KATZ GROUP: BLUFFING WITH 2/7 OFFSUIT

Jason Gregor
September 25 2012 11:40AM

Eight years ago, during the first NHL lockout (how pathetic is it that there is a 1st and 2nd lockout, ugh) poker was on every sports channel. At first fans complained about it, but within month many started watching and playing online. Poker was the new "sport" of choice, but even the most uneducated poker fan realized quickly that you folded 2-7 offsuit, unless you were the big blind and could check to see the flop.

Right now the Katz Group and the City are playing heads up, and the Katz Group lost a big hand yesterday. Their appearance in Seattle followed by a head-scratching press release was akin to going all in with a 2-7 offsuit.

I'm perplexed as to why the Katz Group thought they could use relocating to Seattle as a bargaining chip. The blatant facts are that relocation is NOT an option, even when their current lease expires at the end of the 2014 season.

Here is why relocation won't happen.

  • Gary Bettman admitted he made a mistake allowing Winnipeg and Quebec to relocate, and since then Bettman has proven he'd rather have the league own a team and have them lose $20 million a year than relocate. He won't let one of his profitable teams up and leave.
     
  • The Oilers aren't losing money. They are profitable, despite being the only team in the NHL that doesn't get non game-night revenue.
     
  • Florida, Columbus, Phoenix, NYI and many other teams have been losing money for years. There is zero chance Bettman allows the Oilers to jump the queue and relocate before those other money-losing franchises. A source within the NHL, who didn't want to be named for obvious reasons, told me this morning, "There is no way the league would let them move. They will try to help facilitate a deal to get a new arena, but relocation is not an option at this point."
     
  • The rink in Seattle won't be ready for at least three years, likely four. So the Oilers would play at Key Arena for two years, before becoming a tenant in the new rink in Seattle. The WHL team vacated Key Arena because it's a terrible hockey venue, but the Oilers will play there for two years? No chance.
     
  • The Oilers are the #1 team in Edmonton, but in Seattle they'd be #5 behind the Seahawks, Mariners, Sounders (soccer) and the new NBA team. Seattle will be a viable option for a team that is losing money, but it would be a backwards move for the Katz Group to relocate there.
     
  • The Oilers are amongst the top-five most expensive ticket prices in the league, but that won't be the case in Seattle. The San Jose Sharks sell out every game, but they lost money last year because they can't charge premium prices. Below is the Sharks seating chart.




You can get a ticket in the 2nd deck for $46/game in San Jose. If you want a pair of individual seats in Edmonton in the same section it will cost you $135.50 each (based on LA Kings game on October 16th from Oilers website). It is basic supply and demand. There are more rabid fans in Canada, thus higher ticket prices. Everyone knows that ticket prices in Seattle will not be as expensive as Edmonton.

OTHER OPTIONS

(This is the inside of the Sprint Center in Kansas City. Looks great, but not good enough to attract an NHL team.)

The Katz Group sent out this statement yesterday. It came from Executive Vice President, Bob Black: 

"I can confirm that Daryl Katz, Patrick LaForge, Kevin Lowe and others from the Oilers leadership group are in Seattle for meetings and to attend the Seahawks game. 

We remain committed to working with City Administration to achieve a deal commensurate with what Winnipeg and Pittsburgh have done to sustain the NHL in those small markets. If we can achieve such a deal, the Oilers will remain in Edmonton and we can get on with the important work of developing the new arena and investing in the continued revitalization of Edmonton's downtown core.

Nonetheless, and as the City of Edmonton is aware, the Katz Group has been listening to proposals from a number of potential NHL markets for some time. After more than four years of trying to secure an arena deal and with less than 24 months remaining on the Oilers' lease at Rexall Place, this is only prudent and should come as no surprise.

We are extremely grateful to Oilers' fans for their patience and loyalty as we work through this process towards what we sincerely hope will be a long and successful future for the Oilers in Edmonton. We have no further comment on the status of our discussions with other markets at this time."


Who are these potential NHL markets? Let's assume they are talking about Kansas City, Seattle and Quebec City.

I've already broken down why they won't go to Seattle, but if Kansas City was such a great market how come Atlanta moved to Winnipeg? Moving the Oilers to KC is as likely as the NHL lockout ending this week.

The 2011 census had Edmonton (metropolitan) population 6th highest in Canada at 1.5 million. Quebec City was ranked 7th with 765,700. Will fans in Quebec who average $22/hour pay the same as fans in Alberta who average $27/hour? I doubt it.

At this point relocation should not even be discussed, because it isn't going to happen. Any fan, blogger or media person who suggests it is a realistic possibility isn't paying attention.

The League won't allow it to happen, and the Oilers don't want to move.

The major problem I see now is that the Katz Group hasn't made it clear what they want. Instead of wasting everyone's time, and creating more disdain from their fans, the Katz Group needs to realize that unsubstantiated threats of a possible move won't help them at the negotiating table.

We know the league won't let them move, and we know that deep down the Oilers don't want to move.

