bar in Edmonton or that Tim Hortons or that Starbucks or that Ramada or that West Edmonton Mall or that anything will now be spent in another city...and I suspect there are many just like me...

If you don't think the Oilers attract many people to the city to spend their money and that money wouldn't be spent elsewhere outside the city without them then I think you're missing something...

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#72 Zamboni Driver
July 22 2010, 10:19AM
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Here is the deal, and this is from someone "pro" new arena, and who kinda likes the funding formula mostly recently described.

Blind faithers need to get a hold of themselves. The EXACT same rhetoric being used 'against' city hall can be directed towards Katz et al. Gregor's show yesterday was the prime example. He (and others) railed on endlessly about "why would they give their best bid first??!! It's a NEEGOOTIATIONNNN."

True.

Why would the City do the very same?

These are people spending OUR money. Katz is investing some of his, yep...but what he does with his millions, I couldn't care less (other than paying our "faceoff specialist" $6.5 mil this year..so whining about loss of $$ is not going to fly with me, sorry.) The City of Edmonton, while the some of the councillors are dullards, they are responsible for BEING responsible with tax money.

It's as if asking questions of Batman is somehow blasphemy! They are all Reimer lovers (per Stauffer), pinko commies, and isn't Calgary so much more enlightened?!

There needs to be negotiations...and it needs to be private.

No more gong shows like yesterday "Wow, Katz graced them with his presence for 10 whole minutes!" "Caterina railed on like a lunatic."

Only then will there be progress.

Now can we go back to talking Corsi numbers or something?

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#73 Tyler
July 22 2010, 10:20AM
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Crash - The amount you spend is insignificant in the grand scheme. Studies have been done to determine how significant the effect is. Overwhelmingly, the science is against you.

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@Tyler

What's funny is the Oilers used their "out of town" fans as talk about the whole new arena when the issue of the downtown arena was brought up. They obviously think their money has value to the organization.

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#75 Archaeologuy
July 22 2010, 10:35AM
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There's a lot of whining about money, serious economists this, capitalist that, studies have whatever.

Personally, I dont think this is going to be about tracking money in vs money out. This is about quality of life in the city and branding Edmonton.

The Oilers are part of the city's identity, at home and abroad. When the Oilers play in New York they bring the City's brand with them. There are people in New York, Chicago, and Los Angeles that see the name Edmonton, Edmonton, Edmonton in their Newspapers and on their TVs every time the Oilers come to town. This is free advertising for the city of Edmonton year in and year out. I honestly dont know the monetary value for that kind of Ad campaign that would keep Edmonton in the Global consciousness. The Oilers say they need a new arena, I think most people agree with that. If the city can help fund it then I think it's in their best interest.

At home, the citizens benefit from getting a new entertainment complex. Sure the Hockey team is better suited to be around for another 25-30 years but other entertainment options open up as well. More concerts come to town, more trade shows, more restaurants and other businesses open up. It's also a prefect excuse to keep expanding public transportation like LRT lines.

Not all benefits need to be in dollars and cents in order to be worth it. I get no money from Parks, I get no money from museums and historical sites, but I want Edmonton to maintain them and add to them. I see a new Arena fitting into the same category as a Park or Museum and less like a proper business venture, and that might be hard for some people to swallow.

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#76 Crash
July 22 2010, 10:37AM
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Tyler wrote:

Crash - The amount you spend is insignificant in the grand scheme. Studies have been done to determine how significant the effect is. Overwhelmingly, the science is against you.

Says you... Yes in the grand scheme of things the money I spend alone is insignificant but like I said there are many just like me...MANY

Have you noticed alone how many Calgary fans come up to Edmonton alone for just one hockey game? Do you believe for a second that if the Oilers weren't there that they would be in the city spending their money?

