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Edmonton Oilers

Value investing in arenas

As a hockey fan, this kind of hurts

Josh Harris said Newark’s Prudential Center was a more important financial piece in his purchase of the New Jersey Devils than the hockey team itself.

Harris and David Blitzer, a New Jersey native and senior managing director of Blackstone Group LP, purchased the National Hockey League franchise last month in an agreement that also gave the partnership control of the Prudential Center.

Located three blocks from Newark’s main transportation hub, the $385 million Prudential Center was opened in 2007. Harris called it “one of the most modern arenas in the country.”

“And we think that with the new capital structure and the new ownership group and the new management that we put in, that we’ll be able to make this arena really realize its potential financially,” Harris said in a Bloomberg Television interview.

Harris, who bought the National Basketball Association’s Philadelphia 76ers in 2011, acquired the NHL team in a deal valued at about $300 million.

Harris has already made changes to the Devils’ business personnel, hiring Scott O’Neil as chief executive officer. The former president of Madison Square Garden Sports, O’Neil is also the chief executive of the 76ers.

Harris said he viewed the Prudential Center as complementary to New York City’s two main arenas, Madison Square Garden in Manhattan and the Barclays Center in Brooklyn. The home of theNBA’s New York Knicks and NHL’s New York Rangers, the Garden is completing a $1 billion private renovation. The $1 billion Barclays Center, home of the NBA’s Brooklyn Nets, opened last year.

“If you’re a big concert event and you stop in New York, you’re probably going to play one of MSG and Barclays, and this arena,” Harris said of the Devils’ home.

O’Neil said in another Bloomberg Television interview last week that the Prudential Center was the fourth-highest grossing arena in the nation, behind Barclays, the Garden and Staples Center in Los Angeles. He didn’t offer specific figures or the source of his information.

Located about 11 miles (18 kilometers) from New York City, the Prudential Center has been a one-tenant building since the Nets moved to Brooklyn prior to the 2012-13 season. Harris said the venue’s concerts and special events would be enough to sustain the building without a second professional team.

“Having a basketball team, an NBA team, in this arena is not in the business plan right now,” Harris said. “We don’t think it’s necessary.”

Interesting bit of arena drama right now in New York.  You have Madison Square Garden being evicted, the Nassau Coliseum being totally renovated and refurbished, the Baclay’s Centre opening, and now the New Jersey Devils being purchased not for the team, but because it gives them access to Newark’s Prudential Centre.

In case you think this is just a New York thing, check out what MSG is doing with the old Los Angeles Forum, a building many thought would be torn down.

The first thing to consider is that arenas are costing $300 million dollars at least with many heading towards the $500 to a $1 billion range (depending on land prices).  Older arenas like Nassau and The Forum now have tremendous value, if you can call a $100 million renovation a value, in part because modern arenas have become so expensive, they aren’t viable in non-premier markets.  Remember that the City of Edmonton is paying a subsidy to the Edmonton Oilers to operate their new arena and Glendale is paying a large subsidy to the Coyotes to manage their arena.

Duffy is out of friends

Stephen Maher on Mike Duffy

In 2004, when I arrived in Ottawa to cover politics for the Halifax Chronicle Herald, I was lucky to get a desk in the press gallery between Maurice Godin, a canny Radio-Canada veteran, and Mike Duffy, who was then the host of CTV’s political show.

Both Godin and Duffy were kind to the East Coast greenhorn, and since Godin was on the Hill in the morning and Duffy in the afternoon, I was often able to get help with a story from two of the best reporters on the Hill without leaving my desk.

I got to be friends with Duffy, a twinkly-eyed storyteller with a love for gossip and cold white wine.

He was kind enough to have me on his show a few times, including the night of Oct. 9, 2008, when CTV decided to air some outtakes from an interview in which Liberal leader Stephane Dion struggled to answer a confusing question.

I thought CTV was right to air the clip, since Dion wanted to be prime minister, but I thought Duffy’s take on the interview was way over the top. He treated it like the biggest gaffe since Robert Stanfield fumbled a football, and I’m embarrassed to say I squirmed through the panel discussion without saying that.

Duffy was in the tank for the Tories because he wanted Harper to appoint him to the Senate.

Saying Duffy did the Dion interview to get in the Senate was like suggesting that Steve Smith scored on his own goal in 1986 because he wanted to play for the Calgary Flames.

(that video never gets old)

Bonus link: Here is a video of what looks to be an intoxicated Mike Duffy attacking MPs and the Canadian Press.  The best part of the video is Duffy attacking Peter Stoffer on his expenses while defending his own.