It was a bad bluff and you lost the hand, but the Katz Group still has lots of chips on the table. When you get caught bluffing in poker you take your lumps and move on.

There is nothing wrong with bluffing, it's part of poker. Unfortunately it has also become a staple in most arena negotiations, and usually it only serves to hinder and delay the process. Remember when Mario Lemieux was flying to Vegas, Kansas City, Houston and Oklahoma City, well months later at the groundbreaking ceremony for their new rink he admitted what most already knew.

"It (relocating) wasn't an option. We had to do a few things to put pressure on the city and the state, but our goal was to remain here in Pittsburgh all the way. Those trips to Kansas City and Vegas and other cities was just to go and have a nice dinner, and come back."

During those negotiations some fans despised Lemieux, but once a deal was completed Lemieux was labeled the saviour of the franchise.

The Oilers aren't moving. It is a non-issue, regardless of trips to Seattle, Kansas City or Quebec.

WHAT NOW

Just because relocation isn't a serious option, doesn't mean the city should just sit back and do nothing. According to councillor Bryan Anderson, "There has been no forward progress since last October."

This project needs to get done. There has to be an equal amount of motivation from both sides to accomplish this. The city needs a new facility and the Oilers want one, and we all recognize this. Neither wants to pay for all of it, so find a middle ground by looking at the intricacies of deals in Pittsburgh and Winnipeg and find out what worked and what didn't work.

The Katz Group's "tell" was easy to spot because we've seen it before during previous arena negotiations, but now it's time to deal a new hand and get back in the game.

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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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#1 Shredder
September 25 2012, 12:53PM
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So here's the thing...I'm a customer. I spend $2,700/year on tickets, and about double that on concessions (call me an alcoholic)...I've been patient with the rebuild and helped sell out a stadium that shows off one of the worst teams in the NHL for 6 years. While Mandel has been giving away the farm to the Oilers on the Stadium deal, I've supported him, as I believe that a stadium is part infrastructure for the city - and $100 Million seems right. The Katz group just stabbed the biggest supporter of the Oilers in the back. He's donated $100 Million, plus the $76 or so for the land? And you threaten to leave?

Meanwhile, the players I'm being asked to cheer for are begging for more money and won't agree to anything less than 57% of revenues - some of the highest splits in professional sports, in a sport that has the highest operating cost. My poor millionaire favorite players! Really?!! I may find it hard to cheer for you if you ever play in this city again.

The NHL owners are being a little harsh in asking for a rollback, in that they signed contracts and should be stuck honoring them, but I can see a pullback in the overall cap being a good thing, and getting close to 43% or at least 50% would be reasonable. But let's face it, they're not even being proactive in negotiations. So I may find it hard to give more money when you're going to be lazy negotiators and lockout a season every 6 years to deal with a CBA. I negotiate contracts every day, and even the simple ones can take up to 6 months...maybe you should plan on learning how business works???

To add to it, the owners have promised a good team when the rebuild is done, all the while taking my hard earned money to sell out year after year with one of the worst NHL franchises, and the worst on-ice product. Now as the rebuild seems like it's going somewhere good fast, they threaten to leave the city altogether?

So I pay for this years' season tickets hoping this gets resolved, the customer service agent on the phone gives me attitude and says "it's business as usual" only to have a lockout come up weeks later, and they say I get 4.0% interest...

I'm sorry, but didn't I pay for something, or is all I get a reciept and this sick feeling in my gut? If you were selling blackberry's you'd be as bankrupt as RIM, because no one wants to put up with that. I've been disrespected on every level - players not being hero's but greedy businessmen (I get that at work), the owners unable to give me any hockey that I can watch for the money I spent on tickets, and the team itself threatening to leave the city...credible threat or not. To top it off, stab the Mayor in the back publicly to make yourself seem important. What am I really getting here for my money? Disrespect? Feels like it.

And to think that a downtown revitalization is going to happen because of this inspirational arena? Wake up Katz, downtown has slowly been making a comeback for over 10 years. Downtown is as interesting and busy as it ever was, and it's being revitalized...with or without you.

Let the team go to Seattle or wherever else. I want my money back.

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#2 Woodguy
September 25 2012, 12:04PM
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Don't forget the most important point in terms of SEA/EDM.

In Edmonton Katz get 335 dates to sell in the new rink. 45 dates for hockey and up to 290 dates of non-HRR of revenue.

In Seattle they would be a tenant in the new rink and *might* get some revenue on the non-hockey nights, and certainly no where near 290 dates as Chris Hansen will want that revenue to service his $200MM debt on the arena.

Most NHL teams that lose money on hockey, make lots of money on non-hockey events at the arenas.

Elliott Freidman says that even FLA is profitable as an organization because of non-HRR.

Only NYI and EDM do not control their rinks in the NHL.

No way on earth Katz walks from an arena he controls to just be a tenant in Seattle.

72o indeed.

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#3 Woodguy
September 25 2012, 02:54PM
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DSF wrote:

A few points:

1) Katz also owns the Edmonton Oil Kings and you can be damn sure they won't be playing at Northlands if Katz is operating a new arena. so your estimation of non-HRR dates is inaccurate.

2) You are assuming Katz would be nothing more than a tenant in Seattle when you have no basis to make that assumption. Chris Hansen is paying $275 million as his share of the arena but he is not doing it alone. Steve Ballmer of Microsoft and the Nordstrom department store family are part of his investment group. Katz could easily brought in as a partner and own a portion of the arena, the NBA franchise and, of course, an NHL team.

3) The funding being provided by the City of Seattle and the county is $200 million only if Hansen lands BOTH an NBA team and an NHL team. That funding is reduced by $80 million if an NHL team is not part of the equation.

4) $80 million dollars is a substantial motivator for Hansen to land an NHL team sooner rather than later and he could use any portion of it to lure an NHL team to Seattle.

5) I have no doubt that Edmonton WITH a new arena is a better deal for Katz but assuming Katz will be nothing more than a tenant in Seattle and will have to forego all non-HRR is not knowable at this time since there are many ways he could structure a deal in Seattle.

1) Katz also owns the Edmonton Oil Kings and you can be damn sure they won't be playing at Northlands if Katz is operating a new arena. so your estimation of non-HRR dates is inaccurate.

My estimate of non-HRR is inaccurate how?

WHL games are non-HRR and KG gets the revenues.

2) You are assuming Katz would be nothing more than a tenant in Seattle when you have no basis to make that assumption. Chris Hansen is paying $275 million as his share of the arena but he is not doing it alone. Steve Ballmer of Microsoft and the Nordstrom department store family are part of his investment group. Katz could easily brought in as a partner and own a portion of the arena, the NBA franchise and, of course, an NHL team.

Sooo Katz buys in for how much? He is getting the Edmonton arena for $0 down, so SEA is a worse deal.

Katz gets 92% of the dates at the new rink.

No way on gods green earth does he get anywhere near that in SEA.

Hansen is investing real $ and would want the commensurate non-NBA dates to service his debt.

3) The funding being provided by the City of Seattle and the county is $200 million only if Hansen lands BOTH an NBA team and an NHL team. That funding is reduced by $80 million if an NHL team is not part of the equation.

Relevance?

Hey look, a municipality that knows how to put conditions on its investment! Wish they were here.

4) $80 million dollars is a substantial motivator for Hansen to land an NHL team sooner rather than later and he could use any portion of it to lure an NHL team to Seattle.

Still doesn't give Katz more non-HRR dates than he gets here. Its not close.

5) I have no doubt that Edmonton WITH a new arena is a better deal for Katz but assuming Katz will be nothing more than a tenant in Seattle and will have to forego all non-HRR is not knowable at this time since there are many ways he could structure a deal in Seattle.

Its true that things are not knowable, and I'm glad you admitted that WITH an arena its not close.

That being said, Hansen has to service his debt and given that he's the lead investor he will take most of the non-NHL/NBA dates.

Its just common sense.

The deal that Katz refused is far, far superior than any tenancy agreement that can come from any rink.

Seattle is a bluff, and not a very good one.

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#4 Captain Obvious
September 25 2012, 12:09PM
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Why do you say the city isn't willing to pay for all of the arena? The old deal already had the city paying for everything.

There isn't any more room for compromise on the city's part. They've already given away the farm.

This is take it or leave it time.

If the Oilers take the deal. That's fine. If they leave. That's fine too.

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#5 spOILer
September 25 2012, 12:16PM
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Hey Woodguy,

The other thing Katz would lose by relocating to Seattle or another major American market is leverage.

Try using the fans love for their hockey team against one of the major American municipalities and see how far that flies.

Katz knows all of this. Like the Lemieux trips Gregor mentions, these veiled threats are nothing but smoke and mirrors. Council needs to hold firm (actually they need to back out, but I don't see that happening).

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#6 Captain Obvious
September 25 2012, 12:24PM
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The Seattle comparison really is funny, since the city of Seattle put up so much less of the money for that arena than Edmonton has already agreed to.

The fact is that the city of Edmonton made a horrible deal in comparison to what other cities have done. How can they give up even more than the worse deal ever?

I also find the notion that casino revenues would be devoted to the project offensive. That would represent a direct transfer of funding from community leagues (and hence rinks), preschools, kids sports, etc. to subsidize an already profitable industry. It would literally be stealing from children.

Only a person who lives in a vacuum would think this is a good idea.

I also am offended by the cretins on this board who think this is about capitalism or the free market. There is nothing "free" about government subsidizing profitable industries. I have no problem with Katz making money but he should do it on the basis of a free exchange of goods and services for money. By achieving government subsidies through extortion he's no better than a gangster and he should be treated as such.

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#7 -30-
September 25 2012, 12:42PM
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Jason as always the voice of reason in a sea of insanity.

Well said! You are my hero.

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#8 Kaiser Wilhelm
September 25 2012, 01:22PM
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Jason,

Your logical and well-thought out deconstruction of this bid is one of the better pieces of news I've heard this week. However, I'm still not convinced Markham might not be a option--and we know darn well they'll get fans. Thoughts?