I don't see how any study as you put it could say otherwise... There are tons of people who come to Edmonton to spend their money because of the Oilers...that's a fact. It stands to reason and would be common sense to suggest that those tons of people spend their money in Edmonton only because the Oilers are there. There's no other reason.

And I can pretty much guarantee you that many of those people that spend their money there will not have a need to spend it there if the Oilers aren't there. It sounds to me like quite a bit of lost revenue. How can any study deny it?

You were the one who pointed out how if the people who spent all that money in the bar for the Stanley cup run didn't have the cup run to spend it on that they would spend it elsewhere, meaning elsewhere in the city...I just pointed out to you that this isn't the case....that is a fact to which you respond with ecomomists say otherwise...

Well who are these economists that actually believe by losing many people who spend hundreds of dollars in the city to another city that it doesn't hurt the local economy?...

I think they better redo their study.

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#77 BBOil
July 22 2010, 10:40AM
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@Tyler

If you are going to go using science, can you please provide references.

I can say I've read studies saying the opposite of what you've provide.

(I haven't, but when you start using science in an argument, gotta back it up)

Reminds me of that Gatoraide commercial with Crosby on the bike, and at the end it says "Its science, look it up". Well if its science, it must be an absolute truth that Gatoraide is awesome.

Who did the study, when did they do it, where did they do it and what variables were taken into account, not to mention who gave them the grants to do that study, all have a determination of an outcome.

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#78 David S
July 22 2010, 10:44AM
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wangtaco wrote:

It really surprises me that this Northlands angle hasn't been blown open a bit more - I mean, the Edmonton Journal gnashes it's teeth when the arena project is mentioned, and that's fine (and we won't bother mentioning the other paper....which, frankly, is a joke), but the clear conflict of interest with Northlands is something to be addressed.

If I understand it correctly, the councillors that sit on the Northlands board represent the city, and should theoretically have no interest or ties to the success of Northlands (correct me if I'm not correct in that interpretation). However, let's not kid ourselves, ol' Caterina, the mobster that he looks like, is probably going out for dinners and golf trips with his fellow board members. So when we talk abotu a conflict of interest, I know that in my profession, even if the conflict is merely perceived, it should be avoided. That means whether a true conflict exists or not, if a third party could interpret the relationship (correctly or not) as a conflict, I would excuse myself. Why are these councillors not being grilled on why they are still sitting on these hearings? As far as I know, the Rexall Group doesn't have a former employee on city council...

This post is already almost too long; I won't even get into the job creation and public funding debate.

THIS is the real story it seems nobody wants to touch. David Staples (not me BTW) wrote a great Northlands primer a while ago that starts to explain things. Its worth looking up on his blog.

I know Gregor and Brownlee are sports guys (the best in the city IMO), but I'd suggest a series about what the deal is with Northlands would be tantamount to the Daily Planet revealing the identity of Superman. Maybe Barnes would be into it.

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#79 Ball Buster
July 22 2010, 10:45AM
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The most interesting aspect of economic studies is finding out who has funded them. Just let the economist know what you want the data to say and they can make it happen.

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@BBOil

Even if there is a study I don't think I'd believe it. I know roughly 30 out of town season ticket holders. Many don't just come for the game, they end up going shopping, going out for supper, staying the night in a hotel, going out to the bars after the game etc...

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@David S

I'd expect Gregor or Brownlee to go missing if they started getting into the whole Northlands story.

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#82 Tyler
July 22 2010, 10:52AM
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Guys -

I'm not going to go out and find a ton of links for you. This isn't a particularly interesting topic for me because I've already read a lot of the research. Google guys like Andrew Zimbalist and Mark Rosentraub. There's another guy at U of A, Brad Humphreys, who is a serious guy in this - here's a quote from an interview he did at BoA:

