Tuesday, June 29, 2010

Katz and Copps: Why Edmonton should be concerned.

Darryl Katz looking to take over the lease on Copps Coliseum says something incredibly important about his plans for Edmonton's Arena District, but not in the way that most are speculating. A fair amount of speculation on the matter relates to how the Katz group may be using this as a veiled threat to help secure support for the Oilers new arena.

I'm a little less skeptical.

I'm more of the mindset that Daryl Katz is an incredibly smart businessman and he legitimately sees value in operating sports and entertainment venues. The Katz Group, in connection with the Edmonton Oilers organization, has been incredibly successful at building both the Oilers and Rexall brands. Rexall Place is well regarded as one of the most successful concert venues in North America. There is no doubt that they would do well to expand such a successful entertainment operation (and Rexall pharmacies brand no doubt) into a new market.

So what should these mean to Edmontonians and the quest for the Edmonton Arena District?

It means that operating an arena is a valuable business venture and a smart financial investment. Katz is moving to purchase Copps and other venues in Hamilton because he believes he can make money there.

I tend to agree. Entertainment is a solid market and running a sports entertainment complex is a viable business. It is a good investment that will pay off for the investor.

Which is precisely why I am opposed to using public funds for the project.

Public money is collected for a reason, to provide programs and services for the collective good of society and to meet public needs. It is not a pot to help private investments become more profitable. Katz will do very well to create a Canadian corporation similar to AEG and he will make a lot of money off of it - he doesn't need our help doing it.

I am all in favour of the Edmonton Arena District, its ability to improve downtown and the positive impact it will have on the city. But let's get it done without public investment.


Troy Gillard said...

The issue I struggle with in this Arena debate is the issue of public dollars and how they'll be used. From my reading of it, and from speaking with Oilers President Patrick LaForge, the Katz Group is looking for the City to spend/loan the project $300 million dollars, with that money to be paid back through property taxes and the like. Not to mention that would give the City ownership of said facility, and access to the revenues that such a facility would produce. You talk about public dollars being used for social programs, etc, but I seem to remember reading somewhere the amount of $$$ the City invested in the new Art Gallery. The Art gallery, on a yearly basis, will see somewhere in the area 65 thousand visitors. Rexall Place, on the other hand, will see north of 1.5 million people walk through the turnstiles annually, and that's just for hockey games. That's not including concerts and the like. So why should the Art Gallery get public dollars, but not an arena, which would have a far more substantial impact on the community. I mean, I'm all for art, but it appeals to such a small portion of the populace. When was the last night time people emptied from the bars and spilled out onto Whyte over the acquisition of a Monet? I like the way this Katz proposal is structured, with the City owning the facility and Katz running it. It's a win win, with those precious tax payer dollars to be paid back in spades But what do I know? I'm just a sports guy.

Troy Gillard said...

I should also clarify a point in your post. Katz is not moving to purchase Copps Coliseum, the not yet built Stadium and other facilities. He has entered into a non-binding MOU with Hamilton Council, giving him exclusive negotiating rights on a long term lease. The City of Hamilton will still own Copps, Katz just wants to operate and run it. Which is exactly the proposal that is on the table for the Arena in downtown Edmonton.

Atypical Albertan said...


It is a fair comment to mention that the Katz group is looking for lease arrangements in both Hamilton and Edmonton. But in either case, it amounts to a private enterprise benefiting from public investment.

If the city is to build an arena for the purposes of leasing it to the Katz Group, then the lease must be based on a fair value and the revenue for the build should be recouped through the lease not through taxes - that is not the purpose of taxation. The Oilers currently pay $1 in annual rent on the Coliseum, and such an arrangement on a new city built venue would be inappropriate.

There is a very distinct difference between funding the Art Gallery of Alberta and funding a new arena. The AGA is operated by a non-profit board which has a mission dedicated to advancing the arts, whereas the Katz Group is a for profit operation which has a mission of making profit.

Big point: public funds should not be used to help private companies earn a profit.

Troy Gillard said...

I fully agree that the Oilers should not be allowed to use the new "proposed" facility at no cost if it's the City ponying up the majority of the cash for said building. Katz has now changed his tune again, and is saying he will invest $100 million into the arena project, not in developing the land around the arena (which he owns) And I brought up the Art Gallery comparison purely to show how/where public dollars end up. As a taxpayer, I couldn't care about an art gallery or the advancement of art. The people that appreciate the art should be the ones paying for it, not me. The same can be said for the arena debate. The people who appreciate it should pay for it. Unfortunately, this entire situation has gotten out of hand due to a lack of communication coming from the Katz Group. Maybe the best idea is to put the issue of public funding for an arena to a plebiscite/referendum. Allow the taxpayer the ultimate decision on where their dollars should go. The same should have been done with the art gallery. I'm sorry to keep picking on the art gallery, but I have a very hard time swallowing the idea of using public dollars to build a facility that caters to such a small portion of the general public. I don't care if they are a non profit or not, the AGA should have been funded with dollars from people who use the facility. I can honestly say I've never been, and never will go, barring a significant change in what I find interesting in this life. And when did profit become such a bad word? We're villifying a guy who wants to invest in downtown Edmonton, who is a through and through Edmontontonian, and who generally cares about the city. And yes, this is sometimes how rinks get built. In Vancouver, the city contributed public dollars to GM Place, allowed for tax breaks, and gave them the land on which to build. Same in Toronto. It's how you attract these types of investments to your city. You have to give a little to get a little. Where's your post on the significant amount of public dollars that were poured into the Olympics (yes some of that money was ours) or the G8/G20 (again, some was ours) Bottom line, I'm not saying that City Council should rubber stamp this proposal. In fact, it's quite the opposite. That's what the process is for. To vett any problems, concerns, etc. But to suggest that a man invest his personal net worth into a development project that will benefit the City of Edmonton and it's residents for decades to come, without any sort of help from the City that will ultimately reap the rewards is ridiculous.

Troy Gillard said...

Here's another piece to chew on regarding the Arena Debate.

http://communities.canada.com/edmontonjournal/blogs/hockey/a rchive/2010/03/22/in-whose-interest-a-look-at-northlands-and-edmonton-s-arena-business.aspx