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#9 Next up, is Connor McJesus.
September 25 2012, 02:27PM
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In the confines of City Hall, it's called negotiating, but on the streets of Edmonton it's called panhandling?

Mr. Katz is proof panhandlers can be very profitable...

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#10 Shredder
September 25 2012, 02:30PM
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I guess I should not be surprised, but I would say that readers/bloggers on this site are pretty biased around seeing the Oilers, whatever the cost.

Who wants my season tix for this year? I'll sell them to the highest bidder...

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#11 DonDon
September 25 2012, 05:51PM
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Woodguy wrote:

Who says it has to be local?

Calgary guy looking at buying NJD

Vancouver guy bought VAN.

Doesn't need to be local.

You are correct, it doesn't have to be a local buyer. A Vancouver guy bought the Dallas Stars, Tom Gaglardi of the Sandman Hotels. If the NHL decided that Katz couldn't transfer the Oilers to another city, perhaps another rich owner would step forward. See attached about the new Dallas Stars' owner:

http://stars.nhl.com/club/page.htm?id=83147. Sounds like a good owner. Have we heard anything similar from Katz?

I believe the City of Edmonton Council requires some outside expertise in the business affairs of the NHL to determine what is the right business deal for the City and the fans. Paula Simmonds made some very good points, even though some posters may disagree. Maybe the City should take over the responsibility to design and build the arena, rather than Katz. Katz isn't prepared to put his purported $100 million up front, wants a casino licence (which won't contribute similar dollars per the Pittsburgh model), wants an adjoining Oiler hockey training facility on expensive City land. Wants, wants, wants.

Time for the City to pause and rethink the deal. 30 years is a long time for the City to live with a bad arrangement.

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#12 pelhem grenville
September 25 2012, 11:50AM
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...why is it i don't fear the worst ?

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#13 Hammers
September 25 2012, 11:51AM
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RIGHT ON . Plus the Key arena is a dump to say the least . That wouldn't entice anyone in Seattle . I also said yesterday it was a bluff and if Katz starts playing that game the people in Edmonton need to boycot Rexall Drugs . Hit him in the one place that hurts . I bet of the 100,000 plus fans the Oilers have many go to Rexall . Pull that away and it would get his attention .

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#14 Tyler
September 25 2012, 11:58AM
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2004 was the second lockout. The first lockout was in 1994.

God I hate the NHL.

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#15 Next up, is Connor McJesus.
September 25 2012, 12:03PM
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This latest tactic must have NHL hockey saddling up next to the likes of Micheal Largue or Donald King.

Nothing says we're flying by the seat of our pants like this latest epic fail from Katz. Edmontonians are fortunate that they're not in Seattle representing the city.

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#16 spOILer
September 25 2012, 12:09PM
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Gregor said:

The Oilers aren't losing money. They are profitable, despite being the only team in the NHL that doesn't get non game-night revenue.

They get game-night revenue. All of the gate and 50% of the parking. They don't get concessions, but a chunk of that goes to charity.

The issue here is that when you own the arena, you don't have to include the game night revenue as HHR, which means Katz is taking a much bigger hit on his ticket sales.

This could be resolved by offering to sell Rexall to Katz at the end of the lease.

The Oilers are the #1 team in Edmonton, but in Seattle they'd be #5 behind the Seahawks, Mariners, Sounders (soccer) and the new NBA team. Seattle will be a viable option for a team that is losing money, but it would be a backwards move for the Katz Group to relocate there.

Why does no one ever include the Huskies, who are either 1st or 2nd on this list?

Florida, Columbus, Phoenix, NYI and many other teams have been losing money for years. Despite poor attendance, Florida makes a profit on their arena deal, see Elliotte Friedman's article from earlier today.

But your overall gist is correct, Jason.

I would love to see the City structure a deal similar to the one Seattle has for their new arena. Put Katz on the hook for the arena AND some of the infrastructure.

Bob Black said...

After more than four years of trying to secure an arena deal and with less than 24 months remaining on the Oilers' lease at Rexall Place, this is only prudent and should come as no surprise.

Because signing a new lease or buying the building aren't in the realm of possibilities? This is merely more pathetic posturing.

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#17 I'm a Scientist!
September 25 2012, 12:25PM
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The 2011 census had Edmonton (metropolitan) population 6th highest in Canada at 1.5 million. Quebec City was ranked 7th with 765,700. Will fans in Quebec who average $22/hour pay the same as fans in Alberta who average $27/hour? I doubt it.

I agree with everything in this article except the above statement. Ticket prices will be lower, but so will operating costs. The average wage of everyone maintaining the site would be lower, so the overhead would be lower. This argument doesn't work here.

The rest of the points are completely valid though. The chance that a team in Edmonton would move to Quebec before the american teams is just stupid.

I am tired of all the pissing matches that are occuring around me these days. All sides of all of these issues need to grow up.

