Live And Let Die

2 Oct

“While paying lip service to downtown revitalization the complex is in fact just another destination shopping center, blocked off from the surrounding community. You drive there, you park your car, you stay inside the complex, and you leave. You don’t integrate yourself with the surrounding community. You don’t patronize businesses in the neighborhood. Drive. Park. Shop. Leave. That’s it.”

Some excellent posts from Los Angeles residents about L.A. Live, the AEG-built stadium district so often touted by the Katz Group and others as an ideal case study for a downtown arena district in Edmonton. I recommend reading the comments, too.

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Waste Not, Want Not

30 Sep

“The fans want to get to the other (fiscal) side. That’s what I get in my e-mails, about 99 per cent in favour of a new system. They tell us to fix the NHL, so we’re going to try and do it.” —Patrick LaForge, President & CEO, Edmonton Oilers, September 17, 2004

“Today, our board of governors gave its unanimous approval to a collective-bargaining agreement that signals a new era for our league, an era of economic stability for our franchises, an era of heightened competitive balance for our players, an era of unparalleled excitement and entertainment for our fans.” —Gary Bettman, NHL Commissioner, July 22, 2005

“In the hockey business, expenses are somewhat similar across all teams, given that the single largest component of expense are player salaries, which are bound by a cap and floor, calculated based on league wide Hockey Related Revenues.

As a result, hockey is a business where the operator does not have much discretion over its most significant cost item.”Paul Marcaccio, EVP & CFO, Katz Group, July 21, 2010

———–

Well, that story has certainly changed over the past five years. It didn’t take long to go from “we need cost-certainty or we’ll die!” to “we have cost-certainty!” to “cost-certainty is killing is!” As Matt noted, it’s pretty galling to have an NHL owner complain about the restraints of the Collective Bargaining Agreement, the salary cap and revenue sharing after they locked the players out for a year in order to achieve that exact goal. Cost-certainty was the endgame that fans were told would save the game of hockey. Now we have an owner saying it’s not enough, and that he needs non-Hockey Related Revenues, which can’t even be used to operate the team*, to survive. We’ve gone through the looking glass, down the rabbit hole, and drunk every bottle in sight.

During the presentation to Edmonton’s City Council on July 21, Mr. Marcaccio claimed that “Daryl Katz has had to subsidize the team by several million dollars in each of the past two years in order for the team to break even,” and that “sustainability can only be addressed by a new arena….” Having already examined the NHL’s Collective Bargaining Agreement, we can move past the question of how exactly one can aid the Oilers on-ice product by getting more non-Hockey Related Revenue (you can’t), and instead focus on the ways the Oilers might lose money that have nothing to do with getting revenues from a Coldplay concert. I don’t actually believe that the Oilers are losing money, at least not in a way that is anything other than fancy accounting, but since they refuse to be transparent and open up their books, I thought I’d take a look at ways in which their own mismanagement may be affecting their bottom line.

Spending Too Much

The NHL has a salary cap and salary floor. In the CBA, they are called the “Upper Limit of the Payroll Range” and the “Lower Limit of the Payroll Range.” Teams are required to spend above the salary floor, but below the salary cap. There are almost no exceptions to this, which makes the NHL’s a “hard” cap system.

Looking at the charts below, one can see that over the past five years, since the end of the NHL lockout, the Oilers have spent over 90% of their cap limit in every single year. Over the past three years, it’s been over 97%, making them the 6th, 13th and 7th highest spending teams in the league in those years. Last year the team spent $58,855,000, which actually exceeded the salary cap (they were allowed to do so because of long term injuries to players on the team). They didn’t need to spend that much money. They could have spent $5 or $6 million less without anyone complaining. In fact, considering the results, they probably should have done just that.

