Thursday, January 18, 2007


Muh Mum Ma My...Arena

TSN has a story from the Canadian Press up, on the Oilers looking for a new stadium. Man, the Edmonton Investors Group is good. The team says a couple of things officially, but they let the rest of their story get spun told by someone else. That way, they didn't start the conversation, right? Or feed that info to anyone. It's just out there, floating in the ether, looking for a home. To wit:

1) We now have a timeline for the new building, from Pat Laforge himself: seven years, which is when the contract with Northlands runs out.

2) We have the implied threat of movement, from the writer (I'm going to guess it is Pierre Lebrun):
Built in 1974, Rexall Place is the oldest Canadian home in the NHL and third-oldest in the league, behind Mellon Arena in Pittsburgh and the Nassau Veterans Memorial Coliseum, home to the New York Islanders. In Pittsburgh, failure to reach a deal on a new rink has left the future of the franchise in doubt in the Pennsylvania city.(emphasis mine)

3) We have the writer painting a picture of Rexall wherein the stadium is similar to the streets of Calcutta in its crowdedness and dilapidation:
Between periods, patrons lining up for the washroom snake out the door, becoming a human dam for a streaming river of fans shuffling, elbowing and bumping along to grab food and souvenirs.

The locker room is tiny, media facilities need upgrading and TV trucks are forced to wedge in under the seats with no room to spare.

4) We have the team president say that the building leaves them no choice but to raise ticket prices:
"It causes us to have to increase ticket prices because we don't have that bottom-end price at the top end of the bowl like a lot of other buildings do."

5) We have the writer telling us that the team is trying really, really hard to do this on the cheap:
Edmonton Northlands has commissioned a report from a U.S. architect on whether Rexall can realistically be upgraded to the size of modern NHL rinks. It's expected to be ready next month.

6) We have the writer reinforcing the price tag:
The downtown arena proposal hasn't gone beyond informal discussions among business leaders. The rough price tag is $300 million.

Mayor Stephen Mandel has said he would look seriously at building a new downtown rink that would be part of a $1-billion complex of shops, businesses and a hotel. Who would pay for what is part of the discussion.

7) And least but not least, we have the economist, the guy who is really going to spin the bullshit tell it like it is for the Edmonton Ownership Group.
Sports studies professor Dan Mason said building a rink downtown is part of the new economic model for sports facilities and cities.

More activity in the businesses around a downtown rink can translate into more retail, commercial and real estate tax money to help service the arena debt, he said.

"You can look at it as the arena can pay for itself," said Mason, who studies sports and stadium financing at the University of Alberta.

All in all, a pretty good story for the Edmonton Investors Group. They touch all the bases, without even really needing to move past first.

Just to be clear, let's look at the timeline:

1) On November 14th, 2006, an editorial runs in the Edmonton Journal about the potential for a new arena. The writer, Paula Simons, just wants to start the dialogue. She says the backers of the plan are "anonymous." No timeline is given, Rexall is functional, it is admitted that there are pros and cons to building a new arena in the downtown area, and it all has to be about what is right for the citizens of Edmonton.

2) On December 11th, 2006, an editorial runs in the Edmonton Journal. The writer, Dan Barnes, is fine with the idea, as long as taxpayers don't have to foot the entire bill. He says that it is the Oilers who want a new arena, that the stadium should not be financed primarily by public dollars, that the total cost is around $250 million, that the team should stop with its not-so-subtle references about how old the arena is, and that a clear vision of what the EIG wants to do, and how they wish to see it accomplished, is required.

3) On December 22nd, a story runs in the Edmonton Journal. Edmonton Mayor Stephen Mandel states his support for the building of a new arena in downtown Edmonton. The arena could be part of a development plan costing $1 billion. The arena itself could cost $300-400 million. Rexall is old, may or may not be able to be renovated, and a creative plan that will not burden the taxpayer must be sought out.

Which gets us to today. Notice what has been shed, and how defined it has become in a two month period. It's no longer an anonymous plan, but one the Oilers and the Mayor both support. There is now a timeline, where before there was none. Cost has gone from $0 to $250 million to $300 or $400 million, to maybe even $1 billion if it includes hotels and such. Rexall has gone from functional to run down. An increase in ticket prices isn't the EIG gouging the fans, it's the fault of the building. It has gone from possibly building a new arena on the Rexall site or a new downtown site to just building a new arena downtown. The economic cons have disappeared to the point where a downtown arena is simply the cost of doing business. And the concern about what is best for the citizens of Edmonton has been shed, along with a funding formula whereby the EIG foots most of the bill, in favour of doing what is best for the owners of the Edmonton Oilers. But remember, don't be mad: "you can look at it as the arena can pay for itself."