I have gone back and looked at the economic performance of cities, in terms of income per capita, employment and wages, since 1969 looking for evidence that professional sports generate tangible economic benefits. Over this long period of time, there has been a lot of facility construction and renovation, expansion, and franchise movement. These changes provide variation in the quantity and quality of professional sports in cities over time, and I have looked for statistical evidence that changes in the “sports environment” in cities explains any of the observed variation in economic indicators over time. The short answer is: they have not. Attracting teams and building bigger or newer facilities was not associated with economic growth, or changes in the levels of any of these economic indicators. Professional sports are not, and have never been, engines of economic growth in North American cities. They are effective at moving consumer’s entertainment from one part of the city to another, and raising employment and wages in one specific sector of the local economy, the Recreation and Amusements sector, which contains professional sports teams. People interested in providing government subsidies to sports teams – team owners, real estate developers, elected officials, and others who will benefit directly from these subsidies – loudly and consistently claim that large, important economic benefits flow from professional sports. Their evidence takes the form of (1) unsupported assertions (“of course these benefits exist!”) coupled with ad hominem attacks on opponents (“only an idiot, or an economist, would believe that sports aren’t great for the local economy”) or (2) Economic Impact Studies that are really promotional forecasts based on badly flawed methodology. My research does not mean that subsidies for new hockey arenas are bad. Sports clearly produce important intangible benefits in cities, which may justify government subsidies. My research just means that we – taxpayers, elected officials, team owners, and other stakeholders – should decide on subsidies based on these intangible benefits, not on overblown claims of economic benefits (“More jobs! Higher income!”) made by a few people who will benefit immensely from the subsidies.

It's you against academia Crash.

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#83 Archaeologuy
July 22 2010, 10:55AM
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@BBOil

I would also like to point out that Economics is a member of the Faculty of Arts, not Science. As in Economics might deal with a lot of Math but it is still a Liberal Art. Way too much left up for interpretation to be considered a Science.

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#84 BBOil
July 22 2010, 10:58AM
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@Ogden Brother Jr. - Team Strudwick for coach

Agreed. I used to be one of those out of towners (minus the season tickets). My money wasn't leaving my small town for Edmonton in my pocket unless it had a reason to. That reason was usually the Oilers or Eskimos, and there were a number of season ticket holders for each in said small town.

I was just making the point that if you are going to start saying studies say this or that, you have to provide some sort of reference. I'm sure there are some legit points to what they are saying, but there are probably flaws within each study due to the depth of the discussion, as well as studies that probably say the opposite.

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#85 Adam
July 22 2010, 10:58AM
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@Tyler

Well I've been pretty lucky, and I have been able to sit in more than a few economics classes on this very issue, and I would have to say that they generally would disagree with your base assertion (that NHL teams economic value is low). In fact the actual conclusion that an economist would give you is that, for the city as a whole, the economic value of a team is relatively small, the economic impact of said team is actually very large for the area around it, and the businesses directly associated with it.

Actually most of the classes came to the conclusion that a downtown arena would be a good investment for the city, as it would refocus the capital that currently flows around Northlands into the downtown area. When this happens, the city will see increases in investment for both business and housing developments in the arena district, which is undoubtedly good for downtown and the City of Edmonton.

"This is pretty much tantamount to an admission that it's a terrible financial idea and only works if the City absorbs a huge loss."

This is tantamount to a gross oversimplification of both the economics surrounding the issue of the creation of an arena district, and the statment by Bob Black you quoted. What was actually meant by that statment is that it is unwise for a single investor with limited capital for investment to wholly fund a project of such magnitude. The city can generate several times the capital that Katz can, and thus the risk that the city would take on inorder to provide a certain percentage of the capital to the project is lower than what it would be for Katz (which if he funded the whole project would cost about 1/3 of his current projected net worth [read: a lot of money]). The current plan provides the city with a revenue stream from the arena district, is it not fair to expect that if the city is going to make a profit that they to should take on some of the risk from the project?