Year Cap Max. (Millions) Floor (Millions) Oilers Payroll
2005-2006 $39 $21.5 $35,604,891
2006-2007 $44 $28 $40,929,194
2007-2008 $50.3 $34.3 $49,747,000
2008-2009 $56.7 $40.7 $55,208,000
2009-2010 $56.8 $40.8 $58,855,000
Year % of Cap Used Payroll Ranking NHL Standings
2005-2006 91.3% 16th 14th
2006-2007 93% 22nd 25th
2007-2008 98.9% 6th 19th
2008-2009 97.4% 13th 21st
2009-2010 104% 7th 30th

Not Making The Playoffs

Looking at those same charts, one sees that the Oilers have only made the playoffs once since the lockout. That was the first year after the lockout, when they went to the Stanley Cup Finals. Every other year they’ve missed the playoffs, often by a wide margin. In fact, last year they spent $58.86 million dollars on the worst team in the NHL. So while they’ve been investing an enormous amount of money in player salaries, they are not getting any return in terms of additional playoff revenues.

Spending Poorly

In the chart below, I’ve listed a few examples of expensive contracts the Oilers have signed, extended or attempted to sign since the lockout. This is not an exhaustive list, and not all of the contracts on it have been bad decisions hockey-wise, but it’s a list that reinforces how little a team that claims to be broke has worried about being frugal. And this list only shows the overall contract value, which averaged out over the length of term would indicate the cap hit the team must take on the contract. It doesn’t show how the individual contracts are structured, and how that may affect the bottom line from one year to the next. Shawn Horcoff’s cap hit is $5.5 million a year, for example, but he doesn’t get paid that much every year. The Oilers paid him $7 million in 09/10, and will pay him $3 million in the last year of his contract (14/15). Structuring his contract that way may make sense hockey-wise, but it’s easy to see how frontloading that contract may negatively affect the bottom line of the 09/10 Oilers.

Player Year Term/$
Michael Nylander 2007 ≈ 4 years/$22 million
Thomas Vanek 2007 7 years/$50 million
Dustin Penner 2007 5 years/$21.25 million
Sheldon Souray 2007 5 years/$27 million
Lubomir Visnovsky 2008 5 years/$28 million
Marian Hossa 2008 ≈ 9 years/$80 million
Shawn Horcoff 2008 6 years/$33 million
Dany Heatley 2009 5 years on 6 year/$45 million
Nikolai Khabibulin 2009 4 years/$15 million

One response to all of these examples is going to be that Daryl Katz has not owned the team for the entire post-lockout period. This is true. The Edmonton Investors Group (EIG) owned the Oilers until the spring of 2008. But the argument isn’t just about the Daryl Katz-led Oilers being financially viable. It’s about the Oilers being financially viable in the Edmonton market. Furthermore, in the time Mr. Katz has owned the team, the team payroll has continued to rise (right now the Oilers payroll for 10/11 is $54.4 million, or about 91.6% of the cap limit), he’s tried to sign players like Marian Hossa to huge, expensive contracts, and his team has won 65 of 164 hockey games. Rather than sending out his CFO to make the claim that the team is losing money, and that only a new arena will make professional hockey sustainable in Edmonton, Mr. Katz should probably consider spending less, spending smarter, and putting in place managers, coaches and players who can take his team to the NHL playoffs.

***Cap numbers taken from NHL Numbers and Cap Geek.***

*Note* Please read this link for errors I made in the writing of this post.

The CBA

29 Sep

Edmonton’s arena debate – more particularly, the financing aspects of the debate – is not going on in a vacuum. Rather, it’s being influenced by the economic incentives built into the National Hockey League’s Collective Bargaining Agreement, or CBA. The CBA is an important document to consider when discussing the proposed plan for a downtown arena, yet it hasn’t yet appeared on the radar of local media, politicians and the general public. Here, then, is a breakdown of that agreement, and how it affects the ongoing arena discussion here in Edmonton:

1) The CBA is the labour agreement between NHL owners and the NHL Players Association (NHLPA). It covers everything from the length of the NHL season to the NHL salary cap. The current version was agreed upon following the lockout of 2004-2005, and will expire in September of 2012.

