Did the OEG con the City of Edmonton?

[Speed220DChalavan]

With public declarations (Las Vegas owner) that the Oilers are a top 5 revenue team in the NHL, it’s vital we step back and reflect how they got there. Did the OEG con the city of Edmonton taxpayers for largely a private venture? Was the public (including myself) too ingrained with the Oilers that the details and fine print was overlooked? Did the ‘rah rah rah’ David Staples’ of the world help mold an inaccurate view in quest to be “world class�

Here is the agreement and a few resources

https://www.edmonton.ca/projects_plans/rogers_place/the-agreement.aspx

http://edmontonjournal.com/news/local-news/the-oilers-the-arena-city-council-and-you

http://www.edmontonjournal.com/Simons+Arena+funding+puts+hook/11041912/story.html

https://www.theglobeandmail.com/spo...town-home-of-edmonton-oilers/article15739948/

http://www.cbc.ca/news/canada/edmon...arena-naming-rights-says-councillor-1.1392959

- Katz gobbled up real estate in the arena district area and that North of it prior to contruction. The property values shoot up as a result of this project and surrounding development.

- Katz cash contribution towards the project upfront was a mere 19.7M

- The initial $112.8M of contribution is in the form of rent over 35 years [imagine that, paying for rent]. The initially promised $100M by Katz never transpired.

- The Community rink – bait and switch and is now bare bones from initial renderings.

- City conceded naming rights of the arena to the OEG. These have significant value. In the Skyreach Centre days, they were worth at least $1M IIRC.

- Quietly and separately from the arena agreement:

But wait, there’s more. Or do I mean less? The City has also agreed to sign a $2 million, 10-year annual marketing deal with the Oilers, to market the city in conjunction with the team. Yes, that’s right, on top of the cost of the arena, the City will pay the Oilers another $20 million. Farbrother insists that this is not a subsidy, but rather fee for service. Now, it’s true, that lots of people who don’t live in Edmonton watch Oilers games on TV. But the word “Edmonton†is already part of the team name. It’s not clear to me exactly what extra PR benefits the city hopes to derive from this deal. Meanwhile, it’s clear to me what benefit the Oilers will derive – that $2 million a year will offset the $5.5 million a year that the Katz Group must back the city nicely, leaving a net fee of just $3.5 million.

- Discussions surrounding the City of Edmonton tower aren’t fully public, but that contract too was awarded to the Katz Group.

- Taxpayers bear all the risk if the CRL revenues cannot cover annual payments.

- Strong economic cases and studies there really isn’t any new property tax revenues or new investment – merely a redistribution from one area of the city to another. Commercial and residential property taxes that went to the City of Edmonton are now in effect, partially subsidizing/funding the new arena. There is also risk with the oversupply of commercial/residential properties in the arena district you are lowering the value of properties in other areas of the city/downtown (and subsequently property taxes to the general pool).

To be fair, the city did gain something - a more vibrant downtown, inspiring confidence and enhancing the image of the City. Potential human capital benefits over the long run.

Having that said, this was a deal performed/brokered by people with vested interests. You and I, and all of Edmonton taxpayers ultimately paid for it and have directly contributed to the wealth of a private citizen. This isn’t necessary an indictment against the Katz group – this is a common theme in North America. It is however, something the public should be cognizant of, question thoroughly, and don’t get lead astray irrespective of how many articles David Staples pumps to the contrary.

Click to read more...

 

[rboomercat90]

This will be a fun thread.

 

[oXo Cube]

This will be a fun thread.

No it won't because it will be locked for politics discussion as soon as a mod sees it.

 

[Speed220DChalavan]

No it won't because it will be locked for politics discussion as soon as a mod sees it.

It's not fully politics. It's a relevant issue concerning both the team (current owner) and the City.

I thought HF was mature enough to discuss pressing issues like these.

 

[Gone]

Yes, water under the bridge. Mandel is smiling.

 

[trick91]

hasn't this been beaten to death? Yes Katz got a great deal. Its the cost of keeping an NHL team in your city these days.

