They’re The Same Face

29 Oct

Ok, this is getting embarrassing. In today’s Edmonton Journal, David Staples, for what seems like the millionth time, has written about the supposed virtues of the arena district in Columbus, Ohio. In doing so, Staples once again references an academic paper by Professor Brad Humphreys, of the University of Alberta, as evidence that an arena district can be a financial boon to a city. This is what Staples wrote:

After studying the Columbus model, two economists, the University of Alberta’s Brad Humphreys and fellow researcher Xia Feng, found that pro sports facilities can bring important economic benefits: “A new state-of-the art facility integrated in a comprehensive urban redevelopment program and located in the heart of a large city might be expected to generate increases in residential property values near hundreds of millions of dollars within a mile of that facility, if the location, planning, construction, and development is carried out carefully.”

What’s so frustrating is that I wrote two posts about Columbus in August, and one of those posts dealt quite specifically with the Humphreys’ paper on Columbus, and the important items Staples was leaving out in discussing that paper. For example, Staples glossed over the fact that:

1) The paper was a working paper. It had not been subject to the peer review process, an essential step in the validation of any academic work. Professor Humphreys’ methodology and conclusions have not been screened and looked over by the people who understand these issues best: his colleagues. 

2) The paper did conclude that residential property values were higher in proximity to Nationwide Arena, but it also included a great big, giant caveat that they could not determine how much of that was due to the arena and how much was due to the fact that the arena was downtown.

3) The paper did not take into account the 75-100% property tax abatement provided by the City of Columbus to encourage people to live downtown (Nationwide Arena received a 99% tax abatement).

4) A similar study Humphreys cites in his paper found no effect on property values from the new football stadium in Dallas.

5) A simple calculation shows that even if the increase in property values was a result of the new arena, it was not enough to offset the cost of the facilities.

Most importantly, I showed that even if you take all those other caveats away, you simply can’t “make an argument that the City should invest tax dollars into an arena because it will get more money back from an increase in property taxes. It won’t, because an increase in property values in one part of the city leads to a decrease in property values in another party of the city, and because the City of Edmonton doesn’t collect property taxes in the same way as Columbus.”

All of these items have been cut and pasted from my previous posts. The posts have been sitting here for the world to see for over two months. David Staples reads this website. Yet at no time have I seen him address the points I brought up in my two Columbus posts, points which I have now been forced to make again. They certainly weren’t considered in his article today. Instead, Staples is doing what he’s done on the arena issue since he started covering it: sticking by a case that is at best an outlier, choosing personal experience over sound academic research, and ignoring anything that might get in the way of the narrative he has constructed in his head and in his columns. He’s never applied any real level of scrutiny to the claims made by those in favour of a downtown arena. He’s never looked at cities like Cleveland, Baltimore, Detroit, Washington or even New York City, where massive public subsidies for sporting facilities have done little to nothing in terms of “revitalizing” the areas around them (he chose to visit two cities recommended as case studies by the Katz Group and the loaded Arena Feasibility Committee). Recently, he also decided to speak to a single source—the decidedly pro-arena Mayor Stephen Mandel—before declaring in a story that the arena project was gaining momentum. All this, from the Journal’s new urban affairs columnist.

In 2008, sociologist Rick Eckstein released an article noting that mainstream media are “noticeably biased toward supporting publicly financed stadiums, which has a significant impact on the initiatives’ success.” He stated that:

“This bias usually takes the form of uncritically parroting stadium proponents’ economic and social promises, quoting stadium supporters far more frequently than stadium opponents, overlooking the numerous objective academic studies on the topic, and failing to independently examine the multitude of failed stadium-centered promises throughout the country…”

I can’t help but read that quote and think of David Staples. I also can’t help but read that quote and think of the coverage the downtown arena issue has received in the mainstream media, in particular at the Edmonton Journal.  Has the coverage become more critical over time? Yes. Writers like Paula Simons and Scott McKeen definitely changed their course over the years and started asking for more from City Hall and the Katz Group. The problem is that, from the very beginning, media like the Journal framed this issue in a way that was extremely beneficial to the pro-arena side. And we’ve never gotten away from that. It’s never been framed in terms of a government bailout or corporate handout. Instead, it’s always been framed by the media as finding a solution to the “problem” of downtown. But that gives credence to what is ultimately a false dichotomy. It’s not arena district or nothing. It’s not arena district or horrible city. And it shouldn’t be that the Oilers get a new hockey arena because Edmonton needs to revitalize its downtown core. That’s illogical, and framing it that way has been a disservice to Edmontonians.