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Sports clearly produce important intangible benefits in cities

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#87 BBOil
July 22 2010, 11:01AM
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@Archaeologuy

Don't have to tell me. Went to school there and took the classes. Not my scene, and if all Economic studies were factual we wouldn't have recessions because everyone would know what is good for an economy and what is bad.

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#88 Crash
July 22 2010, 11:02AM
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Tyler wrote:

Guys -

I'm not going to go out and find a ton of links for you. This isn't a particularly interesting topic for me because I've already read a lot of the research. Google guys like Andrew Zimbalist and Mark Rosentraub. There's another guy at U of A, Brad Humphreys, who is a serious guy in this - here's a quote from an interview he did at BoA:

I have gone back and looked at the economic performance of cities, in terms of income per capita, employment and wages, since 1969 looking for evidence that professional sports generate tangible economic benefits. Over this long period of time, there has been a lot of facility construction and renovation, expansion, and franchise movement. These changes provide variation in the quantity and quality of professional sports in cities over time, and I have looked for statistical evidence that changes in the “sports environment” in cities explains any of the observed variation in economic indicators over time. The short answer is: they have not. Attracting teams and building bigger or newer facilities was not associated with economic growth, or changes in the levels of any of these economic indicators. Professional sports are not, and have never been, engines of economic growth in North American cities. They are effective at moving consumer’s entertainment from one part of the city to another, and raising employment and wages in one specific sector of the local economy, the Recreation and Amusements sector, which contains professional sports teams. People interested in providing government subsidies to sports teams – team owners, real estate developers, elected officials, and others who will benefit directly from these subsidies – loudly and consistently claim that large, important economic benefits flow from professional sports. Their evidence takes the form of (1) unsupported assertions (“of course these benefits exist!”) coupled with ad hominem attacks on opponents (“only an idiot, or an economist, would believe that sports aren’t great for the local economy”) or (2) Economic Impact Studies that are really promotional forecasts based on badly flawed methodology. My research does not mean that subsidies for new hockey arenas are bad. Sports clearly produce important intangible benefits in cities, which may justify government subsidies. My research just means that we – taxpayers, elected officials, team owners, and other stakeholders – should decide on subsidies based on these intangible benefits, not on overblown claims of economic benefits (“More jobs! Higher income!”) made by a few people who will benefit immensely from the subsidies.

It's you against academia Crash.

"They are effective at moving consumer’s entertainment from one part of the city to another"

I don't know how to make this any clearer to you that this statement made by this economist is not entirely true...maybe in a place that stands alone and there aren't any other options close by but I'm here to tell you that if the Oilers don't exist in Edmonton that my money will NOT just simply move from one part of the city to another....and I'm also telling you that I wouldn't be alone.

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#89 Adam
July 22 2010, 11:06AM
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@Tyler

Now I can't edit my post. But now that you have expanded your original point of contention, that NHL teams are largely worthless, to include NHL teams do have an economic ripple effect for the surrounding areas and industries you are indeed correct.

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#90 Chris.
July 22 2010, 11:08AM
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@Tyler

I can't comment on the findings of all academia... I can only comment on personal experience: and it is very similar to what Crash is saying.

During the lockout, my wife and I didn't fuel up the truck, pay a babysitter, commute to Edmonton and grab dinner 20- 30 times before/after an Oiler game. During the lockout we didn't attend other events around the city... Instead we used that money to take the kids to Disneyland.

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#91 Tyler
July 22 2010, 11:14AM
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Are you an ex-OilFans guy Adam?

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#92 Tyler
July 22 2010, 11:17AM
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And I wasn't saying that hockey teams are largely worthless, or wasn't intending to make that point. They re-direct money.

Actually most of the classes came to the conclusion that a downtown arena would be a good investment for the city, as it would refocus the capital that currently flows around Northlands into the downtown area. When this happens, the city will see increases in investment for both business and housing developments in the arena district, which is undoubtedly good for downtown and the City of Edmonton.

