Downtown arena: who’s paying for it?

Next Thursday May 6th, the Katz Group will host a public open house at the Art Gallery of Alberta showcasing their plans for the Edmonton Arena District from 11 am to 8pm. The goal is to provide the public an opportunity to learn more about the amenities of the District and provide detail on what it will look like, including parking, traffic flow and some conceptual drawings.

It’s great that the Katz Group wants to showcase their vision on what should be a wonderful downtown district, and a facility/area that should revitalize the downtown core. However, there will be no presentation on the most important factor: Who will fund it?

I have no doubt the Edmonton Arena District (EAD) will be spectacular and is something the city needs, but when you go look at an open house, what’s the first question? How much will it cost?

We’ve all been car shopping or house hunting, or even window shopping in the mall, and no matter how much we like the car, house or pair of jeans we always look at the price tag. If you can afford it, you’ll buy it. If you can’t then normally you don’t.

Regardless of how spectacular the EAD looks, if the Katz Group wants taxpayers to fund it, but the Oilers get to own it, it won’t fly. Earlier today on the TEAM 1260, Patrick LaForge mentioned the following projects that have benefited their respective cities. But in these three cities, the majority of the funding for the arena or the development was private.

Here’s an excerpt from the Lighthouse Project’s website.

How much will the Lighthouse project cost Nassau County, and how will it affect the County’s budget? Nassau County will NOT be providing ANY financial support for this project. Currently, the County loses $1.5 million on the Coliseum and has no money in its budget to improve the Coliseum or the surrounding area. However, the Lighthouse will help the County’s budget, creating a profit from the lease of the Coliseum and generating millions in incremental tax revenues, putting the Coliseum back on County tax rolls.

I’m curious why the Katz Group would have an open house, without determining where the funding will come from first. I’m not ignorant enough to realize that negotiating through the media is the right way to go about securing financing, and I’ve been told that talks are ongoing concerning who will fund this project, but why show the people what the project will look like if it isn’t a guarantee to come to fruition?

I’m on record as saying I’m all for the construction of an EAD. I think our city needs it and our residents deserve it, and if taxpayers have to pay a portion of that, I’m all for it. The open house will be informative about traffic, parking, and the design, but it won’t answer the question that most will want an answer to: How much will it cost?

And until the question is answered, the Oilers and the Katz Group need to be careful about comparing the EAD to any other districts, because if you compare it to one that is predominantly privately funded it will be difficult to sell Edmontonians on funding the EAD through municipal taxes.

Fake news: can you imagine…?

The Edmonton Oilers announced they have relieved long time anthem singer Paul Lorieau of his duties, effective immediately.

Management feels the Oilers slow starts in home games can be directly attributed to Mr. Lorieau. On several occasions, the coaching staff had tried to pass along last minute instructions to the team, only to be told the following:

"Quiet! I’m trying to listen to the F’ing song!"

— Larry in Sherwood Park

  • Bucknuck

    Everyone gets so worked up about this. Negotiations are full of back and forth. Of COURSE Katz is going to start by asking for what he wants. He would be dumb to do anything else, and the man is no dunce.

    I fully expect that he will not get what he is asking, and I think the man knows it as well. You just start low and build up.

    There will be a developer come out of the woodwork that will only sign on if the city does “x”. It will be an armtwisting event of epic proprtions, but I believe there are enough people pushing the agenda that it will happen, adn the argument of who will pay will take on many different aspects as new players get introduced.

    Now you have oodles of underground parking in the downtown core that will mostly only be required by the facility in the evenings. What is the going rate for parking downtown? That will be a rather huge revenue generator I would think. I believe that will be one of the major points of the great debate.

  • Ducey

    What is lost in all of this is that Edmonton needs to decide whether they want to keep the Oilers. Is this the kind of thing you want an extra $75/ yr whatever dollars going to.

    If you don’t want the Oilers, then really there is nothing to talk about. If you do, then we have to find a way to keep them.

    There is no threat to move the team (in fact Katz seems to love Edmonton) but at some point the team is going to need a new building.

