Companies & Industries

Build it and the money will come

Edmonton finally inks a deal.

Photo by Andy Devlin/NHLI via Getty Images

Photo by Andy Devlin/NHLI via Getty Images

The bitter, sometimes petulant negotiations between the City of Edmonton and Oilers owner and pharmacy magnate Daryl Katz over who will pay for a proposed new 18,500-plus-seat downtown arena have come to a close, but the resolution is less than complete. The parties haggled over every last dime; what if there are cost overruns? Plus there’s the “$100-million elephant in the room,” as Don Iveson, one of three city councillors to oppose the deal, calls a lingering gap in funding.

Here’s how the deal shook out: the city will contribute $140 million and raise another $125 million through a surcharge on event tickets. The Katz Group will put in $140 million over 35 years. The city has asked the governments of Alberta and Canada to make up the nearly $100-million shortfall on the $480-million price tag. With shovels to ground scheduled for late summer 2013 and completion in 2016, there’s time to secure the remaining funds, but not much.

“This is not atypical,” says the University of Alberta’s Dan Mason, professor of sport management. “Municipalities often start on major projects anticipating they’ll find some funding later.” He adds that this particular debate generated acrimony because of its high-profile nature and the perception that public funds are going to support private enterprise, which, he says, is commoner than you’d think. He cites the example of a multimillion-dollar interchange at the south end of town that primarily benefits tenants of a big-box mall.

And there is a national context for arena development. Markham, Ont., recently approved the construction of a similar rink, paid for by a public-private mix—this for a city an hour from Toronto that doesn’t even have an NHL team. Quebec City broke ground in September 2012 on its arena. