Oilers want downtown Edmonton arena talks revived

By The Canadian Press - Wednesday, December 12, 2012 at 3:12 PM - 0 Comments

EDMONTON – Officials representing Edmonton Oilers owner Daryl Katz say they were shocked when the city broke off talks on a new downtown arena and they would like negotiations restarted.

The Katz Group is appearing before city council to discuss the stalled $450-million project.

Councillors voted in October to stop talking after the Katz Group refused to publicly explain its request for a $6-million annual subsidy that was not part of the original agreement.

Senior executive John Karvellas says the Katz Group has dropped that demand.

He suggests instead any excess city tax revenue from the arena — beyond what has been forecast — go to the Oilers.

Karvellas also says it’s up to the city to figure out where the $100 million still needed for construction will come from.

The city has suggested that money will come from the province, but the province has so far said it will not fund the arena.

One big cheque from Daryl Katz, many bigger questions in Edmonton

By Colby Cosh - Sunday, November 11, 2012 at 6:20 AM - 0 Comments

Jeff McIntosh/CP

The public-relations problems continue to pile up for Daryl Katz, the drugstore magnate who wants a new downtown arena in Edmonton for his NHL Oilers to play in. It has been more than a year since Katz Group and the city’s council arrived at a “framework” for an arena funding deal, with Katz relenting on his insistence that the existing Rexall Place be pushed out of the concert business. That framework fell apart Oct. 18 after Katz made new demands and a previously sympathetic council ran out of patience, calling off negotiations and flinging the arena into limbo.

The city had made major concessions to get Katz to back off on the demand for a non-compete agreement with Northlands, the powerful non-profit that operates Rexall Place (i.e., the old Northlands Coliseum, which now bears the name of Katz’s main pharmaceutical brand). But the two sides remained $100 million short of the full amount for the new building—money that both insisted, despite an endless series of fairly strident refusals from the province and Ottawa, would eventually arrive courtesy of “another level of government.” Continue…

More Katz mega-donation headaches?

By Colby Cosh - Thursday, November 1, 2012 at 11:47 AM - 0 Comments

The Globe and Mail, by means of outstanding spadework, has accounted for the particulars of all of the $430,000 donated to the Alberta Progressive Conservative party in its hour of electoral need by Edmonton Oilers owner and pharmacy magnate Daryl Katz. Actually, David Ebner and Dawn Walton traced the $430,000 and then some—others with close business relationships to Katz, it turns out, contributed to the PC kitty. But even the $430,000 donated this spring, supposedly in the form of a single cheque, represents more than a quarter of the cash raised by the Tories during the 2012 election period. The party managed to raise just $1.6 million—while spending almost $4.7 million protecting its flanks from the upstart Wildrose Party.

Alberta’s chief electoral officer has promised an investigation into the splitting up of Katz’s hefty donation. (And the opposition parties are calling for Katz to step down from the board of AIMCo, the corporation that manages investment funds for the province, its public pension plans, and some institutional endowments.) But there might be another problem. Step into the time machine with me as we travel back to September 13, 2011 and open the Edmonton Journal:

Has Oilers owner Daryl Katz quietly shifted his home base to Vancouver? That’s the rumour that has circulated in local business circles for months. And while several sources tell The Journal the reclusive drugstore tycoon now spends most of his time on the West Coast, where his children attend school, it’s unclear how much time he still spends in Edmonton.

…Several sources told The Journal that Katz purchased the penthouse condo at the Fairmont Pacific Rim Hotel in Vancouver, and has lived there for much of this year.

“What I’ve been able to confirm from several sources is that Katz has moved to Vancouver and he’s been there since the beginning of April,” said one well-connected Edmonton businessman.

One city councillor interviewed by the Journal’s Gary Lamphier was not troubled to hear that Katz had moved:

Coun. Bryan Anderson sees the location of Katz’s primary residence as a non-issue, however.

“It doesn’t concern me. There’s a lot of big players in the world who have homes in several places,” he said.

