What Calgarians Need To Know About the Oilers Arena Mess

 

 

By: Duncan Kinney**

As a Calgarian who has lived and worked in Edmonton for the past two years let me give you the skinny on the mess that’s going on up here in Edmonchuk and the awkward stylings of their quirky Mr. Burns-esque billionaire pharmaceutical emperor and hockey team owner.

First a quick primer.

Daryl Katz has invested in downtown real estate in order to build an arena in downtown Edmonton. He is currently in negotiations with the city. The numbers break down roughly like this. The arena will cost roughly $450 million, the city will thrown in $250 million, Katz has promised to pay $100 million. I was never good at math (it’s why I’m a journalist) but I do believe that leaves us still $100 million short.

Attempts to bridge this $100 million gap have, shall we say, fallen short. With two recent examples of hilarious flailing about. For even more detail, head to another blog post I wrote on the subject.

The Katz Group let it be known to the media though “highly placed sources in the negotiations” (or some such malarkey) that they were looking into the possibility of putting the arena on the land of the Enoch Cree reserve northwest of Edmonton. It would presumably locate the arena nearby the large casino development out there. The other stumble? In what may bethe clumsiest piece of advocacy I’ve ever seen, the Katz group called up five different Edmonton MLA offices offering “communications assistance” to their offices.

It’s been quite weird actually. Edmonton has essentially grabbed its ankles in negotiations with the Katz Group. The city and the public purse is taking the most risk here, kicking in $250 million on a planned $450 million development. Despite this significant public investment the Katz Group and the Oilers are getting all operational revenue. This deal essentially makes the current owner of their current arena – Northlands – disappear. The Katz group gets a bigger arena with more luxury boxes that will bring in far more revenue yet Daryl Katz seems fundamentally unwilling kick in more than a $100 million on this project. Instead preferring to try and get his way through any number of corporate hostage-taking strategies.

Let’s look at the first move.

While Katz owns the land on which the site is being built the only real, serious gambit he has is to MOVE THE OILERS. That is the precarious Damoclean sword hanging over top of these negotiations. This latest “leaked” plan falls short of that threat however it shows the limited range of negotiating options the Katz group has. They’ve committed to a downtown arena. They’ve sung the praises of downtown arenas for the past two years. Now they don’t want to build a downtown arena?

In order to get out of their current barn into their new one for the 2015 season (Katz has made it quite clear that he won’t be renewing the lease with Northlands) construction needs to begin post-haste. He already has a significant amount of promised public money as well as designs, drawings and general planning for a downtown site. Moving it to the Enoch Cree site would mean the beginning of even trickier negotiations. He won’t own the land (the reserve will) and he will be dealing with entirely different public funding mechanisms (since he’s made it clear he doesn’t want to pay for the whole thing). This whole Enoch Cree mess is an idle threat of the highest order.

And the second tactic, offering PR services to individual MLA offices? Ridiculous. Akin to calling up the Oilers and saying that you’ll help with their goaltending problem. The province isn’t going to kick in any straight-up cash for this project and it’s easy to see why:

• Ed Stelmach is a lame duck

• The Progressive Conservatives are in the middle of a leadership race

• It’s a politically tumultuous time and the biggest threat to the PCs, the Wildrose, are fiscal hawks

• Any money given for this project essentially has to be doubled for the eventual Calgary arena

Yeah, and I believe the problem is fairly simple. He’s either really bad at this or the people he’s hired to do this are really bad at this. I mean, real estate development/getting a bunch of public money can be a difficult gig, sure, but do you think we’d have such a gongshow down in Calgary? No.

Look, the Flames might have a mediocre hockey team with dim prospects in the short, medium and, well, long term but at least our owners are stable, old dudes who wouldn’t be heading to meetings in Quebec City and Hamilton. I don’t think you’d see this need to extract every last ounce of value from the city.

Don’t think that the management team with the Flames (Ken King) isn’t paying attention to this whole deal. When the time comes for the Flames to have a new arena it would behoove them to avoid the style of negotiations and demands that have taken place up here.

It’s gotten weird and a little bit ugly – kind of like Edmonton.