2) The NHL is not a normal, competitive market. It’s more like a socialist utopia: by signing the CBA, the players and owners have agreed to a “fair share” of league-wide, Hockey Related Revenue (HRR). That fair share is fixed, depending on the amount of revenue the league brings in. It’s described perfectly here:

In most competitive markets, having your business generate “big-city revenues” while other competitors have lower revenues would give you relatively more money to invest in your enterprise, or more money to flow to the bottom line. But the NHL is not a normal market.

The market is distorted by the player’s fixed share of hockey-related revenues, and by the revenue sharing system.

Under the CBA the biggest cost – player salaries – is a fixed-proportion of league-wide revenue. Earn more revenue and you’ll ultimately pay more in salaries and more in transfers through the sharing system. Earn insufficient revenue, and your shortfall will be made up by revenue sharing.

3) Here is how the league-wide revenue is divided: for every dollar that’s labeled “Hockey Related Revenue” (HRR), the owners have to pay 56 cents to the players. With the remaining 44 cents they pay their expenses and make their profits. HRR is the operating revenue that owners use to run their teams.

4) The definition of HRR is outlined in Section 50.1 (a) of the CBA, and it is comprehensive. From sweaters to seats, television to Internet, almost any way a club can earn money is considered HRR. In addition, if anyone invents a new stream of revenue (i.e. the next Internet), that’s included in HRR, too.

5) There are some exceptions built into the agreement – revenue sources that aren’t called HRR, and where the owner gets to keep 100% of the cash (found in Sections 50.1 (a) and 50.1 (b)). These are the non-Hockey Related Revenues (non-HRR). Non-HRR cannot be used by the owners to run their teams.*

6) By far the largest exemption is for the financial benefits public authorities can create through arena building and renovation. To use two contrasting examples:

  • If a public authority pays a team $10 million a year to locate or stay in a community, all of the $10 million is counted as HRR. The owner keeps just $4.4 million, while the players get the rest.
  • But if a public authority builds an arena for $100 million, or creates a financial structure that produces the same result, the owner gets to keep 100% of the benefit from that wealth transfer. The CBA takes a broad, even eager, view of all the ways a public authority can structure the transaction to get around the HRR definition. It exempts:

“Any thing of value received in connection with the design or construction of a new or renovated arena or other Club facility including, without limitation, receipt of title to or a leasehold interest in real property or improvements, reimbursements of expenses related to any such project, benefits from project-related infrastructure improvements, or tax credits or abatements, so long as such things of value or other revenues are not reimbursements for any operating expenses of the Club.”

If the Katz Group gets the City of Edmonton to finance an arena, then, all benefits of that wealth transfer go to Daryl Katz. That includes a much higher team valuation, which will surely occur with a new arena and all of its new, Katz-controlled revenues.

7) In addition to the ‘build an arena’ exemption, there are other smaller features in the CBA that allow owners to insulate some of their revenue streams from being called HRR. These include:

  • Luxury Boxes: In an “affiliated arena” only 65% of box lease revenue (whether from hockey or other events), and only 65% of Club/Premium seat revenue counts towards HRR, rather than 100%. This means the owner ultimately keeps 63.6% of revenue from leases rather than 44%. Compare this to the treatment of gate receipts: 100% of the revenue from regular ticket sales count as HRR. All else being equal, an owner would rather build a luxury box which seats 10, instead of 10 new seats in the mezzanine. This is also why the sections designated as premium/club seats keep growing.
  • In Edmonton, for example, the plan is to increase the normal seat capacity from 16,839 to 18,000 seats. That’s an increase of 6.9%. Luxury seats will increase from 39 suites and 16 Skyboxes to 64 luxury suites, 12 bunker suites, 2 party suites, two restaurants, and a club lounge. The increase from 39 to 64 suites alone is an increase of 64%.
  • If the box lease or premium seat is only for non-hockey events, 0% of the revenue counts towards HRR. Parking and concession revenues on non-game days are also completely exempt from the HRR definition – owners can keep all of that revenue. This means that revenue from non-hockey events is especially valuable to owners (they keep all of it), but of no value to the team (none of the money is used to fund player salaries or hockey operations).
  • In addition, in an “affiliated arena” the club only counts 65% of fixed signage, naming rights sales and arena sponsorship revenue towards HRR. Again, it’s a case of the owner getting to keep 63.6% of the revenue rather than 44%.

