Thursday, February 22, 2007

 

A $250 Million Doughnut

"An aging and cramped Rexall Place could be transformed into a roomier, modern rink by adding a 13-metre wide doughnut around the existing arena at a cost of $225 million to $250 million, says a consultant's report."

I kid you not. From the front cover of today's Edmonton Journal.

But that's too much to spend on a renovated building, said Mayor Stephen Mandel, who suggested the report only bolsters the case for a new arena to be built downtown.

What?

But wait. It gets better. Later in the propaganda item story, Mandel says:

"I think there's many ways to look at how we can do this. I've several ideas but I don't want to talk about them yet until we get a little further down the road, but we're not going to burden our taxpayers with a $400-million or $300-million debt to have a new facility. That just won't happen."


Can I ask a question: why is anybody "asking" Mayor Mandel anything? And since they are "asking" him, could they ask him who, exactly, will be paying for all of this? And I mean, "asking" who will be specifically paying for all of this. Because my guess is that it won't be the City paying for either a renovated or new building. It will be the provincial government, which is to say the taxpayers of the province of Alberta. If the City has that kind of money, it's news to me, especialy since there wasn't enough money to plow our street two months ago. And if the province foots the bill for an arena here, you can bet your life they'll foot the bill for an arena in Calgary, too. There won't be any choice in the matter. That's how this province works. One for Edmonton, one for Calgary. And vice-versa. And then the small cities, towns and rural areas will be clamouring, too. So add even more money into the equation. Whatever that dollar amount is for an arena in Edmonton, whatever they decide taxpayers will pay, you can go ahead and double it, maybe even triple it. This reality invites the question: why hasn't the provincial government been quoted in any of these "stories?"

Let me be clear: the Mayor of Edmonton and the Edmonton Investors Group (which includes The Edmonton Journal) are being devious and underhanded in their undertaking to get a new hockey facility. Duplicitous. There is no public demand for a new arena. There never has been. It's being fabricated, created, right now, by the Mayor and the EIG, in order to advance their own agenda(s). It's shameful to me that the Journal has been complicit in the manufacturing of this story, and that no elected official has publicly spoken against this "initiative." If the Mayor has several ideas but "doesn't want to talk about them yet," I suggest that he do exactly that: be quiet. When he wants to be honest with the citizens of Edmonton and lay his and his buddies actual cards out on the table (rather than do what he is doing now, which is use his contacts at the Journal to throw everything at the wall and see what sticks), I'll gladly hear it. Until that time, I wish he'd just take a $1 doughnut and, well...you know.

***Update*** For public consumption, a Wall Street Journal article on the current trend in the U.S., which has franchises ripping out skyboxes in their stadiums. Glove-tap to Avi for the link.

***Update*** Here's another story on luxury seats from the Seattle Times.

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Comments:

Arrgh.

I know that this is politics in action, but it's infuriating watching this unfold.

It's like a bad episode of The Wire.

And does Pat LaForge get paid extra if he works in a reference to Rexall being "a dump" or "tired" in every quote to the media?

PS: How do Flames fans feel about paying for a new Oilers arena?
 


The fact of the matter is that Mandel isn't a stupid man (something I can't say outright for former mayor Smith), and he knows the province is headed for another $6 billion plus surplus. If he asks for money for an arena, and the majority of the provincial population wouldn't support that, Stelmach and the fellows at the provincial level only need say no. Otherwise, it's their fault for giving the province's ("our") money away so freely.

Personally, I'd prefer a new arena complex to help revitalize the downtown core over Ralph bucks, even if it means a new arena in Calgary too. It's not like anyone running this province has had any vision for spending our money anyways.
 


Let's be fair to Mandel. If you were told "oh, using an untried and untested new technique we can renovate your house to be adequate for about 60-80% of the cost of getting a new one, before the inevitable budget overruns that come with untried and untested construction techniques" would you be saying "yeah!"?

Particularly when you probably weren't going to be the one paying for the other 20-40%?

I've said it before and I'll say it again: I have no problem with a government financing a new arena, which can be used for so many things besides hockey, for the same reason I have no problem with governments financing rinks, gymnasiums, parks, athletics facilities, and such across the province every day. It's a public good, and it's a public good that (if the city/province owns it, and they better, and I haven't heard any blather in the papers about the Oilers being upset about their renting arrangement with Northlands at Rexall) has a better-than-average chance of directly returning on its investment.
 


