New Edmonton Arena Construction will begin in March 2014

[MoneyGuy]

Originally Posted by Phanuthier

He's bluffing and everyone knows it. All that crap when he forced the sale to buy the team about how he grew up an Oiler fan and wanting to keep the team in his home town. Does Katz plan on moving too? Otherwise he's not attending games. This is all a charade, its comical at best.

I know he's bluffing. There is virtually nil chance the Oilers are going anywhere. Exhibit A: Phoenix Coyotes. Edmonton is one of the strongest franchises in a league where many teams are suffering financially.

[WilderPegasus]

Originally Posted by Sidney Crosby's Hat

There's no doubt that an arena spurs economic growth in the area around the arena. Look at Columbus, Los Angeles, etc.

Look at Glendale! And how is the new rink working out for Newark?

Heck, Edmonton has 5 condo projects, a casino and an office tower ready to go when the arena gets a thumbs up (all within 4 blocks of the arena site).

The argument is, is this new growth or is it simply taking growth away from other parts of the city? In a city like Edmonton where downtown revitalization is such a priority for this mayor and council, do they care about this argument?

Edmonton is booming and chances are that condos, casinos and office towers would be getting built regardless of whether a new arena is built or not.

[Sidney Crosby's Hat]

Originally Posted by WilderPegasus

Look at Glendale! And how is the new rink working out for Newark?

Both arenas have restaurants, shops, etc. right by the rink that wouldn't have existed without the arena. Glendale has Westgate, Newark has Brick City.

Originally Posted by WilderPegasus

Edmonton is booming and chances are that condos, casinos and office towers would be getting built regardless of whether a new arena is built or not.

These projects are specifically contingent on the arena being built. One office tower of which by Katz Group itself.

[Thunderball]

Originally Posted by Tinordi

Fact: a new arena Costa much much more than any incremental public benefits than it provides, it is not even close to net positive from the use of limited tax payer dollars

Fact: There is no arts/culture public work that generates a net positive in cost, even those with user fees, so not realizing a profit on a sports facility is irrelevant. If there was, there would be private for-profit ventures like sports teams, and not the odd (typically subsidized and tax sheltered) private non-profit. But even sports teams are not a great investment, and massive capital expenditures require assistance from major beneficiaries to materialize without crippling debt (namely, the City and the Province/State).

Fact: Sports teams, Visiting Sports teams, Stadiums and Visiting Attendees generate a significant amount of tax revenue that would not otherwise be present or realizable in that market. The argument about losing local entertainment dollars isn't a particularly strong one (though there have been surveys where people in cities without pro franchises, or cities that lost their pro franchise claim to be more likely to travel elsewhere for sport or leisure then to spend the equivalent amount in their market. You can decide how reliable that is). I wrote a Sports Law paper on a very similar topic.

Fact: Cities can successfully use arenas/stadiums to attract people to specific areas (example: Downtown Detroit - Comerica Park and Ford Field as part of Downtown revitalization).

Question: Assuming NO private money (which isnt happening in any scenario except in the event of trying to replace a pro team), with a lifecycle of 30 years, and a cost of roughly $300 million per facility, is a sports facility worth its per year cost of $10 million per facility in region advertising and promotion, recreation/entertainment value and the potential (note, not a guarantee) for improved revenues?
I'd say yes, you'd say no. But I'd say there's an argument for each side. A cynical one being that more money than $10m/yr is wasted on less fruitful ventures.

[longsuffering]

Originally Posted by Thunderball

Fact: There is no arts/culture public work that generates a net positive in cost, even those with user fees, so not realizing a profit on a sports facility is irrelevant. If there was, there would be private for-profit ventures like sports teams, and not the odd (typically subsidized and tax sheltered) private non-profit. But even sports teams are not a great investment, and massive capital expenditures require assistance from major beneficiaries to materialize without crippling debt (namely, the City and the Province/State).

Fact: Sports teams, Visiting Sports teams, Stadiums and Visiting Attendees generate a significant amount of tax revenue that would not otherwise be present or realizable in that market. The argument about losing local entertainment dollars isn't a particularly strong one (though there have been surveys where people in cities without pro franchises, or cities that lost their pro franchise claim to be more likely to travel elsewhere for sport or leisure then to spend the equivalent amount in their market. You can decide how reliable that is). I wrote a Sports Law paper on a very similar topic.