There is one person, however, who might care a little about the location of Daryl Katz’s primary residence: Alberta’s chief electoral officer. A couple of entertaining morsels from the province’s Election Finances and Contributions Disclosure Act:

16. No prohibited corporation, person ordinarily resident outside Alberta or trade union or employee organization other than a trade union or employee organization as defined in this Act shall make any contributions to a registered party, registered constituency association or registered candidate.

…35(1). No registered party, registered constituency association or registered candidate shall, directly or indirectly, (a) knowingly solicit or accept contributions from any person ordinarily resident outside Alberta…

Despite the Journal’s revelations from last fall, I imagine that, all things being equal, Daryl Katz would arrange his affairs so as to qualify as an Alberta resident for tax purposes. It’s hard to say whether those are relevant here, however. The election law doesn’t offer an explicit definition of “ordinarily resident”. (“The place where you send your kids to school” would seem to provide a pretty decent first approximation.) And in the event the definition needs to be explicitly made now, I’m afraid I expect it to be exactly as generous as necessary to prevent an embarrassing refund here.

Nonetheless, the investigation into Katz’s personal $30,000 donation—and perhaps the entire $430,000 he is said to have actually presented—will obviously require a close study of his comings and goings.

Edmonton’s ice capades

By Colby Cosh - Monday, October 29, 2012 at 10:20 AM - 0 Comments

“It’s fairly apparent at this point that Daryl just isn’t that into us.” This wisecrack from Edmonton city Councillor Kerry Diotte concluded a chaotic Oct. 17 in city hall. Diotte has been a critic of the city administration’s deal with Edmonton Oilers owner Daryl Katz for a new downtown arena, but most of the council, including Mayor Stephen Mandel, thought the formula had been found. Katz was to supply just $100 million of the $450-million construction cost, providing maintenance over a 35-year lease. In exchange, the team was to get rent-free use of the building, revenue from all events, control of naming rights and other perks.

Last fall, Katz asked that his upfront $100 million be turned into an annuity of roughly $5.5 million a year over the lease period; the city acquiesced. It also agreed to pay the Oilers $20 million, supposedly to promote the city, over the first decade of the agreement. As the Canadian Taxpayers Federation pointed out, the naming rights alone would be worth somewhere between $3 million and $5 million a year. Katz’s net contribution to the building was already approaching zero.

Then last month the Katz Group informed the city that $450 million would no longer quite cover the building it wanted—and that, by the way, as arena operator it would need another $6-million annual subsidy. The city summoned Katz to an Oct. 17 meeting to explain. When he declined, council voted to suspend negotiations.

Anything is possible now. Before adjourning last week, councillors discussed building the arena according to the existing plan (which cost the city $30 million) or searching for savings. Renovating the existing Rexall Place for around $200 million, an idea long dismissed by Mandel’s bloc, is looking more attractive.

Either way, the Oilers’ lease runs out in 2014. Katz might choose to erect his own ice palace in the suburbs if he is liquid enough. Despite a net worth estimated at $2.4 billion, his miserliness suggests he may not be. (His retail pharmacy business is under regulatory pressure and he is known to have real estate in Vancouver’s flagging market.) If he can’t find a superior market for his NHL team—and no one knows of one—a fire sale may follow.

Good news, bad news

By macleans.ca - Monday, October 8, 2012 at 6:10 AM - 0 Comments

Good news

Fred Chartrand/AP

Telling it like it is

Foreign Affairs Minister John Baird lambasted the United Nations from the podium of the General Assembly, saying that its “preoccupation with procedure and process” is hindering progress in war-torn Syria. “While the brutal and repressive regime of Bashar al-Assad continues the slaughter of its own people,” Baird seethed, the UN “continues to fail to impose binding sanctions that would stem the crimson tide of this bloody assault.” Baird reaffirmed calls for Assad to quit and—making a particularly unrebuttable point—for action to secure Syrian chemical weapons.

Positive energy

Alberta Premier Alison Redford expressed support for the China National Offshore Oil Corporation’s bid for Calgary oil and gas company Nexen, telling the Calgary Herald that Alberta is open for business. Redford chided economic nationalists, noting that outside oil investors “are simply buying leases to extract our resources on our terms.” Meanwhile, Redford stuck to her guns in the battle over the proposed Northern Gateway pipeline, resisting B.C. Premier Christy Clark’s request for a slice of royalties in return for access to the coast.

