Hockey Headlines

Sunday, 12 July 2015

Maybe He's Right

I try to catch HBO's Last Week Tonight whenever possible. I don't have HBO, but I do have the internet so I rely heavily on the generosity of others and on Last Week Tonight itself to upload the episodes to YouTube and other media sites. John Oliver, while still a comedian, has turned his Daily Show news reporter schtick into a weekly news show that frequently makes more sense than regular news broadcasts and displays a level of investigative journalism that should make Dateline jealous. In other words, John Oliver and the staff of writers for Last Week Tonight do a pretty darn good job in making a lot of sense.

Tonight, Mr. Oliver focused his cross-hairs on public funding for sports venues, and hockey doesn't get left out of the mix. Oliver calls out the Detroit Red Wings and the Arizona Coyotes for their demands for public money to build arenas along with several other teams in other sports. I'm gonna go ahead and drop this right here. Watch, and we'll discuss below.

Let's talk about what Mr. Oliver brought up: the use of public money for building private stadiums that provide almost no economic run-off for the surrounding area. We'll address the economic benefits in a few moments, but let's look at what Oliver presented. The Calgary Flames are currently in negotiations with the city of Calgary to replace the aging Saddledome, but Calgary city council gave fourteen different reasons why public money won't be used to build a lavish, new arena for the Flames. The Saddledome, might I add, is just 32 years old.

Much like the argument made by Mr. Oliver, the Flames' ownership group has two billionaires sitting on it: Murray Edwards and Clayton Riddell who are worth a combined $4.8 billion as per Forbes. Those two could easily fund the design and building of a new arena without even scratching the $4 billion they sit on. Drop $800 million, and you get yourself a pretty incredible hockey rink.

You don't think that funding sports venues is a bad idea? Maybe talk to Greece who are on the verge of being insolvent. If you remember correctly, Greece hosted the 2004 Summer Olympic Games and as far back as 2010, some were pointing to the massive amount of debt that Greece incurred in hosting those Olympic Games as a major player in their current financial debacle. While the Greeks are responsible for a lot of the mismanagement of their finances before and after those Olympic Games, dropping nearly $11 billion on the Games and additional infrastructure projects will almost certainly destroy a country. Especially when the vast majority of those newly-constructed venues sit empty and are crumbling.

Edmonton recently pledged more than $200 million of public money in helping Oilers owner Daryl Katz, worth an estimated $3.3 billion as per Forbes, build his $480 million sports-and-entertainment complex for downtown Edmonton. The breakdown of the money is shown as $143 million put up by Edmonton Oilers owner Daryl Katz, $219 million coming from the city and $114 million coming from other levels of government. A ticket surcharge is expected to raise another $125 million. Of all of the money for a venue to be used by Katz's Oilers the most year-in and year-out, he's putting up less than a third of the money for his design and building which will see him benefit the most! Is that not wrong? Doesn't anyone see the insanity there?

The city of Markham, Ontario is pledging public money for a new 20,000-seat arena in the hopes of luring an NHL relocation or expansion team there. The estimated cost of this arena is $325 million with half of the money coming from private sources in the Remington Group while the other half will be generated through a levy on newly-built homes, townhouses, and condominiums. Imagine you, as a home owner, paying for an arena that you may have no interest in ever visiting. Does that seem right? Aside from having a newly-built home, what benefit does funding the arena give you as a home owner?

As Mr. Oliver pointed out with the New York Yankees, they pay no property tax through their deal with the city of New York. This is a franchise that gave Alex Rodriguez a quarter of a billion dollars to hit a baseball, but will provide nothing back to the city to maintain roads, improve sewer lines, or fund community centers to help develop the next quarter-of-a-billionaire. And it happens with hockey arenas as well as land is either donated freely to the team to build their new arena on or they are given a sweetheart tax break that sees to exist in perpetuity despite the crumbling infrastructure surrounding that land.

Again, take the city of Calgary once more. Ray Jones, elected council member from Ward 5, stated in an interview, "We've got so much infrastructure that we have to build that we don't have money for (things) that are needed, not wanted. The best I could see City of Calgary doing is donating land, but I can't see them donating anything else."

Ward Sutherland, elected member from Ward 1 in Calgary, stated in an interview, "Most people who talk to me don't support it. They think of hockey in Calgary more as a corporate sport, because it's so expensive. Obviously, it brings in a lot of money, and economically there's value in it. So I would say the most we should ever do is land, if we have available land."

