New Edmonton Arena Construction will begin in March 2014

[Locke]

Originally Posted by Phanuthier

Maybe a dumb question, but why don't they get a loan/mortgage/similar?

Well, that has generated some interesting questions concerning Katz's actual financial resources.

[SebC]

Originally Posted by Phanuthier

Maybe a dumb question, but why don't they get a loan/mortgage/similar?

I'm not sure who you're referring to as "they", but from Katz's perspective, why get a loan if you think you can get a grant? From Edmonton's perspective, borrowing money as a muncipality is basically forbidden by the province.

[Tinordi]

Duha calls out Katz. Good article:

http://www.theglobeandmail.com/sport...rticle4568381/

No, it shouldn’t come as a surprise. Jaded observers have monitored this discussion for decade: Should a private sports entity ever receive subsidies from the public purse?

Sometimes, governments give in to the pressure and sometimes, they stand fast.

But the Seattle Oilers?

In a soon-to-be oversaturated sports market that includes Major League Baseball, the NFL, a popular MLS team and a likely NBA expansion team, an NHL team – any NHL team – would be an afterthought.

Honestly, there is no way to see this as anything other than a giant bluff. It would be nice if Edmonton city council saw it that way, too.

Globe weighs in that there's very little economic benefit from an arena:

http://www.theglobeandmail.com/sport...rticle4568843/

[Tinordi]

Originally Posted by Resolute 14

That is simplistic to the point of being worthless.

The Molson Centre was built for $270 million in 1996. Five years later, the Molsons sold the arena AND team for $275 million. Obviously the arena depreciated in value significantly over that time and could definitely be argued as a bad investment.

On the flip side, Molson re-purchased the team, arena and Gillett's entertainment company for $500 million. I'd say the arena obviously appreciated in value in those eight years, but has never approached its original cost.

Which, of course, is why most team owners try to get public funding.

Yes exactly it was simplistic because the original statement was terribly simplistic and worthless. The point of my post.

[valo403]

Originally Posted by Tinordi

Yes exactly it was simplistic because the original statement was terribly simplistic and worthless. The point of my post.

Except you decided to try to make a point about the privately funded building being solvent without providing any support as well. You can't have it both ways, if it's simplistic and worthless as an attempt to counter your position it can't become useful when you try to use it to support your position.

[old-fart]

Originally Posted by getbak

The original price tag was going to be $450M.

Katz would pay $100M, the city $125M, $125M from a facility fee/ticket tax, and the final $100M was never accounted for.

The assumption was that they'd be able to get the provincial and/or federal government to provide that money, but both levels of government have consistently said no.


Since then, the estimated cost has gone up another $40M, and no one has agreed to pay that money either.

Ah... I thought the facility fee/ticket tax was supposed to pay back the $125M from the city. If not, who is fronting that other $125M (not the city, the ticket tax money)? No builder is going to build anything and say 'pay me back as you can over the course of the next 10 years'... (just quick math, but if you charge a $10 tax per ticket, to pay back the original $125M assuming 18,000 people and a sell out for every single event, you are looking at 695 events (hockey games, concerts, whatever) to pay back the $125M - not including any interest).

Plus they are still another $90M off ...

Seems like this is still a ways away.

[Locke]

Originally Posted by old-fart

Ah... I thought the facility fee/ticket tax was supposed to pay back the $125M from the city. If not, who is fronting that other $125M (not the city, the ticket tax money)? No builder is going to build anything and say 'pay me back as you can over the course of the next 10 years'... (just quick math, but if you charge a $10 tax per ticket, to pay back the original $125M assuming 18,000 people and a sell out for every single event, you are looking at 695 events (hockey games, concerts, whatever) to pay back the $125M - not including any interest).

Plus they are still another $90M off ...

Seems like this is still a ways away.

I was wondering that too, I would presume that Katz would require some sort of financing for that amount because if he wants all the revenues hes going to have to run the place.

The article posted that the hard deadline day of Oct.17th has been set.

So far the original $100M as well as the $40M cost overrun arent accounted for yet.

How the hell could there be a cost overrun? They havent even started building the goddamn thing yet and its already $40M over budget?....

[You Need a Thneed]

Originally Posted by Locke

How the hell could there be a cost overrun? They havent even started building the goddamn thing yet and its already $40M over budget?....

They go to an architect and say we are aiming for a project that costs $450M. Architect roughly designs the building. Building is priced. They find out it costs more than the original $450M.

