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.

A family that’s too big to fail?

By Jason Kirby - Thursday, April 15, 2010 at 1:40 PM - 1 Comment

Wayne Glowacki/Winnipeg Free Press

In the span of 10 years, Winnipeg’s Asper clan saw much of its $3.5-billion investment in the newspaper business wiped out. Canwest’s television properties have been hemorrhaging viewers and cash for years. Now, after succumbing to its crushing debt load, the Aspers’ company is being carved up and sold off. Not exactly a track record to instill confidence. But when the Aspers, avid free-market proponents, need money these days, they’ve found a willing source of funds—Manitoba taxpayers.

Last week, Manitoba agreed to a deal with David Asper’s Creswin Properties that will see it cough up funds to build a new $115-million stadium for the Winnipeg Blue Bombers. The money comes in the form of a $90-million loan and a $15-million grant. If Asper repays the loan by 2016 with proceeds from a planned mall next door, he’ll gain control of the CFL team. If not, taxpayers in Manitoba, which faces a $545-million deficit this year, could wind up holding the bill.

Even before the stadium deal, local governments were heavily into another Asper project—the Canadian Museum for Human Rights, a dream conceived by patriarch Izzy Asper before his death. In addition to $120 million in capital and operating funds from Ottawa, Manitoba is on the hook for more than $50 million. Not surprisingly, critics have panned the terms of the stadium deal. “[Premier Greg Selinger] is out of control and running around like a backup quarterback throwing political Hail Marys,” said Opposition Conservative Leader Hugh McFadyen. “It appears Mr. Selinger is turning the government into a lender of last resort for projects that nobody else wants to finance.”

Manitobans had better hope the family’s business track record improves. With so much taxpayer money on the line, the Aspers are looking like they’re too big to fail.

Family ties

By Jonathon Gatehouse - Saturday, March 21, 2009 at 1:28 AM - 17 Comments

A potential federal bailout for private television broadcasters is about to come under scrutiny before a parliamentary committee. Starting March 25, the House of Commons standing committee on Canadian heritage will launch a series of hearings into the television industry’s current economic crisis. But the opposition is serving notice that it intends to find out why the Harper government seems intent on helping private companies like CTV and Canwest Global, while leaving the publicly-owned CBC to fend for itself.

“We want to make sure that (Heritage Minister) James Moore isn’t making a sweetheart deal with a bunch of lobbyists who are close to the Prime Minister,” says Charlie Angus, the NDP’s heritage critic. Earlier this week, the Canadian Press reported that Stephen Harper has recently met with both Canwest CEO Leonard Asper, and Pierre-Karl Peladeau, head of Quebecor, owners of the French language TVA network, to discuss the broadcasters’ concerns. Moore has indicated that the government is looking at regulatory changes and tax breaks to aid the networks—most specifically Canwest which is teetering on the edge of bankruptcy—but says no specific commitments have been made.

Witness lists for the hearings are still being drawn up, but the first to be heard from will be Konrad von Finckenstein, chair of the Canadian Radio-television Telecommunications Commission (CRTC.) Private broadcasters have long been after the CRTC to treat their conventional channels more like specialty networks, which receive a share of cable subscribers’ monthly bills known as carriage fees. Cable providers like Rogers, which owns Maclean’s, are opposed to the idea, claiming the system could inflate customers’ bills by as much as $10 a month.

One opposition concern is the close relationship between Canwest’s owners, the Asper family, and the ruling Conservative Party. The media company’s newspapers have endorsed Harper in the past two federal elections, reflecting a shift in the family’s political allegiances. Izzy Asper, the company’s late founder was a former leader of the Manitoba Liberal Party and a lifelong Grit partisan. In 2003, the year he died, the company donated almost $54,000 to the Liberals, more than double the $25,000 it gave the then Canadian Reform Conservative Alliance. But Asper’s children—Len, David, and Gail—have broken with the faith. Especially since dithering by former Liberal Finance minister Ralph Goodale on tax changes for income trusts shaved an estimated $150 million off the value of a 2005 Canwest newspaper trust offering. In 2007, for example, Len, David, and Ruth, their mother, all donated $1,000 each to the Tories, close to the new maximum. So did Gail, although she also gave $500 to the Green Party and $1,100 to the Liberals.

And since Stephen Harper took power in Jan 2006, his government has been supportive of some of the Aspers other endeavours. The Tories not only carried through with Liberal pledges to fund Izzy’s dream of a Canadian Museum of Human Rights in Winnipeg, but substantially upped the ante. In addition to $100 million towards construction costs, Ottawa has designated the project a “national museum”—the first-ever outside the National Capital Region—and pledged a further $21.7 million a year in operating funds, in perpetuity. (The Asper Family Foundation have pledged $20 million to the project—the third $4 million installment is due later this month—and Gail has been instrumental in raising a further $85 million for public and corporate donors.)

This past December, Treasury Board Minister Vic Toews, indicated that Ottawa is ready to give a further $15 million to another family obsession—a new stadium for the Winnipeg Blue Bombers. Under the proposed plan, the private sector will pony up $100 million of the $150 million estimated cost of the new 30,000 seat facility at the University of Manitoba. And David will take control of the now civically-owned franchise.

Another hot topic at the hearings will be the lack of government interest in bailing out the CBC. The sudden drop off in advertising has left the public broadcaster with a $100 million hole in its budget. But its pleas for an advance on next year’s funding, or other financial assistance, have been greeted with a collective Tory shrug. The NDP’s Angus questions why James Moore seems so willing to help one part of the industry, and so disinterested in the plight of another. “He’s basically hanging the CBC out to dry, going as far as to ridicule its request for bridge financing,” he charges.

But the bottom line for opposition parties will be getting the government and networks to live up to existing commitments regarding local broadcasting and Canadian content. And there they might find at least some common ground. Indeed the sudden Conservative interest in a bailout has followed on the heels of CTV’s announcement that it will close three underperforming stations—two in Ontario and one in Manitoba. And similar noises from Canwest that the same fate awaits its 5 E! channels unless a buyer can quickly be found. Coupled with the networks cuts to local newscasts, the trend bodes ill for the Tories’ favoured strategy of going “over the head” of the press gallery in Ottawa, and flogging its policies through interviews with local media.

“It wasn’t local broadcasting or Canadian content that brought us into this mess,” says Angus. “And things shouldn’t be balanced on its back.”

—with Philippe Gohier