8)  Last but not least, for parking and concession revenue the clubs get to deduct “direct costs” for these services, up to a limit. Obviously this creates an incentive to cram as many of their costs as possible into these categories, so they can pay for their costs with cheaper ‘pre-HRR-tax’ dollars rather than 44-cent ‘after-HRR-tax’ dollars.

  • 100% of parking revenues on NHL game nights count, but you can deduct direct costs up to 30% of the revenue (30% is a league-wide average; individual sites may vary).
  • 100% of concession revenues on NHL game nights count, but you can deduct direct costs up to 54% of revenues (again, a league-wide average).
  • By maximizing the costs you charge against parking and concession revenues on game nights, just 70% of parking revenue and 46% of concession revenue end up counting towards HRR.

The cumulative effect of the above is simple: it creates a strong economic incentive for owners to maximize financial benefits that don’t count towards, or only partially count towards, Hockey Related Revenue. These include arena financing, parking/concession revenues, and luxury box/club seat revenues. The lesson here is that not all revenue dollars are equal, and that not all are used for the same thing. Hockey Related Revenues are used to pay player salaries and redistribute wealth through revenue sharing. Non-Hockey Related Revenues, the revenues the Katz Group so badly desire, go directly into the owner’s pocket. There is no sharing with the players or other owners.

It is important for the City of Edmonton to understand this distinction, because it drives the Katz Group’s negotiating strategy. Citizens also need to understand this distinction, so that they’re not hoodwinked into thinking that the Oilers could ice a better team if only they received parking and concession revenues from concerts and rodeos.

More non-HRR for the Katz Group will not allow the Oilers to ice a more competitive hockey team. It will not allow them to offer a huge contract to a much sought-after free agent. It will not allow them to extend the contract of a beloved player on the current roster. Rather, that money becomes pure profit for Daryl Katz. There is nothing wrong with this in and of itself, obviously. Making money is the end goal of every business owner. But it’s a different story when that owner is making profits because the taxpayer is covering his costs. That’s corporate welfare, plain and simple.

 

*Note* Please read this link for errors I made in the writing of this post.

Seasons Change

14 Sep

This site has slowed down as of late, mostly because of summer and the fact that the arena issue has taken a back-seat to another important decision facing Edmontonians: the future of the City Centre Airport. I expect things to start picking up around here again, however, once we get closer to the municipal elections. In fact, I guarantee it. In the meantime, here’s some more links for you to peruse:

  • Colby Cosh exposes the silliness of comparing an art gallery to a hockey arena
  • Tyler Dellow examines the rationale of building stadiums to draw in NHL franchises
  • Paula Simons looks at the political quagmire Prime Minister Stephen Harper has created for himself on the Quebec arena issue

The Unending Spiral

10 Sep

“It’s nice to have dreams, but when you use borrowed money to achieve them and act as if money grows on trees, you may have a brutal awakening.”

Maxime Bernier on the idea of Canadian tax dollars being used to build a new hockey arena in Quebec City. At least someone in the Conservative Party is making sense on this issue.

Glove tap to Rob Breakenridge for the link.

Links

1 Sep

“The numbers have been there for years but politicians simply took owners at their word that Forbes was simply wrong.”

–Dave Zirin

A few links for you today.

My thanks to the fine gentlemen who sent them my way.

Good Design, Bad Design: Library vs. Arena showdown [Winnipeg Edition]

29 Aug

Editor’s Note: This post originally appeared on Urbane Adventurer, a blog written by Zoe Todd. Many thanks to Zoe for allowing me to post it here.

