RX2: THE ARENA DEAL TAKES A POSITIVE STEP

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.
  • russ99

    It seems as if they are still a long way off to figuring this mess out. It doesn’t surprise me at all. It just goes to show you that the city and Northlands are not that pumped about the whole deal. If katz were smart he should scrap the downtown deal, and buy some less lucrative land and do his entertainment builing with his own money at a lower cost. He’ll receive 100 percent of the profits and get or start a mgmt crew to run the show. No offence to those that think the world of this new arena. But really who wants to hang out in grubby old downtown Edmonton. Revitalization or not, that area is a dumping ground for heartache, vandelism, robbery, theft, hookers, and drugs. How is one arena going to cure ten square blocks of disease? Move the arena to the old air port site, and update that so called race track at the same time!

  • russ99

    I really don’t get why Northlands interests are being protected here.

    Is Northlands putting any money into the arena?

    Is Northlands putting any money into downtown redevelopment?

    Besides, if the Oilers move downtown, Rexall is still a viable venue for what Northlands does. They’d only have to deal with competition, just like in every other market.

    Seems to me that the Katz group is going well past what is expected of ownership to get something done, while Northlands is resting on whatever grip they have in the community.

    Just hope the city realizes what’s going on before they end up in bed with Northlands and no hockey team.

  • russ99

    Cost of building a new arena is 400 million. If you take out the 100 million Katz is offering, that leaves 300 million.
    Cost of a rexall renovation with no katz support is 250 million

    In the end the city would save 50 million to reno rexall.

    Also, shouldn’t the provincial gov be pitching in some of the revenues from the proposed casino?

  • PhillipSmithson

    Hi Jason or other knowledgeable sports person,

    I watched all of the proceedings on TV. Obviously a handful of counsellors believe their job is to represent Northland’s interests first, and the citizen’s interests second.

    What or who is “Northlands”. Are they a corporation? Are they an elected body? NAre they a not-for-profit chariy? How did they come to hold so much power over our elected counsel? Who’s backing them?
    It was discouraging to see the original motion to get amended to include Northlands in the negotiations

  • russ99

    Any retard that sits at home and thinks for one second that the 450 million to this rink is a waste of money needs to simply put their NDP hats on tighter and read Karl Marx again.

    FACT: The oilers will not last past 2014 in Edmonton without a new arena. google Quebec City and Winnipeg.

    FACT: As much as i LOVE the greyhound bus stations and the empty lot ajacent to it, This new project would revitilize downtown Edmonton, not only for that section, but would give a new direction and business model going forward for an entire rebirth of the downtown core.

    FACT: This is OUR TEAM. Who the Eff are we to have gone through all the crap we have since peter puck left only to pinch our pennies now and let the team leave in vain. Day 2 after this team leaves, all the dead beat idealists that try to block such a business deal like thios arena will be thick in the throat and thinking twice.

    FACT: Charge a stupid 5 dollar fee on my ticket. What do i care, ticketmaster already charges like 3 times that, and i don’t see them stepping up to fund the arena.

    Simply put, this needs to happen. Stop thinking about OMFG MY PROPERTY TAXES WILL GO UP 4% NEXT YEAR!?!?!?!, they will anyways, for some stupid project that will take 10 years to complete (cough cough anthony hendey) and will cost millions more to maintain once done. Let the increase next year and the years after MEAN SOMETHING. Id much rather have this debate again in 30 years when the new building is outdated, then sit crying in my oilers jersey 9 years from now like every Jets fan in winnipeg subjected too moosehead games, ugly women, and a football who won the grey cup…. uhh… when?

  • PhillipSmithson

    The biggest thing needed to get a new arena/entertainment district in Edmonton is guaranteed revenue from more than just the Oilers. Other cities such as Vancouver, Montreal and Toronto are larger population centers and can easily fill their venues.

    Thankfully no one has compared the situation here compared to U.S. cities. State laws there are very different. There these large arenas are subsidized and given tax benefits to encourage developers to build in their cities, which is a lot different than here.

    Should tax payers foot the bill, no. But I like the percentage idea, whatever percentage an investor puts in is what they get in revenues (less operating cost) per year. IE: Katz puts up 200 mil. out of a 1 billion dollar building cost (20%) then he gets 20% of the revenues less the annual operating cost. That way if the City of Edmonton puts in say 30% they then have income coming in each year to go towards the debt of the building. Find investors to put in money and offer back revenue payouts annually. (Who knows who you can find, there are quite a lot of 50 million Lotto Max winners floating around recently..)

    • One needs to remember that the current Rexall Place is the 2nd businest arena in north america, behind the staples center I believe. I would assume with a new state of the art arena would be just as busy if not busier attracting bigger shows/concerts/etc. So it doesn’t matter that Vancoiuver/Montreal have bigger markets, we’re already got a busier arena.

      I think the city will benifit from a new arena being built downtown, and thus in turn should have some level of involvement in the cost of building it. But what level is the part that is up for debate.

  • I wish Khabi all the best buuuuuuut…… I would shriek in girlish joy if it turned out that the Oil could run with Deslauriers and Dubnyk for a full year next season. Yes, it would help with another high draft pick but more so it would indicate which goalie to keep.

  • R.A. Slapshotzky

    Fist!
    and Fist ever.

    Lets hope this arena happens. Downtown Edmonton is a wasteland compared to Calgary or Vancouver. Edmonton needs a vibrant downtown to offset the “mall”.