I’ve come to realize that David Staples is never going to stop writing pro-downtown arena articles. Nor will John MacKinnon. David’s heart and eyes have told him that what has “worked” in Columbus will work here. John wishes Edmonton was Montreal and wants a stadium close to where he lives (Todd Babiak’s call for a benevolent dictator to build a new arena still has me baffled). That’s fine. But it would be nice if the Journal found some other voices to chime in on this matter. Maybe tasking some writers to dig a little bit deeper, to provide a little more objectivity. To frame the issue in a new way. At the very least, I’d like it if they found a voice that did something other than bang the same, erroneous drum about Columbus over and over again. I don’t think that’s too much to ask, when it comes to matters of this importance.

***Update*** The blog post title for Staples’ story is even more bold in its declaration: “A downtown arena can be a jewel for Edmonton, but only if best practices are followed.” Yes, a jewel. Gag.

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20 Responses to “They’re The Same Face”

  1. Martin Levenson January 25, 2011 at 10:22 am #

    Does NOBODY remember what happened when Triple 5 Corp built Eaton Centre (now City Centre Mall-West)?

    The citizens of Edmonton were promised office and residential towers and a major hotel on the site. Never happened, despite the fact that the city honoured its side of the bargain by providing tax holidays and other incentives.

    Oh, yeah, we did get the Delta Hotel, but that is certainly not on the scale that was promised. And the justification for NOT building those extra towers was that there was no economic case for doing so.

    And, considering that there are no new hotels or office and residential towers currently being proposed by the MARKET, it seems obvious that there is STILL no economic case for extra buildings.

    So why are proponents of the downtown arena saying that these buildings will be built?

    Fool me once, shame on you. Fool me twice, shame on me!

  2. Todd Babiak November 1, 2010 at 4:53 pm #

    Andy, you know I didn’t call for a benevolent dictator to build the arena. Re-read the column. Be honest with your parenthetical shivs. All I said is that large, audacious projects in Western Europe were built by kings and queens. It’s harder in a democracy, with all these people demanding to be consulted, respected, not sent to live in a van down by the river, etcetera.

    • Andy Grabia November 1, 2010 at 11:00 pm #

      I honestly have no idea what you were trying to accomplish with that post, Todd. I wasn’t lying about the baffled part. I assumed you were playing around, but the last two sentences threw me off. Do I think you were advocating a dictatorship? No. But do I think you were suggesting that city hall ignore the will of the people in building an arena? I’m honestly not sure.

    • The Other John November 4, 2010 at 11:17 pm #

      Todd

      Let’s call the issue like it is. S Mandel did not run for a mandate for a new arena. In fact he could not have said less if he tried on this issue. If a plebiscite was run on this issue, Rexall could not garner 40%. So instead we are asked to fund 80 % of a facility for a private businessman. That’s is simply ridiculous to write

      And if the commercial redevelopment does not work. We are screwed financially!!! The Oilers, not so much.

  3. The Other John October 31, 2010 at 10:35 am #

    Andrew

    I did not call out Ms. Simons.

    Where one repeatedly sets out all of the arguments in favour of a particular side of an argument, and ignores the facts on the other side of the argument, they are typically called an advocate.

    Nor did I misstate the facts.

    The Bell Centre and the Canadiens was bought for $575 million. The point of my raising Montreal is that the owner of that team is the owner of the building AND paid for both the team and rink themselves. Which is precisely what happened in Toronto and Vancouver as well. It is called private enterprise.

    Does anyone find it surprising that the team is not paying the bulk of the costs of a new arena with the City being asked to chip in 20 or 25%? That is still not private enterprise but the size of the subsidy(75%) is troubling.

    As to the second $100 million, that will be directed to the commercial development and may or may not ever occur. That is called the marketplace. If the market place will not build 2 office towers and 2 hotels there, and it will not, Rexall will not spend the “announced” second $100 million dollars.

    The announced second investment of $100 million dollars will be Rexall’s money and all profit or loss will be Rexall’s alone. I have ZERO issue with what they do with their money. That is decidedly not what is happening with the new arena — 75+% of the cash is the City of Edmonton’s money and the success or failure of the commercial redevelopment is the ONLY way we, the taxpayers of Edmonton, generate sufficient money to service the HUGE debt associated with the new arena.

    I am puzzled that you do not see that as a risk but I certainly do. Particularly where no one in the media is asking tough questions as to the underlying demand for projects identified as underpinning the commercial redevelopment like the office towers, hotels. Because no redevelopment, no money to pay our debt

    How the City of Edmonton is seriously contemplating a $350-400 million dollar subsidy to a private business is astonishing. I am also strongly suspect that it is contrary to the Municipal Government Act.