Christmas

Christmas for us started on the 23rd as we joined our good friends Gloria, Jerry, and Kristy for our traditional Christmas together.  It was a bit different this year because of Gloria’s cancer but it was a fun night of exchanging gifts and hanging out.  We gave some books (as is our tradition) but I gave Gloria a Sound Spa which should help her sleep while the boys gave her a plush blanket.

Because I like to make fun of Kristy, we gave her an Edmonton Oilers Snuggie.  Because most of Kristy’s life is dedicated to a) staying warm and b) the Edmonton Oilers, she liked it.

Christmas Eve had Wendy working all day.  This is the worst schedule she has ever had over a Christmas season and it hasn’t been a lot of fun for us as a family but that is the life of people working retail.  I worked part of the day and then headed home to spend the rest of the day with the boys.  We gave the boys two early gifts of some NHLPA hockey sticks so they could play some road hockey during the day. Of course it was freezing outside so instead of playing hockey, we just taped them up.  While she worked, we packed up the Mazda and headed out to Warman where we spent the evening at  Lee and Brittany’s place for a traditional Christmas supper of lasagna and fighting over who got the lasagna leftovers before opening gifts.

Lee is known to master such phrases as “less talking, more chewing” on Christmas Eve.  While he loves lasagna, he loves presents more.  In the past when Wendy was working, he would spend most of the day badmouthing Wendy and trying to convince Mark to open Christmas presents without his mom.  He takes this whole Christmas gift opening seriously.

Of the delay in eating turned costly when Oliver was playing with Tika (Lee and Brittany’s dog) and fell nose first into the edge of the carpet.  There was crying, rug burn, and blood all over the place.  While Oliver’s new shirt paid a steep cost, all was okay.  It wasn’t as if I didn’t expect blood, I just expected it over the lasagna.

Mark

Santa gave Mark a new HTC Desire C Android Smart phonewhile I got him a Fuji AV150 camera (and tripod).  I had created a Instagram, Foursquare, and upgraded his Flickr to a pro account on Sunday.  We made sure we had batteries, SD (and Micro SD) cards all ready to go.  Now we have to download some apps which will mean some quality time on Google Play today.  I gave him a 1932 Chevrolet Truck scale model to build, Oliver gave him some adventure and Star Wars blueprint books (and some Daytona 500 cologne).  He also got a graphic novel story of Canadians in WWII as well as a book on how to create his own graphic novel

In his stocking he found a new watch, a big bottle of the worst cologne known to man, Brut 33 (Wendy wept tears of pain when I showed her the bottle)  Mark also got some high quality headphones; both on the ear and in ear ones.  The less I have to listen to 90s rock, the better. 

Lee and Brittany gave him a Denver Broncos jersey with his name and number on it.  Thank goodness Tim Tebow was traded before the season started.  He was pretty excited with that.  Almost as excited as Tim Tebow gets about everything.

He also got a Starbucks travel mug and gift card from myself.  It’s a bit self-serving as he wanders down to The Lighthouse and takes me out for coffee.  To keep all of his special memories safe, we gave him a small chest to keep some of life’s momentos.

Oliver

All Oliver wanted was a pogo stick and I found him one from Santa on Amazon.com.  I gave him a toy F-22 Raptor jet.  I would have gotten his a F-35 toy but the price kept increasing until Stephen Harper told me not to get it for him.  Mark gave him a rescue play set, a puzzle from the dogs, an Obi-Wan Kenobi lightsaber, and an Optimus Prime Transformer that talks.  He is getting into hockey to I got him some mini hockey sticks and nets.

Lee and Brittany gave him a tricked out big wheel for Christmas.  I immediately thought of this.

Stewie Griffin's tricked out

What’s scary is that I think Oliver would think that was a good idea.

His favourite gift by far was a Power Ranger that transforms into something else.  He was quite jacked about it.  

Wendy

With the new iPod I gave Wendy for her birthday, I gave her a set of iHome speakers and some perfume.  We got her an electric griddle and skillet (she asked for them), a new popcorn maker (which she was really excited about).  Mark gave her a pink Zepco fishing rod which she was horrified of.  Lucky for Wendy, the fishing is horrible in our part of Last Mountain Lake.  We also got her some high quality over the ear and in-ear headphones.  If nothing else she will be able to tune us out for Christmas.  The dogs gave her some new knives and a kitchen scale.  Not sure where they got the money to get those.

Lee and Brittany gave her a gift card for Dutch Growers which made her day.  She’s out right now waiting for spring to hit.

