[What follows below are my remarks from today’s vote on the revised negotiated framework to design and build a downtown arena.]
I’m sold on what a new arena could do for our downtown and our city. But I also believe there’s a better deal to be had than the one before us. I think the responsible thing to do is continue to work toward improving the funding and financing terms.
Make no mistake: I believe in Edmonton and I believe in Downtown.
I believe in it so much that I spend a good portion of my time and disposable income here. And I do this because our Downtown is making great strides today.
The arena could well be a bonus, but I do worry that — after the rhetoric of this debate — history will one day be written as if the arena district single-handedly transformed downtown, rather than giving due to the many businesses, the patrons, and the residents of downtown, who are already here, building a better downtown today.
As I said, I do agree that an arena development could be positive for downtown: it’s why I had no objection to the zoning, and why I think a CRL to fund some of the connective infrastructure, and other catalyst projects, is appropriate.
I don’t think we’re that far from a deal I could support, but I have not yet seen a compelling argument specifically justifying the particular funding formula before us.
Normally, a deal negotiated in a competitive environment is constrained by each party knowing that they can walk away and do business with someone else. That’s more or less the functional definition of competition, and that would be a good footing for negotiation. This deal, in contrast, flows from our weak negotiating position, weakened by the fear of losing the team – a fear I think is irrational, and a bluff I might call – but it is a fear which nonetheless powerfully grips many Edmontonians.
Many of the arguments supporting the funding and financing are framed as if this deal were negotiated in a competitive context, but this isn’t the case. When there is no competition — and there is only one hockey team, and only one league —we really need a different kind of negotiation, with more transparent justifications.
Instead, most of the arguments offered yesterday, and throughout the debate, boil down to a leap of faith. All these arguments speak, often elegantly, to why a downtown arena might be a good idea, but not one of them provides sufficient justification for the funding and financing deal.
So what would a better justification look like?
One method of justifying this funding and financing deal would be to open up the Oilers’ business model and explain for all to see what exactly is required for the team to be sustainable in Edmonton. In other words, offer a real and transparent business case as justification. Instead we’ve simply been told, over and over again, that the Oilers won’t be sustainable without this deal. This remains an unsubstantiated claim, without hard evidence to support it.
Another, and I suspect more practical, course would be to offer justification by way of comparison.
Let’s start with the oft-mentioned Columbus, OH, which had no public money up front, just relief from property tax. Meanwhile, LA’s Staples Centre, the other revitalization case, had 17.6% public funding. Winnipeg’s MTS Centre has about 30% public funding in it. Even Glendale, AZ was only 42% up front public funding (at least to begin with).
The Pittsburg deal has also been invoked, and my understanding is it’s largely publicly financed, but not necessarily publicly funded. The Sports and Entertainment Authority (a State and City joint venture) is doing the borrowing through a bond issue — that’s the financing. The main sources of funding are an amusement tax, which is something like a 5% ticket tax, so let’s call it a user fee, [NB: it’s applied to all amusement across the city, but mainly from Sports and Entertainment events — here are the details of the tax], payments from an associated casino license, and rent payments from the Penguins make up the balance. Other cost overruns were split among the parties.
In contrast – at this point our deal is 57% public funding if you include the land and infrastructure on top of the building, and 81% public financing. That will go to 100% public financing if we have to borrow against future provincial dollars to close the $100 million gap. So I will argue that this deal is out of line with the comparators. We should be working to bring it in line winch the comparators at the very least before approving it.
So what might a supportable deal look like?
It would require less public funding, perhaps offset by a higher city-administered ticket tax, and ideally we would see a return to the upfront $100 million payment from the Katz Group to reduce the public financing required. That could at least bring us in line with some of the comparators.
I’m also not wild about this $2 million/ marketing and sponsorship deal and don’t think we should commit to this as part of the deal without seeing exactly what we are supposed to get for it.
I want to thank Cllr. Caterina for the shrewd changes proposed today. Let’s continue to work toward the better deal that I still have to assume is out there. That doesn’t need to take years, I think it could be worked out pretty quickly in fact – it would be in everyone’s interest to do so.
However, if this is going ahead anyway, and if $450 million is going to buy us a ‘damn good arena’, then we should make sure to build a 100 year building because nothing will anger me more in my old age than to see this debate play out again in my lifetime.