    • Andrew November 8, 2010 at 10:39 pm #

      All sorts of fallacies and strawmen in your post OLJ.

      You’re assuming…no, stating bluntly…that the City will be subsidizing the Oilers to the tune of $350-$400 million.

      Did you pull that number out of your ass?

      If you’be been following the debate, even in a cursory way, you would have run across the concept of ticket surcharges and seat licenses.

      Let’s assume for a moment that the surcharge is $5 per ticket for every event in the arena.

      Now let’s assume the arena seats 19 thousand for hockey and is sold out for 45 games a season.

      There’s $4.275 M per annum right there. Over 20 years…that’s $85.5M.

      You with me so far?

      Now, let’s assume an average attendance for all other events of 10k for another 150 events a year. That’s another $7.5M per year or, over 20 years, $150M.

      So, over 20 years, we’ve generated $235.5 million in “user pays” revenue.

      Now, let’s reasonably assume the City borrows $300M from the province at prime -2 which is entirely plausible.

      Let’s also reasonably assume that an arena district tax levy raises (conservatively) $10 million/year over 20 years. That’s $200 million.

      Do you think the City is taking a huge risk if it borrows $300 million at historically low interest rates with an easily reachable revenue stream of $585 Million over 20 years?

      I haven’t even touched on seat licenses because I assume that would be a revenue stream for the Oilers.

      • The Other John November 14, 2010 at 4:01 pm #

        Sorry Andrew

        Did not realize you were going to try the math argument. It does not work even using the high surcharge you suggest. Let’s start with really basic concepts. The City is borrowing the money and will have to pay interest on that borrowed money. Have you noticed any desire by the Provincial government to get involved in this project that I missed? Because if the infrastructure lending rate is not available to the city they are going to be paying 5% or so on this project. If you want to pay off $350 million dollars in 25 years it will be a MERE $ 2 million dollars a MONTH. Read that again. A MERE $ 2 million dollar a MONTH

        If the loan is not locked in long term at low rates and interest rates go up to 8 to 10 % the carrying cost would be $3.0million per month.

        You are worried that I am not following the debate.

        I am worried that you do not understand what borrowed money and interest rates and payments are.

        Do you pay a mortgage because if you did, you pay an awful lot of interest on the front end of a long term debt. But not if you pay prime – 2 UNLESS interest rates go up. Then prime minus 2 could be $ 3 million a month

        Are you still with me?

        Not sure where you get another 150 nights a year from, but suspect it is an iteration of Rexall being given Northlands concert business. In the real world that is called confiscation but I suspect the $ 7.5 million generated there sounds pretty optimistic but everything related to this MASSIVE public subsidy is optimistic.

        So using your optimistic numbers you raise $11.050 million but our MONTHLY payment at an existing 5% is 2.045 million a month……… So we are $13,million short a year

        We get to your second last conservative number. Or at least what you say is a conservative number……10 million a year in increased taxes. There is no businessvcase for 2 new office towers. There is no business case for 2 new hotels. And we already have the Baccaratt Casino on the location and it will be moved.

        If your conservative numbers were really conservative, Katz could find a bank to finance the building. But he can’t.

        Delighted you did not touch personal seat licenses and luxury box presales. Where in the world do you think Rexall’s $ 100 million is coming from.? Yup from the season ticket fan base.

        So, there is not a conservative business case that can be made for this project and there never was. Looking forward to discussing this if the project goes forward. We will lose our shirts financially and people like yourself will be nowhere to be found.

        Let’s not assume a 19000 seat arena, when the indications are more likely at 17,500 or 18000. I have no difficulty with using your $5.00 game surcharge. That raises a gross figure of $4,050,000.00. With me so far? Less your annual borrowing costs of $ 2.5 m which leaves $1.55 million to pay down your $ 350,000,000.00 Capital Cost.

  4. Andrew October 30, 2010 at 7:14 pm #

    “But that gives credence to what is ultimately a false dichotomy. It’s not arena district or nothing.”

    “Think the Molson family is going to look West with envy when they had to pay $575 million in 2009 for the team and arena when Katz gets both in Edmonton for a mere $280 million?”

    In an article that is highly critical of those who disagree with you and attacks their integrity you may want to be a little more factual and a little less misleading.

    “It’s not an arena district or nothing”. What are you basing that wild speculation on? Have you even considered the alternatives? If so, what are they, what will they cost and who is going to pay for them?