Fact: Cities can successfully use arenas/stadiums to attract people to specific areas (example: Downtown Detroit - Comerica Park and Ford Field as part of Downtown revitalization).

Question: Assuming NO private money (which isnt happening in any scenario except in the event of trying to replace a pro team), with a lifecycle of 30 years, and a cost of roughly $300 million per facility, is a sports facility worth its per year cost of $10 million per facility in region advertising and promotion, recreation/entertainment value and the potential (note, not a guarantee) for improved revenues?
I'd say yes, you'd say no. But I'd say there's an argument for each side. A cynical one being that more money than $10m/yr is wasted on less fruitful ventures.

All those FACTS and not a single link. Links were provided to support the argument from the other side. It would be nice to see something to support the FACTS you're presenting.

[Sidney Crosby's Hat]

Originally Posted by longsuffering

All those FACTS and not a single link. Links were provided to support the argument from the other side. It would be nice to see something to support the FACTS you're presenting.

Here's some good pieces on arena boosting property values:

http://blogs.edmontonjournal.com/201...arena-project/

[seattleflamer]

Originally Posted by Thunderball

Fact: There is no arts/culture public work that generates a net positive in cost, even those with user fees, so not realizing a profit on a sports facility is irrelevant. If there was, there would be private for-profit ventures like sports teams, and not the odd (typically subsidized and tax sheltered) private non-profit. But even sports teams are not a great investment, and massive capital expenditures require assistance from major beneficiaries to materialize without crippling debt (namely, the City and the Province/State).

Fact: Sports teams, Visiting Sports teams, Stadiums and Visiting Attendees generate a significant amount of tax revenue that would not otherwise be present or realizable in that market. The argument about losing local entertainment dollars isn't a particularly strong one (though there have been surveys where people in cities without pro franchises, or cities that lost their pro franchise claim to be more likely to travel elsewhere for sport or leisure then to spend the equivalent amount in their market. You can decide how reliable that is). I wrote a Sports Law paper on a very similar topic.

Fact: Cities can successfully use arenas/stadiums to attract people to specific areas (example: Downtown Detroit - Comerica Park and Ford Field as part of Downtown revitalization).

Question: Assuming NO private money (which isnt happening in any scenario except in the event of trying to replace a pro team), with a lifecycle of 30 years, and a cost of roughly $300 million per facility, is a sports facility worth its per year cost of $10 million per facility in region advertising and promotion, recreation/entertainment value and the potential (note, not a guarantee) for improved revenues?
I'd say yes, you'd say no. But I'd say there's an argument for each side. A cynical one being that more money than $10m/yr is wasted on less fruitful ventures.

So your basic premise from these "facts" is that it is ok that government funds subsidize activity that the private sector can finance on its own?

EDIT: Rhetorical since I obviously know your answer. Just questioning your comparison of private enterprise activity to historically defined responsibilities of government with finite tax dollars.

[Thunderball]

Originally Posted by seattleflamer

So your basic premise from these "facts" is that it is ok that government funds subsidize activity that the private sector can finance on its own?

The basic premise is that the government should chip in on ventures that directly benefit the city and province/state and achieve their policy goals, rather than sit back and hope for the private sector to do so, tax at will, and hope the private venture doesn't go under or move to a jurisdiction that will be a willing partner and lose the benefits and tax revenue.

The city and the province are stakeholders and beneficiaries. They benefit from the Flames and Oilers, and would suffer if they disappeared. They knew it in the 2000s when they did the lottery and the visiting players tax. They'd be wise not to forget that now.

[seattleflamer]

Originally Posted by Thunderball

The basic premise is that the government should chip in on ventures that directly benefit the city and province/state and achieve their policy goals, rather than sit back and hope for the private sector to do so, tax at will, and hope the private venture doesn't go under or move to a jurisdiction that will be a willing partner and lose the benefits and tax revenue.

There is a role for government but I question how much is too much with finite tax dollars for other less glamourous projects/services that need funding.


Like some have mentioned, the city should scale back the project design to where the original money was in 2012 dollars.


What Katz is asking the citizens of Edmonton to do dovetails nicely with what is happening with Seattle's new proposed arena with Chris Hansen, a fellow billionaire.