The question, I think, is how much that is worth. If we're in rough agreement that the Oilers don't generate a ton of spending, they simply direct it a certain way, the question becomes how valuable it is to the City to direct it to downtown. That's a point of debate. I'm not sure how you can say that it makes much of a difference where the money is spent.

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#93 Chris.
July 22 2010, 11:20AM
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On an even more insane note:

I grew up in Lethbridge, and when I graduated high school, I moved to Edmonton with a couple of friends to attend the U of A...

Q- How is that insane?

A- We did no research comparing the U of A to the University of Calgary... We chose to move to Edmonton because we were (and are) Oiler fans. (That truly was the deciding factor)

To this day, all three of us live, work, and raise young families in the capital region... The ONLY reason this happened is because all three of us were children of a Dynasty and wanted to be a part of the City of Champions.

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#94 BBOil
July 22 2010, 11:25AM
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Well considering part of the idea is to move money and investment into Edmonton's downtown core, I think Tyler's quote from Humphrey's is very positive. I really don't know if they Oilers really provide an economic value to the city as a whole or not, but moving them downtown will have an effect on the downtown core, and last I checked that was a place the City wants to improve.

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@Tyler

One way or another the city is most likely to spend a couple hundred mil on an arena. Now do you stay status quo with an area that hasn't changed or do you try something new? What's the worse that can happen?

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#96 Chris.
July 22 2010, 11:28AM
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And I wasn't saying that hockey teams are largely worthless, or wasn't intending to make that point. They re-direct money.

@ Tyler:

100% agree. Hockey teams re-direct money into Edmonton that would have otherwise been spent in Red Deer, Lethbridge, Lloydminister, etc, etc, etc...

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#97 Just saying...
July 22 2010, 11:30AM
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I am really surprised by some of the comments that have been posted. I thought, of all places, ON would feature comments of people who are all for this development, but some of these are disappointing to read.

Just trying to think of this logically. The city recently invested 'a couple' million into the new art gallery, and into the new Churchill Square, in an effort to ravaamp the city's downtown. Both look pretty cool, and Churchill Square does host a lot of different events.

That said, would it not absolutely be worth the 200-250 mil for the city and the people of the city to invest in not only a home for our hockey team, but also a new downtown development? Currently each Oiler game attracts around 16,000+ people - even last season, when times were rough (between economic woes and our 30th place team..) and I don't see that number going down at all, especially with how excited hockey fans are to see the likes of Hall, MPS, Eberle and the reinvention of Oiler hockey.

Now, for the most part, people who make a night out of Oiler games, concerts, or just being downtown, often go for dinner, go for drinks ... and lets face it, there isn't a lot within walking distance from RX1...

So with this new arena and development, there will be food, drink, shopping and an exciting new environment that will almost guaranteed be used by more than those 16,000 people every week. I'd like to know when our lovely art gallery has 16000 people at it during the week.

I think this arena development is simply necessary! It'll be huge for this rebuilding Oilers team, it'll be a huge part of the city, and it'll be a huge for Edmontonians.

Personally, beyond all other feelings as a diehard Oiler fan, I think this will rejuvinate the city center and give Edmontonians something to be proud of in our rather lackluster downtown.

Just saying..

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To go with Just Sayings talk of the art gallery and churchill. Were could one find a list of projects the city has invested in?

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#99 rubbertrout
July 22 2010, 11:38AM
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@Tyler

Doesn't it depend where the money is re-directed? If you go with the assumption that the funds are local and would be spent by local folks on local things one way or another you are correct. From what I gather there are a lot of out of town people that make the trip in for an Oiler game (which might make a fairly substantial variable for whomever does an economic study).

Of course a few hundred bucks here or there even multiplied by a few thousand people might not be enough of a ripple to be totally noticable in the long term in a city of a million people. The local dollars would still be spent but you'd lose some of the out of town money.

@ Archaeologuy(#75)

I agree completely. It pains me to say that as well;)

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