    Your comparison of the Molson family buying the Canadiens and a state of the art 21,273 seat arena that is the 6th busiest in the world is just another example of your fundamental lack of understanding of economics or just another intellectually dishonest attempt to paint Katz as a misanthrope.

    Forbes (not perfect but certainly more credible than any source you provide) last valued the Canadiens at $339 million U.S. so in effect, the Molson family purchased a far grander version of what is being proposed for downtown Edmonton for $169 million while Katz has indicated he will invest $200 million into the arena district.

    It’s also important to point out that the extra 3,000 seats, over and above what is proposed for Edmonton, in the Bell Centre at, say, an average ticket price of $100 over 200 dates a year would generate an additional $60 million a year in revenue and that doesn’t include such things as concession revenue etc.

    While I admit I don’t have the information available to accurately calculate the above revenue, I’m sure you’re at least honest enough to admit there may be a significant difference between apples and oranges.

    You also need to bear in mind that the Canadiens operate in a far larger market than the Oilers and, as such, will have significantly higher revenues from local broadcast rights, merchandise sales, etc., etc.,.

    I would expect the Molson family might very well look west and laugh all the way to the bank.

    It’s disturbing that you can call out individuals like Staples and Simons without once acknowledging that your own intellectual probity is such a shambles.

    • Andy Grabia October 30, 2010 at 8:15 pm #

      In an article that is highly critical of those who disagree with you and attacks their integrity you may want to be a little more factual and a little less misleading.

      It’s disturbing that you can call out individuals like Staples and Simons without once acknowledging that your own intellectual probity is such a shambles.

      It’s kind of difficult to take anything you’ve written seriously when you can’t even tell that I didn’t write a single word about the Molson Family, Montreal or the Canadiens.

      Average ticket price at Habs games is $86.44, btw.

  5. chartleys October 30, 2010 at 4:01 pm #

    Please keep us posted on any city meetings regarding this process. It’s pretty clear this thing will be ram-rodded through without a critical mass showing up to draw some actual attention to the ‘nay’ vote of this. I for one hope I’m in town to attend and I will beg, borrow and drag anyone I can out as well.

    I used to own a house just behind where all this proposed new development is going to take place. I’m not sure how you would get a hold of him but I honestly think you would get some excellent insights from the Central Mcdougall community president. His name is Wayne something or other…Wish I could remember. This guy has some extremely sharp views and has an astounding amount of knowledge fighting with development boards and such. A lot of the work he’s compiled for free has been on the desks of Mandel and the like. I used to have a brilliant isometric of a northern edge redevelopment plan and even some development proposals and documentation regarding this exact model and some of the inherent flaws with it and in the LRT Nait expansion line. It is likely going to create a dead zone the way they are currently going. The LRT stuff actually found that the way they are running the line coming above ground and turning, is actually out of the technical specs.

    I think you would get a very interesting perspective if you managed to track him down. I’ll mention it to Fish as well…

    Thank you for doing this man!

  6. Chris October 30, 2010 at 3:11 am #

    I think we need more taxpayer subsidizing here cuz otherwise we’re gonna end up worse than Columbus. Seating-wise, that is.

  7. Chris October 30, 2010 at 3:09 am #

    That Columbus game the other night has almost no one sitting in actual seats in that arena.

  8. Paula Simons October 29, 2010 at 8:36 pm #

    Now normally, I would let you boys fight in out among yourselves — I am a mother with 14 years experience, after all. But Andy, I don’t think I’ve changed my tune on the arena. I’ve been a skeptic about the site and the funding model from the beginning — and I’ve been loudly skeptical in the pages of the Edmonton Journal – and in our editorial board discussions. I didn’t have a road to Damascus moment. I’ve long argued that the site, so close to trendy 104th St, and to GMU, is the wrong one. And the idea of building on both sides of 104th Ave strikes me as absurd. On top of that, I’d like to flatter myself by thinking that I more or less led the public howling, when Katz proposed his first funding model, and his first blank-cheque zoning proposal.
    I’ll continue to raise these questions, in print and on-line. But I don’t think I have the same appetite you crazy hockey boys do to write on this topic. So much else on my beat….

    • Mike W October 30, 2010 at 9:38 am #

      From your Nov. 16, 2006 article:

      “How do we get the right mix of private investment and government support to make such a dream a reality? LaForge is so right. A city doesn’t get many opportunities for urban renewal like this. Let’s start talking now about how to make the most of it. Thirty-six years ago, Edmontonians debated and rejected the idea of a similar downtown facility called the Omniplex. Is it time to resurrect a little Omniplex spirit? Only Edmontonians can say.”