Personally, I'd prefer a new arena complex to help revitalize the downtown core over Ralph bucks, even if it means a new arena in Calgary too.

You mean, like how Rexall revitalized the region around it? And don't you think that money could be better used in terms of economic revitilization? I'd say 250-800 million could be used in better ways.

I've said it before and I'll say it again: I have no problem with a government financing a new arena, which can be used for so many things besides hockey, for the same reason I have no problem with governments financing rinks, gymnasiums, parks, athletics facilities, and such across the province every day.

The difference is that we use those facilities for physical recreation. We don't use Rexall for the same thing. Furthermore, there's nothing preventing the citizens from getting their "public good" out of Rexall right now. This is a business decision for a hockey team. As such, they can pay for it.

It's a public good, and it's a public good that has a better-than-average chance of directly returning on its investment.

Can you prove that? More importantly, can the people who want us to pay for the new hockey arena.
 


"An aging and cramped Rexall Place could be transformed into a roomier, modern rink by adding a 13-metre wide doughnut around the existing arena at a cost of $225 million to $250 million, says a consultant's report."

13 metre ring is going to cost 250 million!? Who's the builder, Nieman Marcus? I guess theres no possibility that the reno costs are pumped up to make the NEW building look like a better deal, right?

I've said it before and I'll say it again: I have no problem with a government financing a new arena, which can be used for so many things besides hockey, for the same reason I have no problem with governments financing rinks, gymnasiums, parks, athletics facilities, and such across the province every day.

I'd agree with this, the problem is not public cost, its public accessibility. To me that means FEWER Oiler only bells and whistles and more design aimed at the people that come into the building (hopefully) 200+ nights a year.

PS: How do Flames fans feel about paying for a new Oilers arena?

I've got no problem with it, when the old one wears out, say like in another 25-30 years.
 


Could someone with access to photoshop please do the right thing and mock-up Northlands with a giant kruller around it?
 


I don't understand the whole hubbub about paying for a new rink. Rexall is old, small and going to be out of date pretty soon. Taxes in Alberta are already as low as they can possibly make them. The money's going to be coming out of oil revenues, a couple billion of which they gave DIRECTLY to the people a couple years ago. It's not like Alberta is, say, Saskatchewan. We are rich with too much money and not enough projects to spend it all on - taxes can't be lowered even further - downtown Edmonton is maybe the worst downtown in North America.

Who gives a shit if the EIG and the Journal are cooking up this arena plan as some dark caball in a underground lair? To jack an old UofA slogan, it makes sense.

Bring on the new building.
 


This "arena will revitalize downtown" canard should really be put to rest. I moved back to the 'Peg from Edmonton a year ago. We have a shiny, if smallish new arena which has been a success. That success, however, should be narrowly defined. MTS Centre has drawn more events, and has been more profitable to the owners than the old Arena could have ever been. As a patron, it beats the hell out of the old barn on every conceivable level of comfort. That said, downtown Winnipeg has certainly not magically transformed into a crime-free happyland. The only thing that will improve any abandoned downtown is getting people to live in it, and not just pass through for a few hours on the odd evening. The Rex is certainly showing its age, so a new rink downtown would be nice. Necessary? Not yet. As you noted Andy, this looks like Mandel floating trial balloons for the EIG. When the cap goes up to 48 million next year, you'll likely begin to hear that "we can't compete without a new building" bleating again. Oh, that and a 10-15% ticket hike in order to "survive".

As to that WSJ piece, one of the most noxious developments in new buildings has been the double decker luxury suite that eliminates decent seats in the middle of the building, like the Staples Center in L.A. If tighter corporate governance via Sarbanes-Oxley kills off that trend, so much the better.
 


Rexall is not going to be out of date soon. The Oilers do pretty well off it as it is, and a new arena is only there to make them some more money with more seats and boxes.

Good for them, and good luck. But let them pay for it themselves if it's such a win-win.

Also, there are still a billion other things that the Alberta government could better spend money on that would do more public good.

How about finishing the LRT line? I'd rather see that than have two NHL rinks in Edmonton.
 