    Who is going to build it? You may say Katz should, but he could move to any number of cities that have new areas or would build him one in a second (Hamilton, Quebec City, among others). Why would a business pay $400+ million to stay here when they get subsidised elsewhere? Jan Reimer never figure this out and most of the businesses we had moved elsewhere.

    As much as he might love Edmonton is he supposed to pay for the cost of the Oilers, bankroll any losses (I don’t know if there are any), buy the land, build the rink all just because he is from here? (That would be about $700 million) At some point it becomes a break-even propostion at best and he is essentially becoming a philathropist rather than a businessman. You would be asking him to do what you yourself would not be willing to do.

    Maybe Northlands will build it. The problem there is that Northlands is a public company. If it takes a loan, we take a loan, if it loses money, we lose money. So the public has to pay here anyway – with no contribution from the owner and in a terrible location.

    I might point out that some people on council are in a terrible conflict here – ex Tony Caterina – he sits on the Northlands Board and Rexall is in his ward.

    Last estimates I heard were that it was going to cost $250 million to fix Rexall. Who is going to pay for this? You are. Why not try and build a new building in the right location rather than fix up an old one?

    Gregor, to answer your question about why they have not announced a funding model you should review the history here. Everyone got up in arms originally about the funding and there was no plan as to location or what the project would look like – therefore there was no idea of the costs involved. As well it would seem the funding model has not been decided upon.

    It seems reasonable for us to figure out what we may want. Then we can figure out if and how we can afford it.

    • Bucknuck

      There probably isn’t a quicker way to turn the people off of public funding support for an arena than to introduce the threat/possibility of the Oilers moving elsewhere if they don’t get a deal done.

      Either the Oilers are viable here or they aren’t, a new larger arena would certainly increase their profitability but I am not sure it does anything for their viability.

    • Jason Gregor

      Curious where you get the notion that Winnipeg, Quebec or Hamilton would just build a rink?? Do you have any prove of that, or just wishful thinking.

      Did you notice that Balsillie was going to renovate Copps Coliseum with some money coming from the city/government but most from his own pockets.

      Answer me why you think it is okay for us to pay for the RINK, buy the tickets which subsidize most of the team’s revenue and then just let the team get all of the revenue?

      Why is this so great of an idea?

      I’m all for the team staying here, but the deal has to make sense for all the parties.

    • Jason Gregor

      Gregor, to answer your question about why they have not announced a funding model you should review the history here. Everyone got up in arms originally about the funding and there was no plan as to location or what the project would look like – therefore there was no idea of the costs involved. As well it would seem the funding model has not been decided upon.

      It was a rhetorical question. Of course they don’t have a funding model. That was my point, showing what the rink will look like without any funding in place is a PR move. Nothing wronig with it, but that is what it is. THey are hoping the public will love it so much that they will want to pay for it.

      And the fact is it doesn’t really matter what most of us tax payers think. The Katz Group needs to influence and sway city councillors. Those 13 people will vote on this and decide if it will go through. And at this point, many councillors aren’t on board.

    • Deep Oil

      Ducey, your argument is weak due to the fact you need league approval to move a franchise only after alternative local ownership has failed. Former EIG owners would purchase this team back at current market rates $135 million or less, as Katz did three things wrong, purchased the team on emotion/ego, during the boom, and bid against himself.

      I don’t understand why some of the posters refuse to acknowlege the examples that LaForge has presented with 80 – 85% private funding.

      Anyone that wishes to acknowledge Northlands, might not understand that this organization will close the horse racing and lay off more people, as all they will have left is the Agricom – Expo Centre, the axis of power will shift to the private sector via AEG from Los Angeles.

      • Deep Oil

        There is virtually no chance the former EIG would step up again and even less of a chance that Bettman would allow the franchise to be sold at $135 mil. You’re living in a fantasy world if you actually believe otherwise.

        However, none of that actually matters now does it?

        As for aknowledging the 80-85% private funding, what does it matter?

        It may be an poorly calculated move for the Oilers to use the examples they did in regards to setting themselves up for a direct comparison but again, in the grande scheme of things it matters little as long as any deal Katz and the City hash out makes sense.

  • Bucknuck

    As I live few thousand km away and no idea of the pulse of the people there in Edmonton, is there any discussion around the possibility the city and Katz can’t agree and it doesn’t get done at all? Would it be possible (has Katz or representatives of his group ever hinted) the team may be moved???? Or is this a “come hell or high water a deal will get done” sort of situation?

  • Deep Oil

    I think a part of the problem is some councillors are still friendly with Northlands. I’m not too concerned about Northlands, if they can’t stand on their own, maybe they don’t deserve to be in existence. And by the way, the $1 tax was just to simply illustrate the kinds of things that could be done to help finance the arena for the city. Perhaps the city could negotiate a cut of the revenues until the loan is paid off, etc. These are conceptual ideas we are throwing around here, not absolutes.

  • Jason Gregor

    In all of this why doesn’t Katz go to the city and say here is what we propose you guys get the funding for all the Condo’s Buisness rental extra and the CITY makes the money off them Katz gets the funding for the rink and owns that then he can turn around and charge the city a land fee for all those condos buinesses exceta that locate there. In this model the city funds everything BUT the rink, but they also get all money from sales rentals taxes exceta and Katz charges the city for the use of the land he builds his own rink and gets all money from every event.

    • Deep Oil

      Ya, something like that would be fine by me, whatever makes economic sense for both sides. This is just negotiating by Katz, he floats an idea, gauges public opinion, then revises it and floats a better idea, until everyone is on board. Just like he did when buying the Oilers. I feel confident something logical can be hammered out for both sides.

  • Ogden Brother Jr. - Team Strudwick for coach

    One of the richest provinces in Canada and we can’t get government funding? Heck Vancouver government paid what 400mil for a roof of a CFL team. Provincial and federal government is to fund part of a new arena in Quebec city that is to be used for their non-existent NHL team.

    Not saying government should pay for the whole thing, but if my tax dollars are to be paying for a freaking arena in Quebec then why not here?

  • Ducey


    To be clear, the Katz people are not threatening a move, I just mentioned it as the logical conclusion if we don’t build a rink in the next 15 years.

    Here is a link: Quebec city is going to spend $400 million to build a rink to lure an NHL team. Some of this will be your money as I expect the Feds will participate in some way.

    I would expect that Southern Ontario could easily do the same thing. Its all good to say Basille would only use some public funding (easy to say) but who built Copps Coliseum in the first place? Public Money.

  • Ducey

    Answer me why you think it is okay for us to pay for the RINK, buy the tickets which subsidize most of the team’s revenue and then just let the team get all of the revenue?

    All that will change from the present is that you might have to pay for some of the Rink. My understanding is that you will likely own it as well. You will likely get the benefits of it through economic spinoffs (increased taxes from land, businesses, etc) that will pay for it eventually. How fast is part of the argument.

    The other part is a value judgment. Just like why is it okay to bail out GM?

    You look at all the beneifts the team brings.

    A new arena district will likely do something for downtown, increase property taxes, help bring business and people downtown. This has beneifts on a lot of different levels including economic. You will notice the Chamber of Commerce likes the idea and I bet it is because they know it will help their members.

    The City has bid for the Expo (this has created no outrage) but we are going to spend a billion on a party that will last a few weeks in the hope of creating profile for the City. The legacy will be a few buildings on the South Campus of the U of A. Right now the U of A is trying to find funding to put on classes in the buildings they do have.

    What gives the City more profile internationally? Expo or the Oilers? What is going to cost more? The contrast is stark and frankly makes you wonder why everyone is so excited about an arena but couldn’t give damn about Expo.

    Is it okay for us to pay for Horse racing at Northlands? Is it okay for us to build an Art gallery or Winspear? Is it okay to lose money on Indy? Is it okay to build an overpass so that everyone can spend their money at South Edmonton Commom? Is it okay to take a loan for a new arena?

    I guess your answer could be no to all of these questions but sooner or later this town has to do something other than fix potholes if it wants to be a top end city.

    • Ducey

      Huh? The land that the arena is on will go up in value. It essentially a big flat parking lot. The neighbouring land value will go up too.

      If they build a few office towers and associated structures that will increase land values as well.

      The assumption is that people will stay downtown until game time and then go out after the game is valid I think. Right now there is no where to go after a game (at lease on foot).

      The notion that each person has $X dollars to spend on entertainment and there will a corresponding loss of revenue elsewhere in Edmonton is plainly false. If people are spending more money downtown some of this may reduce the amount they spend at WEM but it may also reduce the amount they spend on a trip to Vegas or elsewhere, the amount they spend on a Rogers PPV of a MMA fight, the amount they spend on a produuct made elsewhere, or whatever. These things add little to the Edmonton economy.

      Add in increased outside visits from people wanting to experience a game (or concert), the casino, a revitalized downtown, and I think it will easily increase economic activity and therefore tax revenue.

  • Crackenbury

    Wow. One blog about ownership issues and who’s paying for what and I’m about to blow my brains out. I think one of the worst things that ever happened in sports was making players salaries public. It’s turned everyone, including the media, into business moguls.

  • Heavyd

    This arena will get built. The Katz group is having this open house, amongst other things to get people acclimatized to the idea and have them beleive it is a fait accompli.

    S_Dub, the increased property taxes will result from buildings with higher value situated in the area than exist there now. The cities property tax take from that run-down area is likely not very substantial.

    This arena will get built, either while the Oilers are here, or after they are gone and people start to ask for a new arena to attract an NHL team-just like Winnepeg now and Quebec City which I believe is trying to get an arena built for that purpose.

  • MrCondor

    Rather than go to their neighborhood BPs to watch the game, or to Whyte or Jasper aves, people may go to the arena district. While the corresponding gain or loss may not be exactly equal, that money comes from somewhere. The increased property taxes generated by people and businesses moving to the arena district would be generated elsewhere in the city – and other places or future developments will see a corresponding loss.

    While people spending money on entertainment in the arena district may not directly correspond with money they would have spent elsewhere in the city, the idea that people would change their plans from a trip to vegas or to purchase a product is laughable. Furthermore, are all the chain restaurants, shopping, and real estate management companies operating in the arena district keep all their revenue in Edmonton? Hardly.

    All I am saying is you have to look at the NET increase in property taxes as a whole to get an idea of the true value to the city of such a complex, not simply focus on the gross increase in civic revenue generated by a civic funded revitalization which primarily benefits private business interests.

  • Heavyd

    I’m a huge hockey fan and would love to see an arena downtown but what is overlooked in all of this is the proposed surrounding real estate. Two or three proposed office towers would have a devastating effect on the Edmonton office market. After the construction of Commerce Place and Canada Place, it took almost 25 years for the office market to get back into balance. The reality is there are no tenants for 2 new towers. Tenants may move to the new buildings from other buildings but its still creates a backfill glut, which in turn lowers lease rates and ultimately lowers the tax base of other downtown towers. The Katz Group talks about all the new taxes that will be generated, but reality it is just shifting the base. The same goes for the retail and hotel components of this. I can’t see how this can be pubicly funded when it will benefit the Katz Group and the Oilers at the detriment of other companies who may lose tenants and income as a result of this. If they want to built it with their own money, I’m all for it but there shouldn’t be a dime of taxpayer money going to it.

  • Ducey

    I agree we need to look at Net impact.

    The slowdown of the commercial office market in Edmonton was caused by the Jan Reimers of this city as much as anything. If we would make an effort to actually attract and keep businesses from going elsewhere, there would not have been an issue.

    While we were building a composter and focusing on potholes, Calgary was busy actively stealing Telus etc away from us. In fact, I know a few CEO’s who regularly get calls from Calgary politicians asking them to move to Calgary. In Edmonton we treat them with distain. I would hope we wouldn’t continue the trend with the Oilers.

  • Heavyd

    I pay taxes and this question comes to mind. When was the last time my taxes didn’t go up? Does the public think that if this project is kaboshed that next years taxes won’t go up? This year its 6.5 %. Next year probably another 6.5%. This city has created alot of misery for itself with its expansion at all costs in the past 20 years. only problem with that thinking was that past councils did not worry about who would pay for all those new roads, sewers and buses and everything else. Now Mandels mantra is densification. More people in the same space. What does this got to do with what were talking about you ask. Well if this council really wants people to move into the downtown core they have to make it more appealing. An entertainment district, with a new arena as the focal point of the area goes along way to drawing those people downtown.Bars, restaurants, live music, a winter garden, and other attractions certainly could do that.Thats the problem isn’t it. Its alot of what ifs. If we build will they come? My vote is maybe.

    • Pajamah

      The Caps are easily team #2 in my world, and unless Alzner and Carlson become defensive stalwarts, they’ll continue to be in serious limbo as to whether or not they can take the next step.

      If Semin can get you Shea Weber, do it

      If Mike Green can be traded for anyone within 40 points of him, and can play solid defensively, do it.

      Varlamov wasn’t the problem, and while it remains to be seen if their goaltending is good enough to win a cup, its their defense that is letting them down, big time!

        • Pajamah

          It was, and it wasn’t. Halak shut down the weapons, and full marks to him. But both Habs goals were scored because of defensive lapses, one lead to Fehrs penalty in the first, and Green leaving te puck to hit Lapierre, while Carlson watched Moore outhustle him.

          There weren’t many shots on Varlamov, but they had good chances when they did have shots, and that is on Washingtons shoddy defense.

          However, fixing their defensive game doesn’t stop or change what Halak, Gill, Gorges, and Markov did to them

  • The whole argument about revenue “shifting” being a false positive impact assumes zero growth for business and further, population. Are we not a growing city? Why do we keep assuming everything is going to remain static? If we want to grow shouldn’t we have a bigger vision than “fixing potholes”? Shouldn’t we be building for the future instead of waiting for it?

    In my opinion the flaw with Katz’ approach is that he assumed that the approval process could be achieved by his lobbyists. I mean, look at the communication lead, Janet Riopel. She’s a corporate communications specialist who doesn’t really have a clue about external/consumer marketing.

    So many mistakes have been made. They launched the public campaign by saying “I have a dream”. Problem is, the dream wasn’t very well articulated. Then you have Daryl, a guy who isn’t very comfortable in front of a camera doing an interview in high-end designer sportswear, sitting against a marble background and pointing his finger at the camera repeatedly.

    And of course they ignited the funding issue by pitching out hypothetical scenarios instead of hammering out a couple of possible (and realistic) angles to start with. In lieu of anything solid, they let the public’s worst fears take over the conversation.

    They should have launched the project at the AGA next week (I’m going to try to make it). And they should have shut up about funding until they had something more concrete to work with.

    Its a good vision in principle. One that I’d be proud to have some of my tax dollars going toward. The rest we don’t know about yet so I think its going to take a step back to re-set on all sides.

    • Agreed. The PR and strategy has been goofed up (Katz was a real turn-off in that video) but it still will be a great asset for the city, my city. I was born here, I have a subdivision named after my ancestor, an Edmonton bushpilot named McConachie.

      My point is that it’s easy to get on board when the city I’m already proud to call home, makes strides to get even better. I hope council doesn’t sell the farm, but I don’t mind if a back 40 gets dickered away.

      I’m impressed the preliminary design concept is as far along as it is — they are going to have to build like hell if the arena is to be ready in time for when Eberle, Seguin, Gags, Horc, and Khabby drink from the cup.

  • I’m stranded in Regina wondering the following:

    1. Do I have to now agree with Gregor that Crosby is better than Ovechkin now that Washington has shat the bed?

    Answer: No–I’d still take Ovie in a hearbeat.

    2. Will it stop snowing long enough to permit me to fly home tomorrow?

    Answer: Probably not–good thing I’m staying across the street from the Casino

    The longer I stay here the more tempted I’ll be to buy one of teh dozens of Eberle team Canada jerseys that I see.

  • Pajamah

    Why do you have such an issue with the open house? I think it is a great idea to give the public (the public that will say “I don’t want to pay for an arena that I won’t use) an idea of what the development will look like, what other uses it will have (other than hockey) and what it will do for downtown development and re-vitalization.

    Before they even give is an estimated cost they need to convince a high percentage of tax payers and counsellors(sp) that the city needs this rink.

    The job of a car/house salesman is to sell the buyer on all the benefits of the car/house BEFORE getting to the negotiaton on pricing. That seems to be exactly what Katz is doing…sell the benfits than decide who pays.

    PS…would the profits of the casino not go towards the rink? Why or why not?