It should also be said that the Oilers already cut some stuff to get down to this new number that's still more than the $450M budget.

So they are already over budget before starting, and that doesn't include potential overruns when construction actually starts. Usually there would be a contingency fund built into the budget to cover such stuff, but I don't know whether that's been included yet or not.

[StrykerSteve]

Not sure how accurate, but I read the Oil made 18M profit last year. They aren't going anywhere if that's the case.

[Azure]

Originally Posted by StrykerSteve

Not sure how accurate, but I read the Oil made 18M profit last year. They aren't going anywhere if that's the case.

Which makes it even crazier for Katz not to put up the money.

[Locke]

Originally Posted by You Need a Thneed

They go to an architect and say we are aiming for a project that costs $450M. Architect roughly designs the building. Building is priced. They find out it costs more than the original $450M.

It should also be said that the Oilers already cut some stuff to get down to this new number that's still more than the $450M budget.

So they are already over budget before starting, and that doesn't include potential overruns when construction actually starts. Usually there would be a contingency fund built into the budget to cover such stuff, but I don't know whether that's been included yet or not.

That just sounds like a disaster.

They've already coughed up $125M on a $450M project which is already $40M overbudget, is missing $100M entirely, has $125M from a ticket tax with questionable financing and no agreed coverage for cost overruns.

You know they'll get put on the hook. This thing is going to end up as some half-assed, mafia contracted paper mache monstrosity.

[Cecil Terwilliger]

Originally Posted by Locke

That just sounds like a disaster.

They've already coughed up $125M on a $450M project which is already $40M overbudget, is missing $100M entirely, has $125M from a ticket tax with questionable financing and no agreed coverage for cost overruns.

You know they'll get put on the hook. This thing is going to end up as some half-assed, mafia contracted paper mache monstrosity.

(I think this is the right pic from when Fat Tony builds the wheelchair ramp)

[Locke]

Yup. Thats the one.

Just make it look like a toilet and plop it down in the middle of Edmonton. Enjoy!

[old-fart]

I was just trying to find that exact picture... haha

[You Need a Thneed]

Originally Posted by Locke

You know they'll get put on the hook. This thing is going to end up as some half-assed, mafia contracted paper mache monstrosity.

I'm starting to think that no arena will be built in Edmonton until Katz sells the team.

I've thought for a long time that there's a good chance that Calgary's new arena is complete before Edmonton's, even with Edmonton's seemingly further along the whole time up until now. Sure, the Flames ownership wouldn't turn down government money, but I'm not sure there has ever been any intention by Calgary's ownership to get government involved.

[BlackRedGold25]

Originally Posted by Phanuthier

Maybe a dumb question, but why don't they get a loan/mortgage/similar?

Because Katz would rather the city pick up the bill. A loan or mortgage doesn't change who Is paying for the new rink.

[Locke]

Originally Posted by You Need a Thneed

I'm starting to think that no arena will be built in Edmonton until Katz sells the team.

I've thought for a long time that there's a good chance that Calgary's new arena is complete before Edmonton's, even with Edmonton's seemingly further along the whole time up until now. Sure, the Flames ownership wouldn't turn down government money, but I'm not sure there has ever been any intention by Calgary's ownership to get government involved.

I agree.

Bob Mackenzie even alluded to this fact by saying that the NHL would never approve relocation and if Katz wont build a new rink and a deal cant get done then the NHL would probably ask Katz to sell the team to a local owner who will.

[The Yen Man]

Wow, Katz is really looking like a doofus in all of this. How he didn't foresee such bad backlash is beyond me.

[Azure]

I honestly don't get why Katz has such a hard time paying for everything. The Oilers already turn a profit every single year with a crappy team in a crappy building. With a team that makes the playoffs playing in a new building he could easily double or triple what he makes now.

This whole thing is hilarious to me. Katz has always come across as a ######bag to me. I guess it didn't take him long to prove it.

[Plett25]

The arena deal changed from the original $100 Katz + $125 city + $125 ticket tax + mystery $100

The latest version was Katz not putting in anything, but paying $5.5 million a year. So essentially the city would end up paying the whole shot and would get ticket tax and $5.5 million every year from Katz to service the debt. So Katz would get the arena for no upfront cost, but would pay for maintenance, etc.

Then Katz demanded a $6 million to subsidize the maintenance because there wasn't a casino attached to the arena.

Or something like that.

And then Katz said that the city should be subsidizing the Oilers because without the Oilers, the city would have to pay for a brand new arena all by itself.