Didn't Mr. Sutherland say that most people don't support it? Yet here are Mr. Jones and Mr. Sutherland giving away prime real estate that could recoup thousands of dollars in property taxes each and every year. Mr. Sutherland clearly hasn't seen the studies that prove that arenas and professional sports teams don't bring in a lot of money for cities, yet he's out there spouting off about giving away thousands of dollars in property taxes to appease a private business. Why do we elect people who can't do a simple Google search?

Of course, teams always drop the threat of relocating if their needs aren't met. The Pittsburgh Penguins did it to get a new arena in Pittsburgh. The New York Islanders are moving to Brooklyn after being on Long Island since their arena deal fell through. The OHL's Belleville Bulls left their home for greener pastures - but an old arena - in Hamilton because they couldn't get a new arena in Belleville. And the Arizona Coyotes have had the threat of relocation hanging over their heads every summer. Teams will drop this threat in the hopes of forcing the city to pony up some big money, but there's a curious case one should note before dropping the R-word in the future.

Winnipeg is that interesting case because the threat of the team moving has already come to fruition, and yet Winnipeg still stood the test of time in spite of this "tragedy". In fact, the city didn't see any major fallout from the Jets leaving whatsoever, according to one study. CBC's Armina Ligaya reported in 2013,
"... one 2005 study, conducted by University of Ottawa researchers, looked at the economic impact of professional sports teams on hotel occupancy rates between 1990 and 1999 in eight Canadian cities, including Toronto, Edmonton and Montreal.

"The research, published in the Journal of Sports Economics, found that in 11 out of 17 cases, when a city with a major league franchise goes through a period without a team — due to a league lockout, for example, or when a team such as the Winnipeg Jets leaves — it 'had no statistically significant impact' on the hotel occupancy rates in that city."
In other words, professional sports has very little economic impact on the city in which it exists, and these new stadiums do little to attract new customers through their turnstiles once the honeymoon phase has worn off. Yet the debt and cost of building that arena live on, and it seems to be something taxpayers can't ever escape.

Even in Winnipeg, though, where taxpayers handed True North Sports and Entertainment $40.5 million to build the MTS Centre while paying for the demolition of the old Winnipeg Arena, there's a question about whether that $40.5 million should be paid back. The province, however, feels that the building is a "valuable community asset" despite the fact that the province and city see very little kickback from the Jets. While it's not $200 million like the people of Edmonton are handing over, that $40.5 million could go a long way in city that desperately needs infrastructure capital.

So what do sports venues bring to a city if there are very few economic spin-offs? It seems the largest single thing sports team do is unite the community through civic pride. Civic pride is certainly important because it's a rallying point for everyone within that community, but that rallying cry doesn't pay off the cost of a new arena or repair streets or fix sewer lines in the city where the money spent on a new arena would certainly help.

Less people flock to the bars and restaurants around the venues due to traffic, so there's a negative impact on the business owners who are legitimately trying to make a buck yet see none of the same benefits provided to the sports team who makes millions every year. While I'm not saying the sports team needs to supplement the businesses around them with additional cash, it would almost be in the owner's best interests to close early on game days and not eat the costs of running a business at that time.

The bottom line is this: support your sports teams in whatever way you like. If you buy merchandise or tickets or support their charitable causes, there's nothing wrong with that. However, these are privately-owned businesses who are reaching into your pocketbook for as much money as they can grab when they demand a new place to play. Would you give a 7-11 owner $150,000 to build a new convenience store while he sits in the back and counts the money pouring in? No, you wouldn't. You'd be right pissed if that happened. Why? Because he's a business owner, and he needs to accept the costs of doing business instead of asking the community for handouts.

So why do we give professional sports franchises a pass when they do they same thing to us? Readers, don't confuse civic pride with the cost of business. Sports franchises are great to have, but they're a luxury. If the NFL is any proof, the city of Los Angeles is still thriving despite losing two NFL franchises and having every franchise threaten to move there if they don't get a new stadium.

Here's an idea: let them leave. They're just going to demand a new stadium built with your money in a couple of decades anyway. Why bother with the hassle of going through this argument once per generation?

Until next time, keep your sticks on the ice!

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