One of the things that immediately caught my attention when I first visited Winnipeg this summer was the downtown Winnipeg arena (the MTS Centre); with all of the debate going on in Edmonton about the Downtown Arena, I was keen to dig a little into the history and narrative of the MTS Centre, which is sometimes pointed to as an example of a successful catalyst for downtown revitalization. As an Edmontonian eager to see our own downtown managed in a way that most benefits the city, I was curious to deconstruct the powerful discourse around this Canadian arena.

Now, this post will begin with a caveat: I am not an architect, nor am I a city planner. I don’t have all of the technical language or training to assess the success of the building as a revitalizer of the Winnipeg downtown core from a professional perspective. However, I do feel that I have the tools to assess how the building affects people on the street like me, and my experience living in a city so similar to Winnipeg gives me some insight into how this could translate to an arena project in Edmonton. So, in my last few weeks in Winnipeg I decided to document how the MTS Centre interacts with the people and buildings around it.

You can find some background on the building here.

This article by Nick Ternette in the ‘Uniter’ highlights the tension between the claims of the pro-arena stakeholders and the reality of how the arena has impacted downtown Winnipeg. As the author notes: “The real reason that downtown revitalization has failed is urban sprawl, the lack of people living downtown (13,000 as compared to 45,000 just 15 years ago) and the closing of businesses after 6 p.m. Just look at how empty the area is after business hours.”.

I think these are words for Edmonton to weigh heavily. The lesson is that no one amenity can revitalize a city’s core–to claim that an arena in our downtown core will deliver all of the things that are being promised is wishful thinking at best. What is really impacting our ability to attract people to the city centre is the overall structure of our city, and decisions we’ve made over the last few decades regarding where and how people will live. While my preference would be to reuse the existing arena, I am also somewhat resigned to the fact that even if overwhelming evidence suggests that the downtown arena is not a good return on investment, it will still be built. Therefore, my hope is that if our city is going to invest such a large sum of money into the building (money that could easily have huge and immediate impacts in a plethora of other city areas and initiatives) that we can find a way to build an arena that is thoughtfully designed, conscious of the negative impacts it can have and does not divert money that would be better spent elsewhere to achieve revitalization and urban renewal aims.  However, with the power balance between the proponent, the legislators (city council), and tax-payers being what it is, I fear that we will cave to the demands of a group co-opting the trendy notions of urban revitalization to their advantage to get their hands on prime real-estate in a city core in rapid transition.

I think that we need to separate the two threads of the pro-arena argument, because ultimately two major ideas are at play in the arena debate. One aim is to keep the Oilers in Edmonton. The other aim is to revitalize downtown. These two things may have commonalities, but at the end of the day they are two separate ideas:

a) the arena itself is a sports facility. The main aim of the facility is to house an NHL team, one that the city is emotionally and mythically invested in (and one whose main aim is to make money, period).  The ultimate claim that propels this project is that the Oilers group feels that they need more seats. That is a fair concern–however, is it really worth spending $400 million for 2,000 more seats?  Surely there are more economical ways to address capacity concerns in the existing facility.

b) Trying to roll a whole bunch of other facilities into the plan in order to ‘sell’ the project is risky–once a project tries to be all things to all people there is a huge chance that it will only achieve many things at a mediocre level. Furthermore, urban revitalization needs to be separated from the discourse around the arena. True urban revitalization needs to focus more holistically on the deep-down culture of city planning  and development in this city–and we need to tackle sprawl in meaningful and effective ways. We need to ask ourselves why the downtown core is seen as unsafe or unappealing to so many Edmontonians–and also to question how disparity plays into our narratives about what parts of the city are valuable and which are not.  Why is it that downtown is seen as a place that can be continuously torn apart and built again? Would we ever consider marching into Wolf Willow or Terwillegar Towne or Glenora and telling the people who live there that what they really need is a huge, culturally homogeneous multi-million dollar project to improve their lives?  And why is our downtown–one of the city’s assets in terms of how dense it already is compared to our suburbs–always acted upon and problematized while the suburbs that are contributing so much to the environmental and economic unsustainability of the city are allowed to continue so haphazardly?  I think we need to be bold and courageous in building and creating things that define our city as the vibrant place that it already is. And we need to deconstruct ideas that tell us that the downtown is a place that needs to be invaded by these types of large-scale projects that ultimately benefit a powerful few but don’t necessarily nurture the small-scale and diverse interactions that make a city resilient and strong.