Lee

I bought Lee a Leatherman Skeletool multitool and case.  Mark got him Red Dead Redemption for the PS3, while Oliver got him a George Reed collector’s edition figurine.  Lee and Mark got into an argument a couple of weeks ago where Mark called his uncle, “Uncle Glitter” which has kind of stuck.  Mark got him some glitter stickers for his new iPhone 5.    “Uncle Glitter” didn’t seem to appreciate his nephew’s gift that much.  

He tried to pull his knife on the Skeletool on Mark for bugging him but he couldn’t get it open.  Once he got it open, he cut himself.  

Wendy put together a great beer can chicken gift set of a roasting pan, rubs from Cabela’s, and a grilling recipe book.  I expect some good beer can chicken this summer.

Because Lee was so insistent on lasagna for supper, we gave him a MRE lasagna and a spork as well.  He can now have lasagna while camping.  I think that was his favourite gift.

Brittany

Brittany was given a nice fountain pen, two journals (one lined and one unlined), and an Indigo gift card.  Because both Lee and Brittany are getting new iPhones, we tossed in some iTunes cards as well.  Holding her Indigo gift card was Cooper the Bear which apparently has been a Sears mascot for years (a fact that I did not know).  It just seemed to work well for us.  Brittany is an english teacher and I just think an English teacher with a fountain pen is more intimidating.  It was either that or do what the NRA is suggesting and that is to give her a firearm.

Wendy gave Brittany a soapstone statue of a couple from Ten Thousand Villages which I really liked.  As much fun as it is to bug Lee, him and Brittany are a wonderful couple.

My Haul

I wasn’t expecting too much but Wendy and the boys did a lot of planning and looking for good deals.  Wendy gave me a trail GPS and a George Reed limited edition action figure, Oliver gave me a Toronto Blue Jays hat, Mark gave me Assasin’s Creed II and Red Dead Redemption.  I also got a Leatherman Skeletool.  To balance out my Tim Tebow action figure from last year, Wendy gave me a Peyton Manning action figure.  Lee and Brittany gave me a remote control helicopter.  It flies and crashes quite well around the house.    Also because I don’t smell enough like David Beckham, I was given some of his cologne.  Not sure if that is a good thing or a bad thing.  To replace my old barbecue tools (that are showing some age), Wendy also got me a simple set of three barbecue tools which is all we really use.

The advantage to only periodically playing PS3 games is that I never own the new ones which means that Wendy can find me games for $10-$15 at Wal-Mart and it doesn’t matter since I haven’t played them.  

Perhaps the purchase the surprised me the most is that the boys gave me Neptune’s Inferno which is a book about the naval battles at Guadalcanal

I really had no more success than Lee in using my Leatherman today although no blood was spilled.

The photos can all be found here.

Today is being spent around the house setting up things, doing some reading, and then having a more traditional Christmas dinner.  I had hoped to get get down to work but for the second day in a row, someone has swiped our power cords to the car which is frozen solid in this cold.  We had planned to take a long walk downtown today with Mark’s new camera but as the song says, “Baby, It’s Cold Outside”.  Hopefully your Christmas is a good one and you are enjoying the time with family and friends as well.

Saskatoon’s Future: Being blackmailed by billionaires

As Saskatoon grows bigger, more and more people have talked about bringing a pro sports franchise to the city. Hockey has been dreamt about since Bill Hunter tried to bring the St. Louis Blues to Saskatoon in 1984.  We saw one group try to bring the Phoenix Coyotes here for at least a couple of games a season and there has been been some talk of a CFL franchise coming to Saskatoon (even if it meant that it would kill the Riders). A pro sports franchise would be fabulous in the short term. We would sell out Credit Union Centre and cough up money for some much needed renovations and capital improvements. There may even a new stadium built downtown, where Credit Union Centre should have been built in the first place.  That is how it will start out but let me tell you how it will end.

Over the weekend, the Edmonton Oilers’ owner and senior management went to Seattle to tour the Key Arena in an effort to get the City of Edmonton to pay for an even larger part of a $500 million dollar stadium deal. After getting the city to pay for the entire stadium up front and then giving billionaire owner Darryl Katz a sweetheart loan for his portion (to be paid back over 35 years), he wants an additional $6 million subsidy to run the arena. Instead of paying back his portion back $5.5 million a year, Katz is now demanding that he gets a free half-billion dollar stadium and $500,000 a year to run it. Where do I sign up?

Katz isn’t the only owner to behave badly. For every responsible sports owner with deep ties to his community, there are numerous ones that extort their community to buy them things or as the threat goes, they will move their franchise. The threat works as there is an empty hockey stadium in Kansas City and Seattle is building a new stadium to lure back the NBA (probably the Sacramento Kings).  Hockey is an excellent second tenant to make even more money. Seeing everyone else do it, enables even local billionaires to behave badly. Katz which has deep roots to the Edmonton area and is a very profitable market with a very loyal fan base is basically blackmailing the Edmonton city council to give him the deal that he wants or he will move a team that has spent its entire existence in Edmonton to Seattle.