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#18 Bicepus Maximus - Huge fan boy!
September 25 2012, 12:27PM
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Bob Black, as a professional is a lawyer, but his title in the Katz Group is Exec. VP of the Edmonton Arena Corp.

I wonder how much pressure is put on him to move this process along, and how much native knowledge he has about the NHL, specifically their stance on relocation.

Blatant, poor moves like this come from frustration and desperation. The only real question I have is; who and where are his advisers?

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#19 Rick
September 25 2012, 12:34PM
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It's largely accepted that an arena solution needs to be addressed with or without the Oilers.

Perhaps it makes sense at this point for the City to open some discussions with Northlands to see what a deal may look like with them.

The only way the Oilers could hope this bluff gets taken seriously is to know that Edmonton, without a new arena, would be off the NHL map.

Edmonton has options, even if they are considered lesser options. My bet is that if the City started to look at a deal with Northlands, the Katz group would snap to attention pretty quickly.

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#20 book¡e
September 25 2012, 12:38PM
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I'm a Scientist! wrote:

The 2011 census had Edmonton (metropolitan) population 6th highest in Canada at 1.5 million. Quebec City was ranked 7th with 765,700. Will fans in Quebec who average $22/hour pay the same as fans in Alberta who average $27/hour? I doubt it.

I agree with everything in this article except the above statement. Ticket prices will be lower, but so will operating costs. The average wage of everyone maintaining the site would be lower, so the overhead would be lower. This argument doesn't work here.

The rest of the points are completely valid though. The chance that a team in Edmonton would move to Quebec before the american teams is just stupid.

I am tired of all the pissing matches that are occuring around me these days. All sides of all of these issues need to grow up.

I imagine that the wages of the non-hockey playing employees on the team are not a major cost in terms of overall costs, however, ticket sales and advertising sales in the local region are the majority of the cost.

Unless Hall is willing to accept a 15% cut to pay in Quebec, Jason's point is valid.

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#21 I'm a Scientist!
September 25 2012, 12:47PM
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@book¡e

This is true, however the cost of all operations will be cheaper. Where there is a lower average wage, there is a lower cost of living. The cost of advertising will be cheaper. The cost of the guy running the zamboni, will be cheaper. The cost of the physio therapist, will be cheaper.

Might be a smaller percentage of the total costs however it all adds up and it can still be reflected in the bottom line (i.e. ticket price:profit ratio).

I don't want to argue about it - too much fighting these days, it really isn't worth it.

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#22 Truth
September 25 2012, 01:02PM
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This is getting ridiculous. It's embarrassing to be a taxpayer in the city of Edmonton that cannot agree to do something for the horrendous downtown.

I hope the mayor and all councilors get punted after Katz sells the Oilers to another EIG who can afford to keep the Oilers in Edmonton by way of the city paying the entire bill on a new arena. A new arena that is a slight upgrade to Rexall. The new EIG will once again be hardpressed to pay for top level talent because it does not own the arena or collect any revenue from it.

Big deal Katz is a billionaire, isn't that the reason everyone applauded his purchase of the Oilers in the first place? Someone that can afford the talent. Let him make his cut. If you are jealous, go buy an NHL team and do the same.

I don't look much into the exact numbers, but even if taxpayers were to pay for the entire arena and collect no "revenue" from the tickets being sold there I cannot see how this is a bad deal.

Imagine a 450M dollar statue that doesn't cost the city anything to maintain but will potentially generate billions of dollars in future revenue for the city through taxes and tourism. Not to mention is the talk of the town and everyone around wants to come see it. How is that bad, even if the statue maintenance contractor gets to collect a fee and can make/lose money?

If Edmonton and its citizens are this stupid I will gladly leave this city for one that has some self respect. Hell, I might even follow the Oilers to Quebec City and watch them play in an arena paid entirely by us Albertans.

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#23 Shredder
September 25 2012, 01:13PM
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@Truth

While your rant is a good one, and certainly feels like similar frustration to my own, I would caution you not to eat up to much of Bob Black's press. Yes it's nice to see a viable owner...but he's not taking any risks with his own money here. And that's how business works: you take a risk, you get a reward. Katz is pretty one sided in asking the City to take the risks, and he gets profits and subsidy's, not to mention the fees from running it.

While having a nice arena downtown will be great, it has been proven not to generate tourism or other gdp for the area. But I do agree with you on a lot of other items such as having an item of pride.

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#24 Tim in Kelowna
September 25 2012, 01:27PM
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Gregor, great read. People seem to be very worked up about this issue, it's good to see a journalist who has kept an even keel. This is just part of the process- I fully expect Katz and City Council to have an agreement in place by Oct 17.

But there is one aspect of this Seattle visit that isn't sitting well with me. Any idea why Gretzky was involved in this bluff?

I understand that attending the football game was planned well in advance, but if I were The Great One, I wouldn't have gone anywhere near KeyArena with Katz. It just seems like an unnecessary hit to his sparkling reputation in Edmonton.

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#25 DSF
September 25 2012, 01:39PM
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Woodguy wrote:

Don't forget the most important point in terms of SEA/EDM.

