Sep. 26, 2012 - Issue #884: Strangelove

Deals are for suckers!

The on and off-the-table arena agreement ...

Of all the practices prohibited by the federal Competition Act, the "bait and switch" is probably most familiar. That's when you're lured into a store or business by an attractive price—an almost impossibly attractive price—for some product or service, told the product is no longer available and then gently nudged towards a different, higher-priced product. Sure, you could just walk away, but you've already promised the family a new flatscreen TV. Promised it loudly. Right in front of Joe, that asshole next door.

The Act protects us from being forced to choose between paying $3000 for a television on which we planned to spend $1000, but that never really existed, and going home empty-handed. Retailers cannot advertise at bargain prices without a reasonable ability to deliver.

That the Act does not apply to either developers or local governments is unfortunate, as illustrated by the ongoing downtown arena saga.

April 2007 was the first in what would turn out to be a five-year playoff-free streak for the Edmonton Oilers. The day after their owners, the Edmonton Investors Group (EIG), bought a full-page newspaper ad acknowledging the team's dismal performance, EIG Chair Cal Nichols told a reporter that a rumoured new arena would help the team attract better talent. Having heard those rumours, and liking them, Mayor Stephen Mandel struck his Arena Feasibility Committee.

In May, Daryl Katz launched his attempt to purchase the hockey club. Facing continued opposition from EIG after his third bid, Katz took his campaign public in July, promising to contribute $100 million towards a new arena and build a training facility at the University of Alberta if his $185 million bid succeeded. It didn't.

A June Leger/Edmonton Journal poll showed 56 percent of Edmontonians opposed a downtown arena; 67 percent if tax money was involved. Declaring the poll premature, Mandel told the Journal no property taxes or infrastructure money from other levels of government would go toward the project. 2007 was an election year.

That December, Katz tabled a $188 million purchase offer, reiterating his promised $100 million arena contribution. EIG rejected the offer but their resolve was fracturing. In February 2008, EIG accepted $200 million for the team.

In March, the Arena Feasibility Comittee recommended a $450 million arena be built downtown. Despite the mayor's assurances, taxpayers would not be burdened. The committee found it "highly probable" the arena would "require contributions from all orders of government in order for it be economically viable."

A lengthy absence of arena news did not make the public's heart grow any fonder. An August 2009 Ipsos Reid/Global Edmonton poll found 77 percent (46 percent strongly / 31 percent somewhat) opposed the city contributing money for an arena.

Through unnamed sources "close to the Katz Group," local media unveiled a grand vision. There would be two rinks, one for the Oilers and major events; the other for the Oil Kings and secondary events. There would be student housing, office buildings, a performing arts centre and a casino. Who could say no?

Some councillors were wary. Ed Gibbons told a reporter he warned Katz, "Don't be a Pocklington. People want this city to be great. They want signature facilities. But they won't stand for being bullied."

In February 2010, Katz announced he would not contribute $100 million to build the arena. "There really isn't a suitable mechanism in our view by which Daryl Katz could invest $100 million into a building that's owned by the city," his representative told the Journal editorial board.

An unsuccessful attempt to quell public outrage came on Valentine's Day by way of an open letter from Katz in which he suggested people "misunderstood" his earlier commitment. "Maybe I'm still suffering for having started my career as a lawyer, but I thought the words were clear," he wrote. The words were clear. That the words had changed was the problem.

That 2010 was an election year was not lost on council, who held firm until Katz put his $100 million for construction back on the table—until the election was out of the way.

Last fall's agreement sees the city pick up the full $450 million construction tab (not including land and infrastructure) with another level of government contributing $100 million (both have said no), $125 million from a ticket tax and $45 million from a Community Revitalization Levy. Katz's $100 million? Thirty-five annual installments of $5.67 million (including interest). The city would pay Katz $2 million a year for promotional considerations. Katz would pay all maintenance and operating expenses while retaining all revenues, including naming rights.

Now, with $100 million in funding still missing and about half that spent by council, Katz wants more, including an annual operating subsidy of $6 million.

Ward 11 Councillor Kerry Diotte has had enough. Asked if council were the victims or the perpetrators of a massive bait and switch scheme, he ducks the question, but agrees the deal seems to be ever-changing: "It's like trying to nail Jell-O to the wall." Since the Katz Group has made new demands, says Diotte, it's time for the city to put everything back on the table.

Perhaps. Or maybe, when confronted with the old bait and switch, the best course of action is to walk out the door. The kids will get over it. You shouldn't really care what Joe thinks. And, come to think of it, that old television isn't so bad.

More stories in front »

vueweekly.com comments: powered by Disqus