Concurrent with these articles has been the conversation on the blogs. I have consistently opposed the idea, skeptical about the motivations of the Journal and the EIG, and refusing to use public dollars to the tune of $250 million + for a hockey rink that the owners should pay for themselves. Mike at Covered in Oil has also rejected the idea. Avi at SportsMatters has written the best piece on the subject, deconstructing much of the spin about economic benefits and the responsibility of taxpayers. Though it was done in the National Post, Colby Cosh also deconstructed the arguments in favour of a new building, then proceeded to support the idea in his concluding paragraph. And finally, Tyler has written on the issue at mc79hockey, supporting the use of taxpayer dollars on the grounds that other entertainment events and cultural activities receive government funding. I haven't given a perfect summary here, and I completely left Matt's view out in the cold, but my point is that the Oilogosphere has been on the issue from the get go. I'm also certain it's engaging in a much more balanced and informed debate about the issue than the public at large, and probably the City of Edmonton, the Edmonton Oilers Investors Group, and the Province of Alberta, for that matter.

Having again expressed my disapproval of using $250 million + of public funds to build a new Oilers arena, I'd like to pick up on a point Cosh made in his National Post article. I disagree with his and Dellow's assertion that giving private owners of a profit earning hockey club hundreds of millions of dollars is the same as supporting scientists, artists and non-profit organizations like the Edmonton Folk Festival, but I do agree with his point about a new arena being built on the basis of a competitive advantage. I have been thinking about this for some time, and have come up with some conditions whereby I can buy into the building of a new Oilers arena. Not that my aceptance matters at all. I'm just having some fun. Most, if not all of the conditions, centre on the notion of a competitive edge.

1) The new arena must have a European-sized ice surface.

The NHL Rulebook states that the "official size of the rink shall be two hundred feet (200') long and eighty-five feet (85') wide. The corners shall be rounded in the arc of a circle with a radius of twenty-eight feet (28')." International rinks are wider, at 98.5 ft, and have more space behind the net. That is the kind of rink I want in Edmonton: 200 feet long, 98.5 feet wide, and corners with a radius of 28 feet. I also want 13 feet from end board to goal line, 58 feet from goal line to blue line, and 58 feet between blue lines. Such a rink size would never happen in Rexall, because it would cut out seats in the lower bowl. But with a new arena, it can happen. I suppose Gary Bettman and other owners might object, but I say forget them. Build it, and then build a team around it. It's no different from what the Flyers, Bruins and other teams did for years, and it's how it works in baseball. It's a unique feature for fans to enjoy, and it will help the team draw in a specific type of free agent: the fast and tremendously skilled one.

2) The new arena must be tailored to be as loud as humanly possible.

Paul Allen did this one right with Qwest Field, home of the Seattle Seahawks. He demanded that builders minimize the stadium footprint, allowing fans to get closer to the game. The final product was one where the fans are practically sitting on top of the field, rather than pushed back through the traditional bowl structure. The structure of the stadium, especially the roof, was designed to optimize fan noise. One end of the stadium was specifically designed for the hard-core fan: metal bleachers were put in, so that the fans could stomp their feet and make a ton of noise. A "12th Man" flag was put up, to recognize and honour the fans, as well as get them pumped up before the start of a game. The effect of these design features has been tangible. Opposing teams regularly get false start penalties, more than anywhere else in the NFL. They've even complained that the Seahawks are piping in the noise, it's so loud. I don't know how it can be done in a new hockey arena, but making the place ridiculously noisy should be the goal. It enhances the fan experience, and makes the place tough for opposing teams to play in (see Chicago Stadium).

3) The new arena must have state-of-the art facilities, locker rooms, and player amenities.

Mark Cuban and the Dallas Mavericks are the model. Not only did Cuban make Dallas a destination of choice by offering nice juicy contracts; he made the amenities something the players would notice. As soon as he bought the Mavericks, he arranged for the team to fly on their own plane, and bought every member of the team and the organization a new laptop computer. He equipped the Mavericks locker room with state-of-the-art technology. Every player has a stereo system and a video game console, amongst other things. He also made sure that the opposition player's dressing room was outfitted to the max, so that they would have an idea of what it would be like to play in Dallas if they signed there as free agents. The idea is that you spend money on things outside of the cap that will draw players to your city. I would argue that the model is even similar to the creative class model expounded by Richard Florida. People increasingly care more about amenities that affect their standard of living--health care, education, parks and recreation, arts & culture etc.--than they do about pure salary. These players are getting paid millions no matter where they play. It's the details that make the difference. Like, you know, not letting Chris Pronger live in Terwilliger Towne. Stuff like that.

4) The new arena must have a real organ.

No model here, other than the legendary ambience at old-school hockey arenas. I want me an organ!