How about finishing the LRT line? I'd rather see that than have two NHL rinks in Edmonton.

I'd also like to see them get rid of all these crazy-assed experimental intersections that are sprinkled throughout Calgary and replace them with honest-to-God cloverleaves. Not likely to happen, but it's right after another hospital and a tuition decrease on my personal wishlist. New arena, especially here in Calgary? Down around #872, right after paving the streets with straight Alberta crude.
 


It invites, it does not beg, the question.
 


Mike...a bad ep of The Wire is still better than a good ep of Lost. I'm not saying you're a Lost fan but I don't like to see The Wire bemsriched in any form;)

I read some of the Wsh Post stuff for it's entertainment and Hoyas and Nats stuff and one day I came across a piece where Leonsis was talking about they've lost a lot of the luxary box money because of the crackdown on lobbyists.

Great link BTW AG

Dennis
 


The money's going to be coming out of oil revenues, a couple billion of which they gave DIRECTLY to the people a couple years ago.

I think the idea is that the money went BACK to the people.

No one doubts that there is money in this province. But it's irrelevent. The question is why should taxpayers foot any of the bill, and why that money should go to the arenas, and not some other investment, such as infrastructure, health care, education etc.

It invites, it does not beg, the question.

True. I'll change. Thanks for the logic catch.

When the cap goes up to 48 million next year, you'll likely begin to hear that "we can't compete without a new building" bleating again. Oh, that and a 10-15% ticket hike in order to "survive".

That's happening already, though not on a large scale.
 


My point here is that the Ralph Bucks Giveaway was a spectacularly bad idea in economics (not that I'm complaining, I spent my 400 on booze and a road trip) but it also pointed out that:

(a) there are no feasible, usable large scale infrastructure projects left to fund. Edmonton has its ring road and LRT extension. A further LRT extension would be more than useless since the cold hard fact is that E-Town is a car city and almost no one takes public transit (spoken as someone who took public transit when I was back home). a train to the airport could be useful but really if it doesn't make sense in Vancouver (and it doesn't) why would it make sense in Edmonton?

(b) gripe about health care funding all you want but it's exceedingly well funded as it is, throwing more money at it is not an issue but an eventuality.

(c) a tuition roll back will never happen.

what is left to do with 6 billion annually in surplus? sure, splunk some in education, health care, the usual sorts of things, and why not a couple billion to the heritage fund. but you'll still have something left over to at least partially fund new projects in the major cities like say an arena in Edmonton and maybe a stadium in Calgary. it's not a major burden to taxpayers (the money comes from natural resources and it's impossible to lower taxes even further with no sales tax and a low flat tax and barely any corporate taxes) and it gives the city a new cornerstone in the downtown core, especially if the whole development involves condos, shops, low market housing, etc. a real downtown and, something that's been missing from Alberta forever, actual vision.

alberta is swimming in money. do something with it.
 


compared to a lot of the newer arenas, rexall IS small, cramped, lacking in amenities, has a breaking down ice plant, ugly, not architecturally important, located away from probably the majority of its paying customers, in a bland/bad neighbourhood, over 30 years old, and out of date.
 


Graham, until the personal income tax is eliminated and all user fees (particularly the health care tax) are reduced to zero, taxes in Alberta are most definitely not "as low as they can possibly make them." A hockey arena for corporate welfare bums and spoiled millionaire athletes is about as far from being a "public good" as one can imagine. If the province has a $6 billion surplus, it needs to return that money to its rightful owners: taxpayers.
 


alberta is swimming in money. do something with it.

Sure, but what makes the EIG group more in "need" of the money than me, or the roads, etc?

Got to spend it somewhere, might as well be on the Oilers doesn't make much sense to me.

Why not just give 1000 people half a mil each? I'm sure that'd be fun for the taxpayers as well. How much less sense does that make as compared to everyone in Edmonton spending 500 bucks each so the EIG can make more money.

speeds
 


alberta is swimming in money. do something with it.

Sure, but what makes the EIG group more in "need" of the money than me, or the roads, etc?

"Got to spend it somewhere, might as well be on the Oilers" doesn't make much sense to me.