In Edmonton Katz get 335 dates to sell in the new rink. 45 dates for hockey and up to 290 dates of non-HRR of revenue.

In Seattle they would be a tenant in the new rink and *might* get some revenue on the non-hockey nights, and certainly no where near 290 dates as Chris Hansen will want that revenue to service his $200MM debt on the arena.

Most NHL teams that lose money on hockey, make lots of money on non-hockey events at the arenas.

Elliott Freidman says that even FLA is profitable as an organization because of non-HRR.

Only NYI and EDM do not control their rinks in the NHL.

No way on earth Katz walks from an arena he controls to just be a tenant in Seattle.

72o indeed.

A few points:

1) Katz also owns the Edmonton Oil Kings and you can be damn sure they won't be playing at Northlands if Katz is operating a new arena. so your estimation of non-HRR dates is inaccurate.

2) You are assuming Katz would be nothing more than a tenant in Seattle when you have no basis to make that assumption. Chris Hansen is paying $275 million as his share of the arena but he is not doing it alone. Steve Ballmer of Microsoft and the Nordstrom department store family are part of his investment group. Katz could easily brought in as a partner and own a portion of the arena, the NBA franchise and, of course, an NHL team.

3) The funding being provided by the City of Seattle and the county is $200 million only if Hansen lands BOTH an NBA team and an NHL team. That funding is reduced by $80 million if an NHL team is not part of the equation.

4) $80 million dollars is a substantial motivator for Hansen to land an NHL team sooner rather than later and he could use any portion of it to lure an NHL team to Seattle.

5) I have no doubt that Edmonton WITH a new arena is a better deal for Katz but assuming Katz will be nothing more than a tenant in Seattle and will have to forego all non-HRR is not knowable at this time since there are many ways he could structure a deal in Seattle.

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#26 DMan
September 25 2012, 01:46PM
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DSF wrote:

A few points:

1) Katz also owns the Edmonton Oil Kings and you can be damn sure they won't be playing at Northlands if Katz is operating a new arena. so your estimation of non-HRR dates is inaccurate.

2) You are assuming Katz would be nothing more than a tenant in Seattle when you have no basis to make that assumption. Chris Hansen is paying $275 million as his share of the arena but he is not doing it alone. Steve Ballmer of Microsoft and the Nordstrom department store family are part of his investment group. Katz could easily brought in as a partner and own a portion of the arena, the NBA franchise and, of course, an NHL team.

3) The funding being provided by the City of Seattle and the county is $200 million only if Hansen lands BOTH an NBA team and an NHL team. That funding is reduced by $80 million if an NHL team is not part of the equation.

4) $80 million dollars is a substantial motivator for Hansen to land an NHL team sooner rather than later and he could use any portion of it to lure an NHL team to Seattle.

5) I have no doubt that Edmonton WITH a new arena is a better deal for Katz but assuming Katz will be nothing more than a tenant in Seattle and will have to forego all non-HRR is not knowable at this time since there are many ways he could structure a deal in Seattle.

Valid points - but you forget that Katz would have to (at least on the outside) attempt to find a local buyer prior to moving the team... I'm sure Gregor's source would be pretty reliable and considering (as much as it pains me to say something good about him) Bettman's stance on keeping the Canadian content of the NHL consistent - I don't think much of what you're speculating is viable.

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#27 DSF
September 25 2012, 02:02PM
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DMan wrote:

Valid points - but you forget that Katz would have to (at least on the outside) attempt to find a local buyer prior to moving the team... I'm sure Gregor's source would be pretty reliable and considering (as much as it pains me to say something good about him) Bettman's stance on keeping the Canadian content of the NHL consistent - I don't think much of what you're speculating is viable.

Yeah.

It would seem that the Mayor has put October 17th as his line in the sand to have a deal done so, if it isn't, the next move I would anticipate is Katz offer to sell the team to local interests.

Who knows who that might be?

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#28 oilerman53
September 25 2012, 02:23PM
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Its funny and ironic that any city east of Saskatchewan in Canada can get an arena. Its borderline ludicrous to think that cities like Markham ans Quebec City are closer to getting an NHL sized rink that's world class and do not have an NHL team to occupy said structure. Furthermore these buildings will receive some sort of subsidy be it from any level of government where everyone knows in Canada that the oil rich province of Alberta basically drives our economy.

So while Katz is flying off to Seattle, Hamilton, Vegas, Denmark, Amsterdam or what have you. Our city council is farting around trying to find ways to turn us on Katz? Over money people barely see anyways? Wasn't it just six years ago when Alberta gave back $400 per person on the Ralph bucks? This is stupid, everyday that this arena deal goes on with no resolution Edmonton and Alberta moreover look like morons. With state of the art buildings in place for Markham and Q City. Where the hell do they think the public subsidy monies are coming from? North of us mostly in Fort Mac and our oil reserves. Edmonton is looking more stupid and stupid by the minute, the Oilers are this city's biggest claim to fame.

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#29 DM
September 25 2012, 02:31PM
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DSF wrote:

Yeah.