**5) The Edmonton Ownership Group must increase its commitment to maximizing the fan experience.

This one's a bonus, mostly because I want to talk about Cuban. Again, he is the exemplar. Many sports fans think of Cuban as the crazy owner who runs around the basketball court, waving his hands and yelling at referees. But despite the aloof appearance, Cuban takes his ownership, and specifically ownership's relationship with the fans, seriously. Everyone knows he sits courtside at every home game, but Cuban also sits in the $8 seats several times a year, hanging out with fans and asking for input on the product. His email address is put up on the Maverick's scoreboard every game. In 2001, he received an email from a fan suggesting that the team put up three-sided 24 second shot clocks, so that spectators too could see them (they were originally built for just the players). The new clocks were up three weeks later. He writes on his own blog, and the comments are turned on. The Mavericks maintain a database that tells them if season ticket holders have attended a game or not (tickets are scanned at the turnstile). If they have not, they get a personable phone call from a staffer the next day, inquiring about their absence and making sure all is okay. And speaking of tickets, Cuban lowered their price this season. The reason: player payroll was going down.

Granted, when Cuban took over the Mavericks they were an unsuccessful team unable to put butts in the seats. But Cuban changed that through smart business moves, and he hasn't stopped trying to please the fans now that the team is selling out every night and winning games. The lesson for the Oilers is this: don't take your fan-base for granted. I'd start off by increasing the production value of Pay-Per-Views and not increasing ticket prices without an increase in payroll. Here's an even more radical idea: tie your ticket prices to the number of wins on the ice. The team wins, the product is good, prices go up. Team stinks or underperforms, the product is no good, and prices go down.

That's all I got. I could write a fancy conclusion, tying it all together, but I'm not getting paid by the word. This took too long as is. It will all get flushed out in the comments. In short, I don't buy most of the Edmonton Investor Group's arguments, but if they want to talk about creating a competitive advantge, I'm all ears.

***Update*** PM has his own take on COI.

***Update*** Big edit here. At the beginning of this post, I said:

"And least but not least, we have the economist, the guy who is really going to spin the bullshit tell it like it is for the Edmonton Ownership Group."

Turns out, the guy I assumed would be an economist--because, you know, they were talking about the economics of building a new arena in the downtown core--doesn't have a single degree in the field. He teaches in the Faculty of Business at the UofA, but all of his degrees are in Physical Education. Nothing wrong with that, of course, and the resume is pretty stacked with research on hockey, but I would have assumed the expert would be equipped with a bit more expertise. Thanks to Tyler for the link to the Dr. Mason's CV.



Great post.

The only thing that bugs me: during the lockout, in winning fans over to the CBA, EIG promised that a cap system was the solution for keeping the Oilers in Edmonton.

Barely out of this CBA agreement you already have EIG turning the screws on a new arena, with not-so-subtle allusions to ticket price increases and the Pittsburgh Penguins (via their sports typist lackeys).

And you know what? It will almost definitely work.

Good ideas about the arena.

Two points

The fans close to the ice - like the difference between watching something at Clark Stadium and the same event at Commonwealth.

Ice Surface - but rather than Olympic size, totally screw them up by going 195 x 95 - 5 feet shorter, 10 wider.

The only thing that bugs me: during the lockout, in winning fans over to the CBA, EIG promised that a cap system was the solution for keeping the Oilers in Edmonton.

Yup. And where does that extra revenue go, if salaries are fixed?

Great insight, Andy. I think a new arena is all but inevitable, and the 7 year time frame is realistic. The economics of the benefits of public funding are still unclear to me, but I guess now is the time to sort all of the possiblities out to avoid the situation in Pittsburgh now. Not that I worry about the Oilers moving, but because we all know this debate over a new arena will come to a head sooner or later.

Its effects external to the exchange between ticket buyer and team are probably greater than for opera or ballet, though no effort to measure that has been made.
Isn't that like saying: I'm going to make a completely unsubstantiated claim, but don't hate me because I will immediately acknowledge that it's almost certainly b.s.?
If the government is going to waste money I am content that it should waste money on one of my own pursuits, even if many of the underlying arguments are bogus (as I worked to demonstrate). That does not mean I am in favour of wasting money, and I am at fault for leaving any impression to the contrary.
Yes, it's a waste of money, but as long as they're wasting money on stuff I like, I won't complain too much. This is how our country could run up a half-trillion-dollar debt and Alberta's provincial government spending could double during King Ralph's reign.

you can look at it as the arena can pay for itself

If an arena paid for itself, the owners would build it…

Although I’m certain the “pay for itself” claim relates to general tax revenue for the city.

As a fan observing from a far in Milwaukee (we just built two stadiums via taxes) I thought you’d be interested Caught Stealing: Debunking the Economic Case for D.C. Baseball.

I’m assuming politicians are basically the same in Alberta as Wisconsin so the stadium will be built no matter what objections are raised. Thus in an effort to make you feel better, just know that my country spends 200 million a day in Iraq.