So, with that in mind, let me take you on a tour of the MTS Centre, as seen through the eyes of one young twenty-something with a passion for urban issues.

The building itself is fairly conventional: it resides on Portage Street (which is a lot like Jasper Ave).  It takes up an entire block, and offers a handful of restaurants (a Moxie’s, a Tim Hortons, an Arby’s). There are some vendors that were closed at lunch hour when I visited, but appear to be open during events in the centre.

There is also parking in the back of the building, and a second building to the West of the arena houses a bar and the CTV offices. The arena is surrounded by a number of office buildings and stores, including a Mountain Equipment Co-op, a Dollar store, the Aboriginal People’s Television Network headquarters, ‘The Bargain Store’, a church, the Radisson Hotel, the Millennium Library, the City Place Mall, and is connected to a number of buildings that surround it via pedways elevated above the street. There are three major malls in the Winnipeg downtown core: these include Portage Place, City Place (directly connected to the arena via a pedway), and Winnipeg Square (located beneath the street and accessible via the infamous intersection of Portage and Main).

One thing that I noticed immediately were the number of empty buildings that surround the arena, six years after its construction.  To be fair there are a number of vacant buildings throughout the entire downtown core:

The black and white building picture in the left of this image used to house A&B sound.  It is directly across the street on the northeast corner of the arena. It is being leased by the company that owns the MTS Centre to house the Body Worlds Exhibit this year, and is slated for demolition after the exhibit ends in order to make way for a hotel.

The beige building in the centre of this image, which is directly across from the northwest corner of the MTS Centre, used to house an RBC bank, but the bank moved to the new Manitoba Hydro building a block west of the arena. The building is now empty.

The method:

I visited the building between 11 AM and 12:15 PM on a Sunny Monday (August 16).  The weather was a touch cool (+15) that day, compared to the week of blazing temperatures that preceded it. I wandered throughout the building with my camera, observing how people were moving through the space, and also trying to document what facilities exist in the building and how the facility interacts with the streets around it.

As I moved through the building (or at least the parts that I had access to) I was struck by how few people were in the space.

There are some nods to the fact that the building is on the site of the historic Eaton’s building:

It was also interesting to see how little activity there was in the restaurants in the arena. I saw about 20 people dining in the Tim Hortons and Arby’s area:

There are a number of restaurants that appear to be open during events, but were closed during lunch hour when I visited:

When I stepped outside, I noted how little interaction there is between the building and the sidewalk: on all sidewalks that ring the building there was very little pedestrian activity, especially the south, east and west sides of the building.  The portion of the building facing Portage avenue offers more activity, but the building is not designed to encourage people to enter or explore the space from this main drag, other than to attend specific ticketed events or to squirrel yourself away into one of the food establishments buried inside the complex. It is possible that the cooler weather influenced the lack of pedestrian activity around the building. However, the form of the building does not really engage pedestrians or encourage them to interact with the building, either. The one restaurant structure (a patio) that does emerge onto Portage avenue is lined by a tall, partially frosted glass wall that stops patrons from seeing or engaging in street life (and, probably very intentionally, prevents people on the street from interacting with diners).  The perimeter of the building is marked by blank walls, doors designated for ‘staff only’, and parking infrastructure.

By contrast, I stepped across the street and entered the Millennium Library to see how that space was being used at lunch hour:

The library was recently renovated by Patkau Architects and LM Architectural Group; I used the space as a place to work on my thesis this summer and I was really impressed by the number of people who used the library throughout the day, and how the well-designed space invited people into it.