Now that Seattle has reached out to him (and he has reached back), expect a Kansas City visit as well.  Why not play multiple markets off each other until Edmonton City Council responds to the bullying. While it doesn’t excuse Katz’s behaviour, many other owners behave the same way. The NFL has an empty Los Angeles market where the threat of teams moving to Los Angeles has gotten it better stadium deals in almost every market where the NFL has a new stadium. It will be used for leverage in the upcoming years in Jacksonville, Miami, Oakland, and San Diego. While FedEx Field in Washington is only 15 years old and still cutting edge, owner Daniel Snyder has already declared it as “half-life” and wants a new downtown, stadium.   Instead of wanting Washington to pay for it, he is willing, if they give him a big chunk of land to develop for free.  So why does a 15 year old stadium that is the largest in the NFL need to be replaced after only 15 years? He wants to keep up with the Giants/Jets/Cowboys and maybe even the new Rider stadium.  EIther the Washington taxpayers pay for the stadium or give him premium land for his own profit.  Either way, taxpayers pay. Just watch, if he doesn’t get what he wants, he will move the team. Threats of moving teams got a new stadium built in Miami even when there isn’t a great market left to move to and this was after Jeff Loria had already proven that he is the worst owner in sports (he destroyed the Montreal Expos).

Heading back to Seattle, the Key Arena was completely renovated in 1995 and brought to NBA standards. NBA commissioner David Stern called it state of the art but less than a decade later, he was in town demanding that Seattle build the Supersonics a new team, invest another $220 million into the stadium or they would move. When the city said no, the team moved to Oklahoma and became the Thunder. In 2002, the Charlotte Hornets moved to New Orleans because of their antiquated stadium that was built in 1988. The fans supported the team through 364 consecutive sell-outs but even that wasn’t enough to keep the team in town. The stadium didn’t make it’s 20th birthday before being demolished (it was 13 years old when Charlotte had their first referendum on building a new stadium).

This is what happens. Billionaire owners of profitable teams want more and the expectation is that taxpayers give it to them. It happens all over the place and as Saskatoon grows, it will happen here, whether it is a NHL team, a CFL team or even a AHL team; it’s great for a while and then all of us have to pay up for the right to buy tickets to watch a team. It’s a sick system and I feel bad for the City of Edmonton, Edmonton Oilers fans, and fans of sport in the city because it’s not right.

Will the same thing happen in Saskatoon?  If pro sports come to Saskatoon in a real way, of course it will.  We will tell ourselves that it won’t happen, we have local owners, and we are a growing market in a booming economy; just like Edmonton told itself when Katz bought the team.  It’s only a matter of time.

How do such stupid people posses such great wealth

Bruce Arthur on the NHL owners statements of the last week

It is not an election, of course, so perhaps the NHL is just ignoring public opinion, confident as ever that any anger will pass. But if they are trying, they could perhaps do better. It wasn’t just Romney-esque gaffes, though if you define a gaffe as accidentally telling the truth, then Jimmy Devellano qualifies. The Detroit Red Wings executive and alternate governor managed to offend players in an interview with something called Island Sports News, in which he could perhaps have spoken more elegantly.

“It’s very complicated and way too much for the average Joe to understand, but having said that, I will tell you this: The owners can basically be viewed as the ranch, and the players, and me included, are the cattle,” said Devellano. “The owners own the ranch and allow the players to eat there.

That’s the way its always been and that’s the way it will be forever. And the owners simply aren’t going to let a union push them around. It’s not going to happen.” Listen, average Joe: it’s too much for you to comprehend that the really rich guys are the bosses, and they set the rules. Never happens anywhere else, especially for average Joes. Some players responded on Twitter by mooing, just as Ted Lindsay would have done.

Devellano then talked about the “unwritten rule” about not signing restricted free agents to offer sheets, and the fact that not every owner follows that unwritten rule might be the only thing that keeps it from being an admission of collusion. Which Don Fehr, having successfully fought collusion in baseball, just might sprinkle into his motivational speeches should the players waver.

The US$250,000 fine the Detroit Red Wings received will probably keep any other owner or executive from speaking their minds, but sometimes you can divine an owner’s intentions by his dealings with Edmonton City Council. As the league attempts to reduce the players’ share of revenues, Oilers owner Daryl Katz was trying to increase the share of public investment in an arena that is already slated to cost almost half a billion dollars.