Great post on the topic. What kills me is that not a single reporter mentions any of the studies that show that stadiums do not bring all the magical benefits mentioned but if a new arena/stadium gets mentioned on a blog then commenters are ready to pounce.

Do reporters not do any work anymore?

Also, you are slightly ahead in the Hot-Off and Chris! does look startling like Freddy Mercury. You might have just lost the gay vote.

No, it's like saying we have obvious, strong, dramatic, fresh, yet informal evidence that hockey can improve life in the community for nearly everyone,

That's hockey doing that in a functional rink. What does hockey and a new arena do that hockey alone does not?

that the impact of the more abstruse fine arts on non-participants seems to be less broad and profound,

Which of these activities are asking for $300 million? How much does the city of Edmonton spend on the fine arts?

"I think pretty much everybody else got what I was driving at, but if you need me to draw a picture, it can be arranged."

Will you need funding for that?

Great idea on the rink size, but I think there's a rule now. Big ice would, however, accommodate international tournaments and revenue. The Olympics would be cool, if we could re-build Lake Eden.

As a oilers fan living here in Seattle I can completely understand and sympathize with your plight. See our two new stadiums and the fight over the replacement of a 3rd (let the Sonics go somewhere - we don't watch them anyway). Ours were funded much by the taxpayer.

That being said, I completely understand those that argue that tax dollars shouldn't be used. I, too feel that living in a country with an obscene national debt and closing schools due to shortage of tax dollar funds seems insane to use additional taxes to fund something like the stadiums.

However, we as a community voted to increase taxes specifically for Safeco Field, it was OUR choice and the beauty (and at times downfall) of my country is that we had (in this situation) the choice to make.

I do also see the frustration in the fact that we spend millions in tax dollars in things that are just as non-essential. Festivals, New Age Art (do you even know what the hell it is?????) and other seemingly insane activities.

I guess the point that I am making (if I am making one at all) is that it is a matter of perspective. If you like those festivals, you feel that it is an asset to the community to have them and should be funded, just as an oilers fan you feel that they are an asset to the community.

I do still have problems with extra taxes to pay for stadiums here in Seattle, but I sure do love sitting in Safeco Field and Qwest Stadium. I sure do love being a Seahawks fan and rooting for my hometown team.

I do see the direct corallation to the business that these activites bring to downtown. I do see the uses of these facilities during non-sporting event days that bring revenue to the community, and I do see specific taxes being assessed in Seattle to businesses directly profiting from these buildings.

Realistically, you desperately need a new stadium, realistically, you will get a new stadium in the next 5+ years, and realistically the Oilers are not going to pay for very much of it (as much as we think they should). I say make your demands on what you want in the arena and remember that with all the Politicians bullsh*t, there is some truth, that it will enrich your community (a city that I fell in love with when I went to University there) and it will bring new business and a new economic center with it (remember to make those demands - if your gonna pay you might as well get what you want), and enjoy it cause there is nothing like sitting in a brand new arena watching an age old tradition......

Which of these activities are asking for $300 million? How much does the city of Edmonton spend on the fine arts?

I can answer that. In 2005, the Edmonton Arts Council gave $2.766 million to artists and arts organizations. As Avi pointed out in his post, the EIG has been getting substantially more than that every year since 1998, to the tune of at least $4.6 million a year, and probably more.

As Avi pointed out in his post, the EIG has been getting substantially more than that every year since 1998, to the tune of at least $4.6 million a year, and probably more.

Substantially more from the City of Edmonton, I forgot to say.

No, it's like saying we have obvious, strong, dramatic, fresh, yet informal evidence that hockey can improve life in the community for nearly everyone, that the impact of the more abstruse fine arts on non-participants seems to be less broad and profound, and finally that that a formal test (ideally a quantitative one) would still be nice if it were possible.
Gosh, you sure do use perty words. Bein' a turnip an' all, I gotta believe wat yer sayin' mus be right n' all.
Except your "argument" is completely devoid of facts or substantiation (see, I have a liberal arts degree from the UofA just like you). It is not obvious.
I think pretty much everybody else got what I was driving at, but if you need me to draw a picture, it can be arranged.
You write it, therefore everybody else gets it. That's some powerful s*** you've been injesting.

We should also remember that Edmonton Arena II would not necessarily be an entirely City of Edmonton-funded operation. How much cash has the province dumped into the two Jubilees, the Winspear, etc. etc. since Northlands Coliseum opened in, what, 1977, wasn't it?

We should also remember that Edmonton Arena II would not necessarily be an entirely City of Edmonton-funded operation.

I doubt very much funding would come from the city at all. The province would have to be the heavy lifter. Mandel is just lobbying. He can't put the walk in that talk.

Apparently they're suckin' back the Kool Aid: 59% of Oilers fans polled at their website say "new rink, dude." Gah.

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