One nit-picky note: the entrance to the library allows enough space for people to move freely and safely into and out of the building. Unlike our downtown library, the main transit stops are located across the street (westbound buses) and across from the MTS Centre (eastbound buses).  I never felt unsafe or crowded when trying to access the library. This was a welcome change from the inadequate space in front of our library for patrons and transit-riders to access the building and transit.

One other thing I love about the Millennium Library is that the Children’s section has a whole ‘Aboriginal reading-in-the round’ section full of Aboriginal books. This is pretty great for a city with such a large Aboriginal population (and benefits both Aboriginal and non-Aboriginal people).

It is not clear from the photos, but the library was PACKED. There were people all over the place, including the cafe near the entrance.  It is also exciting to note that the library is renovating the plaza behind the building and creating a Millennium Garden that promises to be a really great addition to downtown life.

In my opinion, the library serves as a much more powerful and effective magnet for daytime downtown life than the arena. The arena does indeed draw people into the core sporadically: on nights when there were concerts (such as the Black Eyed Peas show two weeks ago) it was clear that thousands of people were coming downtown, but they also fled really quickly after the events.  In terms of sustainable and manageable downtown street-life, I think there’s something to be said for a ‘sustained burn’ encouraged by a building (and public service) like the Millennium Library instead of a rapid and sporadic influx from a building like the MTS Centre.

Based on my observations I’m not convinced that the Winnipeg arena, as executed, is actually very impressive as an urban renewal tool.  The library fares much better: the stunning architecture, the thoughtful layout of the outside and inside space and the future Millennium garden to further encourage people to interact with the building does a much better of drawing people into the area.

Edmonton should consider this when deciding how to proceed with the arena proposal. Some questions to bear in mind:

  • Will the structure add to day-time street-life?
  • How will rapid influxes of fans and concert-goers be managed?
  • Will it bring people to the city core in a sustained way?
  • Will the arena complex nurture our amazing local restaurant industry or will it further marginalize local entrepreneurs (ie: do we need another Moxie’s in the arena when businesses like Bistro Praha are struggling to find a suitable space?).
  • How will it contribute to community and human interactions (the lifeblood of a resilient and livable city)?
  • Will it be physically arresting or a re-hash of mediocre architecture (something we can do without)?
  • Furthermore, how will an arena district impact socio-economically disadvantaged residents of the downtown core? Will people who rely on services located close to the proposed arena location be displaced? How would this affect non-profits that serve this population–will they be compensated if they need to move to better serve their clients?
  • Are there more effective ways to spend several hundred million dollars to foster a functional and inviting and thriving downtown core?

In any case, I am not convinced that arenas deliver on the hype.  Let’s call a spade a spade: arenas are for sports teams. They serve a very specific market, and are homes for private businesses.  There are ways to encourage public benefits in sports complexes, but ultimately arenas are a pretty expensive way to deliver those benefits.  Investing our money in good public infrastructure and smart investment in local talent and business would be a more diversified (and thus resilient) way to foster a vibrant urban core.  I also think that doing things to curb sprawl (ie: creative downtown infill development, firmer controls on suburban sprawl, doing  a really good job with the airport redevelopment) should take precedent over flashy one-off facilities.  As a citizen I am very concerned about how much public money would be spent on an arena complex, and I hope my observations contribute to this debate in a constructive manner.

——————————–

*A note on rigour: I wish I could have observed the space over many days throughout the summer to measure activity and movement in a more rigorous way. Although I was informally observing the space throughout the summer, my schoolwork prevented me from setting up camp and studying the MTS Centre scientifically.  I also didn’t visit the Moxie’s or the bar in the arena complex at lunch, so I can’t determine how busy they were at noon. However, given my overall impressions of the building I think there are some things about it that should be considered very critically by those concerned about how a downtown arena will affect Edmonton.

**One thing I do like about the MTS Centre is the front entrance:

Oops!

26 Aug

“I also don’t understand why you’d say you have a $120MM business while you’re simultaneously pleading poverty. Usually even the really poorly run teams know how to present a certain image when they’re asking for a handout.”

Tyler Dellow looks at the recent statement by Oilers Vice-President Allan Watt that the Oilers are a $120 million dollar business.