 

[CantHaveTkachev]

Katz got a great deal

Edmonton gets a great downtown for the 1st time ever

move on people

 

[Speed220DChalavan]

hasn't this been beaten to death? Yes Katz got a great deal. Its the cost of keeping an NHL team in your city these days.

This is the logic every owner in North America uses to pry out every last dollar from taxpayers.

 

[Speed220DChalavan]

move on people

Or you could choose not to comment in every thread that doesn't interest you?

Just a thought.

 

[Del Preston]

Yawn.

 

[Marc08]

Theoretically? Yes
Practically? No

 

[McDraekke]

With public declarations (Las Vegas owner) that the Oilers are a top 5 revenue team in the NHL, it’s vital we step back and reflect how they got there. Did the OEG con the city of Edmonton taxpayers for largely a private venture? Was the public (including myself) too ingrained with the Oilers that the details and fine print was overlooked? Did the ‘rah rah rah’ David Staples’ of the world help mold an inaccurate view in quest to be “world class�

Here is the agreement and a few resources

https://www.edmonton.ca/projects_plans/rogers_place/the-agreement.aspx

http://edmontonjournal.com/news/local-news/the-oilers-the-arena-city-council-and-you

http://www.edmontonjournal.com/Simons+Arena+funding+puts+hook/11041912/story.html

https://www.theglobeandmail.com/spo...town-home-of-edmonton-oilers/article15739948/

http://www.cbc.ca/news/canada/edmon...arena-naming-rights-says-councillor-1.1392959

- Katz gobbled up real estate in the arena district area and that North of it prior to contruction. The property values shoot up as a result of this project and surrounding development.

- Katz cash contribution towards the project upfront was a mere 19.7M

- The initial $112.8M of contribution is in the form of rent over 35 years [imagine that, paying for rent]. The initially promised $100M by Katz never transpired.

- The Community rink – bait and switch and is now bare bones from initial renderings.

- City conceded naming rights of the arena to the OEG. These have significant value. In the Skyreach Centre days, they were worth at least $1M IIRC.

- Quietly and separately from the arena agreement:



- Discussions surrounding the City of Edmonton tower arenÂ’t fully public, but that contract too was awarded to the Katz Group.

- Taxpayers bear all the risk if the CRL revenues cannot cover annual payments.

- Strong economic cases and studies there really isn’t any new property tax revenues or new investment – merely a redistribution from one area of the city to another. Commercial and residential property taxes that went to the City of Edmonton are now in effect, partially subsidizing/funding the new arena. There is also risk with the oversupply of commercial/residential properties in the arena district you are lowering the value of properties in other areas of the city/downtown (and subsequently property taxes to the general pool).

To be fair, the city did gain something - a more vibrant downtown, inspiring confidence and enhancing the image of the City. Potential human capital benefits over the long run.

Having that said, this was a deal performed/brokered by people with vested interests. You and I, and all of Edmonton taxpayers ultimately paid for it and have directly contributed to the wealth of a private citizen. This isn’t necessary an indictment against the Katz group – this is a common theme in North America. It is however, something the public should be cognizant of, question thoroughly, and don’t get lead astray irrespective of how many articles David Staples pumps to the contrary.

To the bolded, if I am reading it correctly, this is saying that the arena's new location in the city is pulling investment and development away from the old are in which the the Coliseum was located? Have you been to that area of the city in any kind of recent history? There was almost zero development going on there, and certainly no investing in the area. It was a ****** area of the city for a professional sports team to be located, and nobody would want to invest in that area without massive incentives and a commitment from the city of invest tons of cash into the area to make it somewhat attractive. The downtown location makes way more sense for a ton of reasons. And I'm pretty sure there were large investors for some big buildings that only came to Edmonton because of the new arena, meaning that it wasn't stealing investments from other parts of the city, but bringing them in, because no high-rise apartment/condos or business towers were being built on 118th/Beverly area.

