BY PETER HOUSTON – FAN FUEL BLOGGER
If you thought the end of the lockout meant the end of hearing about greedy owners, think again. On Wednesday, Edmonton City council approved a deal with Oilers owner Daryl Katz to build a new downtown arena. Many of you may remember Katz from his recent charade where he threatened to relocate the team to Seattle if council didn’t fork over more taxpayer money to build a stadium for his team. The incident blew up in his face and his bluff was called, but it exemplified the sense of entitlement and greed rampant among owners of professional sports franchises. And somehow it didn’t stop Katz from getting what he wanted.
First, a little context. In October 2011, Edmonton City council and the Katz Group had come to the framework of a deal for the arena. Katz was going to pay $100 million of the $450 million dollar project, while the city and provincial/federal government raised the rest. The city would own the building, but lease it to the Oilers for $5.5 million a year. Katz would also have to pay about $10 million a year to operate the building. In return, he keeps all the profits from every event at the stadium, not just hockey, for 11 months of the year.
But Katz, the 13th richest man in Canada with a net worth over $2 billion, changed his mind and decided that wasn’t good enough. A few months ago the deal collapsed when he demanded another $6 million a year from the taxpayers to offset the costs of running the rink. Not only that, Katz also demanded that city staff move into a new building he was putting up beside the rink and become its anchor tenant. He claimed he needed all of this because the team had been losing money for him since he bought them in 2008. When asked on two occasions to show the team’s financial records by city council, or even just meet with them to show why he needed the extra money, Katz refused. This is when he stormed off to Seattle and threatened to relocate the team.
According to Forbes, the Oilers have been a top-10 NHL team in profit for the last nine years, despite putting an awful product on the ice (minus their Cup run in 2005-06). They also have one of the highest average ticket prices in the NHL (fourth in 2011-12), but have still sold out Rexall Place almost 300 games in a row.
Katz took his demand for an extra $6 million a year to help pay for operating the building off the table because city council decided they would pay for it. That’s right, for those of you scoring at home: he demanded an extra $6 million help pay the arena’s operations and maintenance, the city said no way, he threatened to move the team to Seattle, the city laughed at him, and then the city gave him what he wanted and more. As the Edmonton Journal reported, In the new deal, the city assumes “the costs and responsibility for all the major building rehabilitation and structural repairs, things like the pipes, the air conditioning, the escalators.” How in the world does that happen?
The elephant in the room under the new deal is the contribution that’s expected from the provincial government. The total cost of the plan (which includes surrounding infrastructure) is $607 million. The city will pay $219 million, Katz and the Oilers $143 million and $125 million will be raised by a tax on tickets. That leaves $114 million, almost all of which is expected to be covered by the provincial government. But Alberta premier Alison Redford has continually denied that the government will give any money to help build the stadium, which makes sense considering their $6 billion-plus deficit. However, Edmonton Mayor Stephen Mandel has been adamant they will get that money from the province. Does he know something everyone else doesn’t? Or did he also notice that Daryl Katz and people very close to him donated a total of $430,000 to Redford’s Progressive Conservative party during the last election?
Either way, Katz has somehow gotten a better deal out of all of this and the taxpayer will pay. This is a problem for a few reasons. First of all, why should taxpayers pay so that a billionaire has a place for his hockey team to play? This may come as a surprise to some – and may incite calls for me to hand in my passport – but not everyone in the world is a sports fan, let alone an NHL fan.
Some people would argue that not only is having a professional sports franchise something that people want in their city, but it also provides an economic benefit. It creates jobs at the arena and nearby bars; restaurants and hotels will get more business and brings in tourists. Well, that’s true to an extent, but it’s a complete spin on the facts.
According to research on the subject, professional sports franchises provide no economic benefit to the city where they’re located. The money people spend on “entertainment” such as a night out to go and see a hockey game is just redistributed from money they would have otherwise spent at the movies or concerts. It’s not actually making people spend any more money than they otherwise would. Also, the jobs it creates are mostly low-wage, temporary work, which are replacing better jobs that are driven out of town.
So somehow, even though the lockout is over, an owner has won again. This time it’s not at the expense of millionaire players, but everyday taxpayers. Katz received from Edmonton city council an even nicer deal than the one they had originally agreed to even though he had lost all leverage. His fans are some of the most loyal in the NHL and the way he rewards them is by threatening to move to team to Seattle and demanding more of their tax dollars.
It’s exactly this owner greed and sense of entitlement that is ruining our professional sports leagues today. It’s part of the reason why we have lockouts and blackouts and relocations. It’s why a beer at the game costs more than a six pack from the store. It’s why your property taxes go up. Owners feel entitled to a profit margin. But owning a professional sports team is not like having a savings account where you just collect a fixed interest, or profit, every year. Owning a team is like being on a team; there are ups and downs, ebbs and flows, winning streaks and losing streaks. And for an exceptionally loyal Oilers fan base, located in one the smallest markets in the NHL, they deserve better than Daryl Katz.
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