      Granted, you’ve been a consistently cautious voice about the arena, but I think it’s fair for Andy to say that you’ve “started asking for more from City Hall and the Katz Group.”

      • Andy Grabia October 30, 2010 at 6:55 pm #

        I also think it’s fair to say that the readers and writers of Covered in Oil, mc79hockey, Colbycosh.com and Battle of Alberta, along with the Canadian Taxpayers Federation, would object to your declaration of leading the public howling, Paula. We’ve all been writing and talking about this issue since you first wrote the trial balloon column on Nov. 14, 2006.

  9. David Staples October 29, 2010 at 10:56 am #

    Humphrey’s study wasn’t alone in stating success of Columbus district?

    http://glennschool.osu.edu/news/bluejackets.html

    Are you trying to tell me that arena district in Columbus wasn’t a massive success?

    Is that your opinion, that it did little to revitalize that downtown?

    Much to admire in Columbus. Of course, you’re right that it’s the best case we’ve seen. But if I don’t see us heading down the path where best practices are used here, as I make crystal clear in my column, I won’t be supporting the project, nor should anybody.

    If I do see best practices employed, I’ll fight hard for it.

    P.S. Any sociological work on the attitude of non-msm bloggers to arena districts;

    I’m sure it would be enlightening to generalize about bloggers as well.

    • Andy Grabia October 29, 2010 at 3:04 pm #

      Humphrey’s study wasn’t alone in stating success of Columbus district?

      Yeah, I covered that in the first Columbus post, too, David. Let me cut and paste for you again:

      “Staples also referenced a study by the John Glenn School of Public Affairs at (The) Ohio State University, which reported that property values in the Columbus arena district had shot up by 267% in ten years. Scott Hennig at the Canadian Taxpayers Federation has already scrutinized the findings, but I’ll add that Staples failed to mention that the study was paid for by the Columbus Blue Jackets and the owners of the arena district, Nationwide Realty Investors. Not really a surprise, then, that the result of the study saw the arena district as having a positive economic effect on the region.”

      I’m sure it would be enlightening to generalize about bloggers as well.

      Well, it was media coverage of 16 cities and 23 stadiums, but if you want to call that a generalization, go ahead. You could also check out the recent paper by Dan Mason on the subject if you don’t want to believe me or the sociologist.

    • The Other John October 29, 2010 at 3:38 pm #

      Staples

      As a columnist you are given the freedom to opine on issues relevant to the City of Edmonton. You are not free to divorce yourself from the facts. And yet you repeatedly do it, article after article after article.

      Would love to see some attempt at balance out of you but it has become clear that is not going to happen. The only news organization that would call your views balanced are Fox News and, no, that is decidedly not a compliment!

      You cite Columbus and ignore almost every sports facility that did not work. You ignore the redevlopment subsidy the City extended to that project. You ignore the complete lack of demand for new office towers downtown in Edmonton. You ignore the fact that there is no demand for new hotels downtown. Yet both of those projects – office towers and hotels, are the “hook” to the ancilliary commercial development at this site.
      Suspect even you would agree…. moving Baccarrat Casino from one spot on parcel to a diferent spot on parcel is not commercial development or “revitalization.

      And the commercial redevelopment, the taxes that flow from that redevelopment is the ONLY way the City can fund its #$350 million subsidy of this private business.

      Once the arena is built, please explain in a logical manner what economic incentive the Katz group has to expand the commercial development? They are not land developers. Additionally they will have complete control of a new arena that will churn out $115 million in revenue. At little or no cost to Rexall Sports. Little cost if personal seat licenses and luxury suite presales do not generate the full $100m Rexall contribution.

      Suspect but do not know that with control of arena Rexall Sports will simply say– too bad about the commercial marketplace not willing to build but it is simply the business reality.

      Think the Molson family is going to look West with envy when they had to pay $575 million in 2009 for the team and arena when Katz gets both in Edmonton for a mere $280million? Course that happened in Quebec the Canadian home of private enterprise….wait you say that’s Alberta’s claim to fame

      These are not hard facts to check out. But I would recommend you not stop using Steve Mandel or Darryl Katz as your source for the facts.

Trackbacks/Pingbacks

  1. History Repeats: An Edmonton Case Study « alex abboud.com: a Blog on Ideas, Cities, and Innovation - September 30, 2012

    […] Like now, proponents toured what were considered the model sites across North America at the time. […]

  2. Alberta’s Community Revitalization Levy: Proposed Downtown Edmonton Arena District at MasterMaq's Blog - December 17, 2010

    […] I encourage you to read through the report. Of course, the findings are not without dispute. You can read another perspective on Columbus here. […]

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