Again though, if I'm reading this wrong (and I'm not very well-read in economics, admittedly), apologies. Just what I got from that bullet point.

 

[McDraekke]

This is the logic every owner in North America uses to pry out every last dollar from taxpayers.

That should tell you something, no? If every North American owner is doing the same thing, then why do you say it shouldn't be happening? Do you really think every single city that hosts a major sports club is being swindled and that they have no idea how economics works? That's naive.

Or you could choose not to comment in every thread that doesn't interest you?

Just a thought.

You posed a question. People are responding to it. Don't get snarky when you post a thread like this, asking us a question.

 

[awesomo]

i mean you wont find a person that says katz didnt get a steal of a deal

but at the same time, lots of people (including me) have moved into the DT area because of the new arena.

edmonton DT is starting to become quite an attraction for many people and it wouldnt have happened without the arena

 

[SK13]

This is the logic every owner in North America uses to pry out every last dollar from taxpayers.

The problem with this is the City of Edmonton is profiting on this within it's first decade, while securing hugely important large-scale downtown development. You know, that thing Edmonton has needed for the better part of three decades?

If you know how this project was funded, you'd realize this is a largely pointless rabble-rousing.

 

[Stoneman89]

It's not fully politics. It's a relevant issue concerning both the team (current owner) and the City.

I thought HF was mature enough to discuss pressing issues like these.

How is this a "pressing" issue? The arena and the amenities are done, and the buildings around it are well on their way. Right or wrong, in whomevers mind, it's now water under the bridge and we should be moving forward.

What's the next thread going to be? How Peter Pocklington conned the The City of Edmonton, and sold hockey assets to fund his business failures?

Let it go, man.

 

[Speed220DChalavan]

To the bolded, if I am reading it correctly, this is saying that the arena's new location in the city is pulling investment and development away from the old are in which the the Coliseum was located? Have you been to that area of the city in any kind of recent history? There was almost zero development going on there, and certainly no investing in the area. It was a ****** area of the city for a professional sports team to be located, and nobody would want to invest in that area without massive incentives and a commitment from the city of invest tons of cash into the area to make it somewhat attractive. The downtown location makes way more sense for a ton of reasons. And I'm pretty sure there were large investors for some big buildings that only came to Edmonton because of the new arena, meaning that it wasn't stealing investments from other parts of the city, but bringing them in, because no high-rise apartment/condos or business towers were being built on 118th/Beverly area.

Again though, if I'm reading this wrong (and I'm not very well-read in economics, admittedly), apologies. Just what I got from that bullet point.

Thanks for the comment. One of the few examples of civic discourse thus far in this thread.

I'll give an example.

-Stantec had several offices across the city that paid commercial property taxes.

- They are now moving to the arena district (on property Katz owns). Any incremental property tax revenue on that site (from the property tax that was initially paid on property in that area) will be going towards the new arena.

- Meanwhile, property tax the city collected on older buildings (such as where Stantec's previous head office were) will suffer unless there are new offices/companies that can replace Stantec's office space.

This is what I meant by re-distribution. Dollars being allocated from general pool to the CRL - which ultimately have to be covered by taxpayers or a reduction in city services.

 

[Jimmi McJenkins]

I would say if you sincerely believe, like truly sincerely believe, that the OEG conned the city, might be best to withhold dollars from the OEG and boycott OEG related things.

 

[McDraekke]

Thanks for the comment. One of the few examples of civic discourse thus far in this thread.

I'll give an example.

-Stantec had several offices across the city that paid commercial property taxes.

- They are now moving to the arena district (on property Katz owns). Any incremental property tax revenue on that site (from the property tax that was initially paid on property in that area) will be going towards the new arena.

- Meanwhile, property tax the city collected on older buildings (such as where Stantec's previous head office were) will suffer unless there are new offices/companies that can replace Stantec's office space.

This is what I meant by re-distribution.

Fair enough, but all businesses will always go towards where they believe to be the profitable smart decision. So while I can see your point, I don't think that there's anything wrong with it.