Continue…

Edmonton wants a new $100 million arena

By Colby Cosh - Thursday, March 15, 2012 at 1:52 PM - 0 Comments

Amber Bracken/QMI Agency

One hundred million dollars. A one, eight zeroes. That is what’s standing between the city of Edmonton and its planned new downtown home for the NHL’s Oilers. No big deal, say supporters of the space-age barn that would replace aging Rexall Place. That’s a fraction of the cost of a major highway overpass. Done right, say the starry-eyed, it could transform Edmonton’s infamously sleepy downtown. But where is the money going to come from? The city’s sweetheart deal with its richest citizen, Oilers owner and pharmacy billionaire Daryl Katz, left that $100-million gap to be shaded in through the largesse of “other levels of government.”

So far, those other levels have refused to consider it, and pretty convincingly, too. When Rexall Place (originally the Edmonton Coliseum) was built in 1974, the city got help from, among others, the federal agriculture department. But in government circles, the days of that kind of creativity are over. The federal government passed through a period of fiscal stimulus when the financial crisis hit, but wanted the money to go to “shovel-ready” projects. Edmonton’s dream palace didn’t even exist on paper yet.

The messages from under the dome of the Alberta legislature are largely the same now. Asked about the funding gap, Edmonton city manager Simon Farbrother says, “There continue to be informal discussions with the province,” and notes that a provincial election is around the corner in the spring. In an auction for votes, it is possible that new Premier Alison Redford might improvise anything. But Redford’s preferred branding, a close adviser warns, is about “people, not buildings.” Her predecessor, Ed Stelmach, was an old-fashioned pavin’ politician. Redford’s campaign focus—an unsurprising one for a human-rights lawyer—is expected to remain squarely on health, education, and seniors.

Continue…

Quebec and the NHL arms race

By Colby Cosh - Tuesday, September 14, 2010 at 12:36 PM - 0 Comments

You knew that when the smoke of an arena controversy became visible, the sports-as-culture warriors would soon come riding over the hill. David Asper pops up in today’s National Post to observe that most of us accept the idea of government funding for high-culture venues like concert halls, theatres, and galleries. “To define ‘culture’ narrowly, without including sports, is elitist,” he complains. (Strictly for form’s sake, I should offer the riposte: what’s so bad about elitism?) “If we are to have a legitimate definition of our national culture, it must be based on the totality of who we are and what we do. Places where professional sports teams play are no less houses of culture than the opera, the theatre or the art gallery.”

The question you should be asking Mr. Asper is “So what, rich guy?” He is, in my view, quite right; sports are part of our culture. I would even argue that they are a morally elevating part of that culture—a medium for the cultivation and display of courage, duty, justice, and fair play (a crucial, almost defining element of our civilization that is not at all the same thing as “justice”). But that premise is not enough, not nearly, to establish that massive public funding for professional sports venues is proper or necessary.

Turn his argument on its head and set aside high culture: what important cultural institutions don’t we depend on governments to build? Would Asper argue that restaurants don’t define a city or that they aren’t places where highly civilized imaginative pleasures are expressed? Doesn’t a good clothing store or a furniture shop have a clear cultural dimension? A shoe store? Aren’t hairstylists, skate parks, comic shops, Apple Stores, recording studios, and the parlours of small-town piano teachers all enablers of cultural expression? Should all these things be nationalized and paid for by the state?

The relevant fact about live National Hockey League games is not that they are not “culture” but that they are owned by a profit-maximizing cartel which limits access and squeezes every penny it can get out of that access. Here in Edmonton, where the owner of the Oilers is trying to get an arena built at staggering municipal expense, you often hear arguments to the effect of “Oh, we bought an art gallery for a non-profit company, so we can certainly buy an arena for a billionaire.” It already sounds preposterous when you put it in plain English like that, and it’s even sillier if you pause to compare the function of an art gallery to the function of an NHL hockey rink.