It would seem that the Mayor has put October 17th as his line in the sand to have a deal done so, if it isn't, the next move I would anticipate is Katz offer to sell the team to local interests.

Who knows who that might be?

Doubtful at best... Last year - the Oilers brought Katz (I'm assuming before tax) income of $18 million... With the current CBA focusing on cutting player salaries - I would assume, with everything being equal - that number would grow slightly as his margins would increase...

What motivation would he have to sell a profitable organization?? I doubt he gets fed up, packs up his marbles and marches home if he doesn't get a new arena...

He really doesn't have too much leverage to negotiate with anyone in regards to moving the team... He has one of the few NHL organizations that makes money... He has a team that has filled a 16,500 arena for three years straight... He has a market that would fill an 18,000 - 19,000 arena as well...

Simply put - the city has to simply stand its ground and continue to negotiate in good faith... As I've said before - $225 million for a $450 million facility works for me considering the benefits the arena would bring... I'd even go as far as to supporting council on building the facility themselves and having Katz sign on as a tenant... That would be an uber-agressive move on the city's part - but I'm sure that move alone would bring Katz to the table - should he want a building where he can dictate the who's, where's and how's...

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#30 Jon W
September 25 2012, 02:38PM
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Markham is not in the equation because any team moving to the Toronto market would have to pay BIG fees for the right to move there. As relocated fees would be charged and then proximity fees in the case of Ontario based teams would make that move at best minuscule.

Quebec you have to add taxes to over all costs. So no do not believe this bluff. A year ago I was a Katz booster for the new arena but a ticket tax is not HIS contribution and so he is NOT putting in half. As Black argues.

I could rant forever on the moves of the last few day I am really disappointed with the Oilers and their PR department and Mr. Katz in particular. Man up dude.

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#31 Woodguy
September 25 2012, 02:55PM
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DSF wrote:

Yeah.

It would seem that the Mayor has put October 17th as his line in the sand to have a deal done so, if it isn't, the next move I would anticipate is Katz offer to sell the team to local interests.

Who knows who that might be?

Who says it has to be local?

Calgary guy looking at buying NJD

Vancouver guy bought VAN.

Doesn't need to be local.

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#32 Mark-LW
September 25 2012, 03:06PM
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Shredder wrote:

While your rant is a good one, and certainly feels like similar frustration to my own, I would caution you not to eat up to much of Bob Black's press. Yes it's nice to see a viable owner...but he's not taking any risks with his own money here. And that's how business works: you take a risk, you get a reward. Katz is pretty one sided in asking the City to take the risks, and he gets profits and subsidy's, not to mention the fees from running it.

While having a nice arena downtown will be great, it has been proven not to generate tourism or other gdp for the area. But I do agree with you on a lot of other items such as having an item of pride.

I wouldn't say he is taking zero risk. A 35 year deal to keep the Oilers in the city of Edmonton is not zero risk. Go ask EIG how profitable the Oilers were when the the Canadian and Albertan economy weren't doing as well as they are now.

You can't say that there will be a profit every year running an NHL franchise in a small market (yes, we are a small market by population) Canadian city that cuts cheques in US Dollars.

If in 20 years the Loonie drops to $0.65 and our player payroll is at $150 million that means Katz is paying $230 million for payroll PLUS all operating costs of running the team (equipment, travel, board, etc..). This is a very real scenario - see 2002 - and is a very real risk. Meanwhile The City of Edmonton still gets to keep NHL entertainment on their list of things to do in the city.

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#33 B-Co
September 25 2012, 03:09PM
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Why are you comparing an individual seat price to the cost of two seats?

"You can get 'a' ticket in the 2nd deck for $46/game in San Jose. If you want 'a pair' of individual seats in Edmonton in the same section it will cost you $135.50 each."

So a proper comparison would be: Pair of Tickets in Edm: $135.50 Pair of Tickets in SJ is $92.00 (Same seating section)

Now looking at that I would say that there is not a huge difference in the ticket price considering SJ is an average at best hockey market. I'd say those are surprisingly high actually. Please compare properly.

Buying a new house on the North side costs $350,000 but buying a pair of the same houses on the South side costs $800,000! How can anyone afford to live on the South side!

Hah! I'm kidding of course, I assume it was an oversight by the author, or at least I hope it was.

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#34 B-Co
September 25 2012, 03:22PM
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Holy crap it is, wow individual prices are crazy high. Face value on season tickets are way lower than that.

Well I take it back then!

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#35 Shredder
September 25 2012, 03:24PM
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Mark-LW wrote:

I wouldn't say he is taking zero risk. A 35 year deal to keep the Oilers in the city of Edmonton is not zero risk. Go ask EIG how profitable the Oilers were when the the Canadian and Albertan economy weren't doing as well as they are now.

You can't say that there will be a profit every year running an NHL franchise in a small market (yes, we are a small market by population) Canadian city that cuts cheques in US Dollars.