Apart from that specific scenario of "redistribution" you also stated that no new investment and development would be happening, only redistribution. I think my point is made that there was new investment - I don't have any details, but I do recall hearing that there were properties built in Edmonton solely because of the new downtown arena. Could be wrong, as I'm quite literally going off of memory. But I'm fairly confident that is true. So while there is redistribution, there is also new investment as well.

 

[UnicornONtheCOBB]

sure, he got a great deal, and due to rabid fans, fans that support the team, win or lose, they continue to fill the building, which fills Katz's pockets. This deal was not that different from the majority of arena/stadium deals around North America, either the city steps up, or the team often leaves (Chargers, Rams, Raiders, etc.).
One thing to remember is, even though this deal was great for Katz, if the city and the fans didn't support the team and the building, it wouldn't have been such a success. The people of this city were starved for something like this, they were starved for a competitive hockey team as well. They got a world class arena and entertainment district, and thanks to a lottery, got a generational talent in McDavid, who helped turn around a horrible hockey team. So, ya, everything really has worked out for the OEG. That being said, the city and it's downtown won as well, maybe not to the same financial extent as Katz, but in 3 to 5 years, when Ice District is complete, I have feeling, regardless of a couple hundred million dollars here or there, that the city and it's residents will be very happy with the result, and if given the option of the deal that was made and the new downtown or no deal the same old downtown and the team still in Northlands, I don't think there is an even a choice. Katz had the vision, and the capital, and the support, and the power to make it happen. He bought up land that had been parking lots for 50 years, now he is reaping the rewards for his vision and his gamble. That's how the world works, to me, I'd say both the OEG and the city of Edmonton are going to come out of this as winners.

 

[Speed220DChalavan]

That should tell you something, no? If every North American owner is doing the same thing, then why do you say it shouldn't be happening? Do you really think every single city that hosts a major sports club is being swindled and that they have no idea how economics works? That's naive.

It happens because city councils /taxpayers let it happen. Owners (like Katz) play on the emotion of sports fans, make empty threats (Seattle Oilers), and attempt to convince it's a good deal for taxpayers.

When it isn't.

Here's a more recent example

http://deadspin.com/the-raiders-robbed-las-vegas-in-americas-worst-stadium-1795475973

 

[SK13]

Thanks for the comment. One of the few examples of civic discourse thus far in this thread.

I'll give an example.

-Stantec had several offices across the city that paid commercial property taxes.

- They are now moving to the arena district (on property Katz owns). Any incremental property tax revenue on that site (from the property tax that was initially paid on property in that area) will be going towards the new arena.

- Meanwhile, property tax the city collected on older buildings (such as where Stantec's previous head office were) will suffer unless there are new offices/companies that can replace Stantec's office space.

This is what I meant by re-distribution.

Redistribution has massive value in Edmonton, as it's downtown core has suffered for decades. Edmonton occupies a huge pocket of land and over the decades, we've become more and more spread out to suburban pockets, at the expense of our downtown economy.

That being said, the OEG had partners from the very beginning with the Ice District, and much of what's being built does not happen without the arena. So redistribution simply doesn't cover it. You mention Stan-tec, but what you don't point out is that they're building the largest tower in western canada. Not quite just moving their current operation across town.

 

[Speed220DChalavan]

Redistribution has massive value in Edmonton, as it's downtown core has suffered for decades. Edmonton occupies a huge pocket of land and over the decades, we've become more and more spread out to suburban pockets, at the expense of our downtown economy.

Thing is Stantec was already downtown.

Dollars will now be allocated from general pool to the CRL - which ultimately have to be covered by taxpayers or a reduction in city services.

The only way the City's property tax revenues (which in turn are used to fund city services) don't suffer is investment into the city / creation of new permanent jobs.

I'm not convinced the new arena district has done anything in that regard.

 

[Pointteen]

Did anyone actually believe the Oilers weren't in the top five teams for revenue?

 

[Del Preston]

Still laughing at the "Confirmed with Link" prefix used in the title. Like it adds some legitimacy to the thread.