***Update*** Jonathan Willis also takes a look at this issue.

***Bonus*** Here’s a story from today’s Edmonton Journal, noting that only 46% of downtown residents surveyed by Downtown Business Association are in favour of a downtown arena. And Mayor Mandel is in complete denial.

Miami Vice

25 Aug

“[Owners] simply don’t tell the truth about the finances,” deMause said. “Or if they do, it’s in such a narrow way.”

I tweeted this article by Jeff Passan yesterday, but it’s worth sharing here again.  Then there’s this follow-up today from the Miami Herald (glove tap to Brian Gould for the story):

Before the team was awarded the favorable deal — the Marlins basically secured every dollar of revenue made at the stadium — several commissioners argued the city and county had the right to know the team’s financial position, given that taxpayer dollars would foot almost $500 million of the stadium’s cost.

But the Marlins refused, pointing to their protected status as a private entity.

The club even played political hardball on the issue, threatening to leave town if it didn’t get its way. The Marlins took meetings with officials from San Antonio and Las Vegas before securing the deal they wanted in South Florida.

 

Coincidentally, there’s a NHL hockey club that claims to be losing money right here in Edmonton. It also refused requests from city councillors to open up its books, pointing to their status as a private company. It hasn’t explicitly stated it will leave town if it doesn’t get all the revenues from a newly-built, mostly publicly financed downtown arena, but it’s stated that it won’t play in the only other arena in Edmonton it can play in past 2014. Interestingly, it’s also met with officials from another city, all the while denying it has any plans to relocate. That’s eery. It’s almost like there’s a playbook when it comes to these matters.

In all seriousness, the lesson here for Edmonton’s City Council is pretty clear: don’t just accept the word of the Katz Group on their finances. Demand that they open their books.  If Mr. Katz really wants to make Council’s “job easier by articulating why this project is necessary… important and can benefit all Edmontonians,” he can start by being open and transparent about his hockey team’s financial situation.

***Bonus*** I chose “Miami Vice” as the title of this post just so I could include the classic “In The Air Tonight” scene from “Brother’s Keeper,” the series’ pilot episode. This recording isn’t that great, but still. Crockett. Tubbs. Michael Mann. Phil Collins. Epic.

Newark, Newark

23 Aug

“Our city is the complete opposite of Newark, NJ and, as such, there can be no doubt that a downtown arena district in our city will be anything other than an unmitigated success.”

yegarena

Uh, okay.

Since the proprietor of that website won’t allow comments, thereby preventing people from challenging the merits of his arguments, I thought I’d open up a thread and encourage people to leave their comments here. We’ll call it a group post. I’ll even get the ball rolling by pointing out a few things:

1) The Devils haven’t paid rent since 2008, and are now going to court with the city of Newark. So that’s $5.7 million owed to the city by the team the city spent  $358 million to build an arena for.

2) The arena doesn’t pay taxes or water fees. Those taxes and fees might be useful for an impoverished city to have.

3) I don’t know the mathematical system where $15 million in economic activity is a proper offset for the cost of $350 million dollars, but even so, that article was written in April, and probably doesn’t hold up when the city of Newark is now looking at laying off 350 policeman and firefighters, cutting back trash pickup, and closing city pools.

Calling a public expenditure of that amount an “unquestionable success” in light of the stark reality facing Newark is bewildering. Saying “if Newark decides to sell its interest in the downtown arena, it won’t be be [sic] because the project failed to achieve its goal; it’ll be because Newark needs money fast” is…I don’t even know. Crazy piled on crazy? If Newark decides to sell its interest in the Prudential Center, if Newark is able to sell its interest in the Prudential Center, it will only be correcting a mistake it never should have made in the first place. Newark made the very poor decision of investing a very large amount of public money into an arena, and now can neither offer basic public services nor gather taxes as a consequence. It can’t even get its major tenant to pay the rent. Newark isn’t a lesson in economic success. It’s a lesson in irresponsible governance.