Hansen is putting legally binding personal guarantees to any cost overrun, over and above the agreed to amount of $490M. He is allowing yearly audits to ensure his net worth is at least $300M to make those payments.

There will be escrow accounts set up that have ongoing 5 year's worth of debt repayment from the city/county financing portion of the project plus his original $290 million skin in the game.


He is also paying another $47M for improvements to traffic mitigation and the city owned legacy arena which will be impacted by the shiny new toy.

Does he have bad business acumen compared to Katz? Maybe but simply put, Seattle has a law via plebiscite that prevents tax subsidies to sports franchises after what happened to the taxpayer with Century Link, Kingdome, Safeco and Key Arena projects.

Yet despite all these restrictions, Hansen sees an opportunity to make money. Compare that to Katz who has moved the goal posts and needs a new PR firm.

[EddyBeers]

Originally Posted by Sidney Crosby's Hat

Here's some good pieces on arena boosting property values:

http://blogs.edmontonjournal.com/201...arena-project/

Those looked like mainly opinion pieces to me. I guess the question is whether Katz wants to move the team to Kansas or some other hockey hot spot. Do any of those articles actually have facts that back up what they are saying?

[Tinordi]

Laugh

How does the city benefit from higher property prices around the arena?

[corporatejay]

Originally Posted by Tinordi

Laugh

How does the city benefit from higher property prices around the arena?

Tax revenue.

[Tinordi]

?

The city property tax mill rates are set by what the city needs for revenue. Higher property values means lower mill rates all else equal.

Even then under your scenario where there would be net tax increases would it even come close to approaching the city's direct investment? answer: no

[morgin]

Originally Posted by Tinordi

?

The city property tax mill rates are set by what the city needs for revenue. Higher property values means lower mill rates all else equal.

Even then under your scenario where there would be net tax increases would it even come close to approaching the city's direct investment? answer: no

It doesn't have to though. As long as there are tangible benefits to the city, even as simple as "making a good percentage of our citizens happy" by making the outlay of funding, it can likely be justified provided it is a reasonable outlay given the economics of the project. Also, they need to be up front with the public and stop calling it an "investment". It's not an investment any more than the mandatory public art component of infrastructure projects is an "investment". It's an investment into factors that are very difficult to quantify, and rarely will result in a zero dollar impact.

[morgin]

Originally Posted by morgin

It doesn't have to though. As long as there are tangible benefits to the city, even as simple as "making a good percentage of our citizens happy" by making the outlay of funding, it can likely be justified provided it is a reasonable outlay given the economics of the project. Also, they need to be up front with the public and stop calling it an "investment". It's not an investment any more than the mandatory public art component of infrastructure projects is an "investment". It's an investment into factors that are very difficult to quantify, and rarely will result in a zero dollar impact.

And don't get me wrong, I'd love it if the reality of stadium/arena building was that the regions could demand the owners not only 100% fund projects but also to get approval had to contribute certain monies to offset regional infrastructure changes to support transportation to and from, etc. We don't live in a rational, fairy tale world though and since regions have long allowed themselves to be bent over, we need to focus on incremental change. Slowly reducing the amount spend on these projects when the economics of the primary tenants means they should be 100% privately funded is one way, but we aren't even close to there yet.

[SebC]

Originally Posted by Tinordi

Laugh

How does the city benefit from higher property prices around the arena?

If anyone is looking for the precise point where Tinordi's argument jumped the shark, this is it.

[Tinordi]

Explain

[Tinordi]

Why should the city spend $100 million to increase the value of land for private landholders? By definition the price increase is capitalized into the value of the land so it's not like we're getting some difficult to arrive to public good.

Further does the city own the land around the arena? Even if it did hoe much would the land increase in value and what is the absolute value increase compared to the $100m investment?

Because the city doesn't own the land it's all moot anyway. As already started the property tax rate is set by what the city needs as a percentage of the value of all properties so the city isn't going to just get a windfall of new tax receipts from higher land values. Property tax rates could drop off the average value of properties increases but as I've detailed in earlier posts this would just displace economic activity not add incremental activity so some areas of the city will likely see their property value decline making the net increase a wash.

So no, the argument is sound.

[Sidney Crosby's Hat]

The city will own the arena and the land around the arena.

[Mr.Coffee]

So again, nobody seems to be able to answer my question.

Why are new rinks needed, at all? Because Gary said so? Who cares?