“In our view, it is the team that acts as a subsidy for a city’s arena, which is effectively infrastructure, not the other way around,” Katz said in an interview with The Edmonton Journal. “For our part, on the other hand, we’re taking a lot of risk by committing to one of the NHL’s smallest markets for 35 years.” Well, study after study shows that sports arenas do not actually spur economic benefits, so no, the subsidy actually goes the other way. And while Forbes is no Bible when it comes to NHL finances, it puts Edmonton right in the middle of the league in 2011 revenues, and shows the team to be substantially profitable over the last five years. Oh, and city councillor Tony Catarina told the Journal, “They don’t want to pay taxes. They want help now in operating the arena. They want a guaranteed ($6-million per year) subsidy. They want the city to be their tenant in a major office building. They want the casino licence.” Helpfully, the NHL has told Edmonton city council that “absent a lease, and with no state-of-the-art arena either being constructed or about to be, the Oilers would be a candidate for relocation,” according to Journal columnist John MacKinnon. The Oilers official Twitter account then retweeted a link to that column, which as social media strategy goes is a hell of a way to connect with your fans. Nice little hockey team you got here. Shame if anything were to happen to it.

The Scandal of Two Tier Health Care in Canada

So the Calgary Flames jumped to the head of the line when it came to H1N1 vaccinations.  Are we surprised?  It’s long been a practice in Canada where professional and semi-pro athletes get preferential medical treatment.   They get a MRI within hours while the rest of us wait months.  Elective surgery comes within days while we wait forever.  Yes you can say that their job depends on it but a lot of people whose jobs depend on being able to work pain free get stuck on long waiting lists and have to go on disability.

So naturally the team doctors assumed the Calgary Flames could just jump the queue and I assume the person who set up the private clinic thought it was business as usual like it had been so many times in the past.  Now you have the Premier determined to “get to the bottom of it” but the reality is that this kind of stuff has been going on since the winter of 1980 when the Calgary Flames moved from Atlanta and stuff like this happens to almost all pro sports teams. 

If Premier Ed Stelmach wants to get to the bottom of it, why not show waiting times for the Edmonton Oilers, Edmonton Eskimos, Calgary Stampeders, and the Calgary Flames for surgical and medical procedures and compare it the rest of the population who does not play professional sports.  I assume they jumped the queue in almost all cases.

Eyes Wide Shut

Peter Pockington The Globe and Mail has a  long feature on the infamous owner of the Edmonton Oilers, Peter Pockington.  He may be the most disliked man in Alberta’s history and I can’t blame them.  In addition to selling Wayne Gretzky to the L.A. Kings, the Alberta government said he left Alberta taxpayers on the hook for millions.  (which is why he had to sell the Edmonton Oilers)

The fine fabric of Pocklington’s life began unravelling in 1998, when Alberta Treasury Branches, a savings institution owned by the province, forced Pocklington to sell the Oilers, alleging that $100 million in loans to Pocklington had gone awry. The next year, he placed his main holding company, Pocklington Financial Corp., into bankruptcy, clearing the way for creditors to pick away at his crumbling empire. Other holdings that slipped away included a Triple-A baseball team in Edmonton and Canbra Foods Ltd., a margarine company based in Lethbridge. Alberta Treasury Branches seized Canbra and sold it for $64 million. Pocklington was also forced to relinquish his private jet, the Group of Seven paintings and even his $750,000 wine collection.

Despite hearing the stories of people who are suing him now, I don’t really feel sorry for them but it isn’t as if he didn’t have a long history and what happened between him and the Alberta Treasury   What he did was on the public record and yet you have this quote

Kamatari thinks back to how he was influenced by Pocklington’s own "authorized website," which portrays him as civic-minded, serving on the board of directors of the Betty Ford Center, providers of drug and alcohol rehabilitation services. On the site, Pocklington also expresses his admiration for entrepreneurs, proclaiming that "small businesses are what made America great and will continue to make America great." Pocklington wrote that "businesses fail for a number of reasons, including under-capitalization, no vision by the owner/founder, lack of product and not spending 48 hours a day on making it successful. Business is tough! You have to be dedicated."

The article is talking about multi-million dollar deals being done and no one thought to do due diligence on their new partner because he has his own flattering domain name with some quotes on it?  Was there no time to do a Google search or phone someone at the Alberta Treasury Branch?  I am sure some former Alberta politicians would have been comfortable talking as well.  It’s easy to vilify Pockington but the information was out there enough that everyone should have gone in with their eyes wide open and not quite enamored with the country club he lived at.