If in 20 years the Loonie drops to $0.65 and our player payroll is at $150 million that means Katz is paying $230 million for payroll PLUS all operating costs of running the team (equipment, travel, board, etc..). This is a very real scenario - see 2002 - and is a very real risk. Meanwhile The City of Edmonton still gets to keep NHL entertainment on their list of things to do in the city.

Valid point. Over 35 years anything can happen...however did you know that should the team go into insolvency (such as in the case of Phoenix) the contract with the city that states it will stay in town will be void. Not that Katz wants to go bankrupt. Having your cake and eating it too is a good starting point for negotiations, but it's a tough one to understand as a place to dig your heels in.

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#36 book¡e
September 25 2012, 03:28PM
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Mark-LW wrote:

I wouldn't say he is taking zero risk. A 35 year deal to keep the Oilers in the city of Edmonton is not zero risk. Go ask EIG how profitable the Oilers were when the the Canadian and Albertan economy weren't doing as well as they are now.

You can't say that there will be a profit every year running an NHL franchise in a small market (yes, we are a small market by population) Canadian city that cuts cheques in US Dollars.

If in 20 years the Loonie drops to $0.65 and our player payroll is at $150 million that means Katz is paying $230 million for payroll PLUS all operating costs of running the team (equipment, travel, board, etc..). This is a very real scenario - see 2002 - and is a very real risk. Meanwhile The City of Edmonton still gets to keep NHL entertainment on their list of things to do in the city.

This is not a real scenario being put forth by anyone credible.

I deal with economists and planners who make projections for a living. The low end projections for Alberta see a pretty long steady trajectory of growth for the province. Projections for the Canadian vs the USA dollar would suggest that a $0.65 dollar is about as likely as a $1.35 dollar. So, the risk of Katz making extra boatloads of money are about the same as the possible losses.

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#37 book¡e
September 25 2012, 03:37PM
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http://www.theglobeandmail.com/sports/hockey/globe-on-hockey/gretzky-probably-zero-chance-oilers-are-relocated/article4567733/

Gretzky basically saying that the team is not leaving Edmonton and that he was in Seattle because he was asked to a football game.

The undertone of the article is that I think he is a bit pissed off that he was drug into the negotiating process by Katz and Lowe.

Good of Gretzky to basically pull the rug out from under Katz' threat to move the team.

I apologise for calling him Katz' Boy Toy earlier today.

Until I hear otherwise, however, I am going to assume that Lowe is essentially Katz' luggage carrier.

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#38 Mark-LW
September 25 2012, 03:44PM
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@book¡e

I didn't realize national economies were so predictable over a third of a century. I must have missed the predictions of the 2008 meltdown back in 1992. If it's a 50-50 that the Loonie goes down as compared to up, that's still a risk in my view.

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#41 book¡e
September 25 2012, 04:08PM
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Mark-LW wrote:

I didn't realize national economies were so predictable over a third of a century. I must have missed the predictions of the 2008 meltdown back in 1992. If it's a 50-50 that the Loonie goes down as compared to up, that's still a risk in my view.

never mind

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#43 OilClog
September 25 2012, 04:19PM
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Gretz should just buy the team.

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#45 Reg Dunlop
September 25 2012, 04:40PM
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Perhaps we are reading the situation wrong. Maybe Katz knows the lockout will be multi-season so he relocates the oil, then relocates OKC to Edmonton so the fans he respects and cares so deeply for can still watch RNH and Ebs and the boys. Since NHL lockouts will from now on be the norm, Katz is actually doing us a favour by placing the best available pro team in North America on display 40 nights a year in his beloved hometown.

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#46 NHL / NHLPA
September 25 2012, 04:45PM
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Tyler wrote:

2004 was the second lockout. The first lockout was in 1994.

God I hate the NHL.

We don't care because we're wearing our hater blockers and we know you will spend your money regardless is there is a season this year or not.

Yours Truely,

The NHL & and NHLPA

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#47 Word
September 25 2012, 04:46PM
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If the Oilers move to QC, I bet we (Albertans) would end up contributing the same amount to the team via taxes as we would if Edmonton City Council simply paid for the entire arena upfront.

Yay equalization payments!

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#48 mikezanier
September 25 2012, 04:52PM
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Mark-LW wrote:

I didn't realize national economies were so predictable over a third of a century. I must have missed the predictions of the 2008 meltdown back in 1992. If it's a 50-50 that the Loonie goes down as compared to up, that's still a risk in my view.

http://worthwhile.typepad.com/worthwhile_canadian_initi/2012/01/nhl-ticket-revenue-relocation-and-exchange-rates.html

You can use your view or that of an economist. Actual respected economist says your theory is wrong.

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#49 jr_christ
September 25 2012, 04:54PM
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Jason Gregor is the shizzzzzz

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#50 jr_christ
September 25 2012, 04:55PM
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mikezanier wrote:

http://worthwhile.typepad.com/worthwhile_canadian_initi/2012/01/nhl-ticket-revenue-relocation-and-exchange-rates.html

You can use your view or that of an economist. Actual respected economist says your theory is wrong.

come on... no one respects an economist

JK

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