Why not just give 1000 Edmontonians half a mil each? I'm sure that'd be fun for the taxpayers as well. How much less sense does that make as compared to everyone in Edmonton spending 500 bucks each so the EIG can make more money?

speeds
 


yes, taxes ARE as low as they can make them and have the province still make some sort of economic sense, protected from sudden downturns in oil prices, etc. it's no longer (if ever) possible to have a place with absolutely no taxes and social programs.

my point is that (sorry to use hockey terminology) taxpayers are not driving the results in alberta's coffers: oil is. thus, "giving it back to the taxpayers" (see: Ralph Bucks) makes no sense whatsoever.

300-500 million might sound like a tonne but spread out over 5 to 10 years of 1 to 6 billion dollar surpluses, it's barely a drop in the bucket.

plus, it'd be cool to have a new rink.
 


I respectfully disagree that it's impossible to have a jurisdiction with no taxes.
And it's a proveable fact that Alberta is a long, long way from being a tax-free province. Income tax. Hotel tax. Health care tax. User fees in schools and hospitals. And on and on. They might not be called a "tax" but they are a "tax" just the same.
As for social programs, this isn't the forum, but it's not an immutable law of the universe that any of those must, or even should, exist either.
Art.
 


(a) there are no feasible, usable large scale infrastructure projects left to fund. Edmonton has its ring road and LRT extension. A further LRT extension would be more than useless since the cold hard fact is that E-Town is a car city and almost no one takes public transit (spoken as someone who took public transit when I was back home). a train to the airport could be useful but really if it doesn't make sense in Vancouver (and it doesn't) why would it make sense in Edmonton?

This is patently false. Saying there is no use for an LRT because no one uses it now is pretty shortsighted. In addition, the highway to Fort McMurray needs to be twinned, many facilities at the Universities need to be renovated or rebuilt, and I won't even get into Indirect Costs of research. I could spend a day idenitfying needs in this province that outweigh a new stadium.

compared to a lot of the newer arenas, rexall IS small, cramped, lacking in amenities, has a breaking down ice plant, ugly, not architecturally important, located away from probably the majority of its paying customers, in a bland/bad neighbourhood, over 30 years old, and out of date.

I call bullshit on this one, too. Half the stuff doesn't justify why we should pay for it, and the other half won't be any different once a new stadium is built.
 


I think that before any bugger even thinks about building a new stadium anywhere in North America they should investigate the reasons that these buildings start "falling apart" after about 25 years.

This doesn't happen to office buildings. Why not? The stadia in Europe wear much better. Why? I mean Manchester United play in a facility that is nearly 100 years old (granted significantly rebuilt after being bombed by the Nazis in the 1940s). And that team is a publicly listed company valued at about $1.5 billion, similar to the value of the entire Western Conference in the NHL.

Must be the building materials. Yeah, that's the ticket.

Great link, Andy. I suspect that the changes in tax law is the driving force here, I'm not familiar with US tax law but a similar revision here had a significant impact on Canadian sports teams a decade or so ago.

BTW: The Oilers luxury suites now rank among the most expensive in pro sports.
 


I think that before any bugger even thinks about building a new stadium anywhere in North America they should investigate the reasons that these buildings start "falling apart" after about 25 years.

I made this point when it was being debated at TB's. Look at how old the Forum was when the Habs finally left (72). Look at how old MLG was when the Leafs moved (68). How in the crap can you tell me that a 33-year-old arena is delapitated and unusable? If it was made too small, isn't that the fault of the designers at the time? I mean, granted, it was built for a 10- or 12-team WHA, not a 30-team NHL, but the point stands that if size is your only issue, that's not, in my view, worth $250M or $400M. Even worse, if as Grabia says, Calgary gets a new arena out of the deal, that's even dumber. The Saddledome is 24 years old, folks. Renovated about 12 years ago. 19k+ seats. No excuses.
 


I think that before any bugger even thinks about building a new stadium anywhere in North America they should investigate the reasons that these buildings start "falling apart" after about 25 years.

Exactly. The issue has now been very expertly reframed to two options: either a renovation or a new building. Few media members or politicians are mentioning the third option: none of the above.
 


One other point: why would adding 3000 seats guarantee that they get sold, anyway?

Up until this season, The Oilers were far from selling out every game with 17,000 seats.
 

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