I am the last person on earth the Art Gallery of Alberta would pick as a defender, but an art gallery is at least intended to provide a public good in the strict technical sense: it takes assets nominally owned by wealthy people and makes them available, at a low price not set in a profit-maximizing way, to virtually unlimited numbers of people—without affecting the value of the assets. That, in fact, is the historical origin of public art galleries; they were designed to multiply the benefits of a shared cultural heritage by extracting paintings and sculptures from vaults and putting them before the public in a safe, secure, orderly manner.

NHL hockey is simply not a public good according to an economist’s definition. Game attendance, at least, fails both tests: it’s both rivalrous and excludable, in the sense that you don’t get to attend if you don’t have a ticket, and buying a ticket (at a market-clearing price or lower) excludes someone else from having one. That does not mean there aren’t external benefits from the sale of that private good, in much the same way that there might be positive net external benefits from living near a good bakery even if you don’t buy bread. But using public funds to subsidize that good would still constitute a relatively pure transfer (a theft, some might say) from the people who have no use for it to the people who do. It would be like specifically underwriting pumpernickel production on the premise that bread is, in general, a good thing that is an important part of Western culture (as it certainly is).

Asper, of course, doesn’t come close to acknowledging the wider point that subsidizing NHL arenas is ultimately a means of subsidizing a cartel—of using the gullibility and open-handedness of politicians in one city to threaten those in another. Nobody is discussing expanding the league, and further expansion is difficult in principle; even leaving aside the state of the NHL’s overall finances and the current health of the economy, about thirty teams seems to be the natural upper bound for a competitive structure that isn’t organized like soccer (with meaningful parallel competitions and relegation/promotion between divisions). Quebec’s arena proposal is a means of darting ahead in the queue for troubled franchises in other cities, franchises that are ceaselessly seeking their own sweetheart deals for cheap rent, non-hockey revenues, and other subsidies.

This action is understandable, since Quebec has already been cheated out of NHL hockey by a richer urban rival in the past. But the overall effect is to create an inane arms race, a contest to see who can throw the most money at NHL owners and players. It’s bad enough that cities behave in such a sordid, compromised manner; we really don’t need all three levels of government working together to raise revenues and salaries for a private profit-maximizing business.

Khabi bull

By Colby Cosh - Wednesday, September 1, 2010 at 12:37 PM - 0 Comments

Oiler goaltender Nikolai Khabibulin’s trial for the offence of “extreme” impaired driving was the talk of the town in Edmonton yesterday. Khabibulin, 37, may seem a little old to be horning in on the extreme sports craze, but that’s what Arizona charges you with when you’re caught going 70 in a 45 mph zone and you have a blood alcohol content of 0.16%. The Russian, pulled over in February, was found guilty late last week and was sentenced Tuesday to 30 days in jail, the mandatory minimum. He had the bad luck to be busted in Maricopa County, home to the demented Sheriff Joe Arpaio and his “tent city” justice. Continue…

Small Balls: Thursday June 19, 2008

By Cameron Ainsworth-Vincze - Thursday, June 19, 2008 at 11:26 AM - 0 Comments

La première étoile: Daryl Katz. After several failed bids, the billionaire finally received approval from the NHL board of governors yesterday to buy his hometown Edmonton Oilers for a cool $200 million. That’s chump change for a guy who is worth $2.4 billion and runs his family’s pharmaceutical empire. He has indicated that he will spend any amount of money to ensure that the team wins, and has already pledged $100 million for the construction of a new arena. Katz is primed to bring the Oilers back to their glory days. Thank God.

Two minutes for … Wanging it. The Yankees are furious that their ace, Chien-Ming Wang, will be sidelined until September after spraining his Lisfranc ligament and tearing a tendon in his right foot while running the bases in an interleague game against the Astros. Hank Steinbrenner blamed the injury on the National League’s archaic rules that require a pitcher to hit. “The National League needs to join the 21^st century. They need to grow up and join the 21^st century.” So what your saying, Hank, is that in this century pitchers can get so out of shape that they should be wheeled around the diamond as to not harm their delicate bodies? If David Wells got his ass around the bases without a heart attack, it seems reasonable to suggest that your pitchers should get in 21^st-century shape. Continue…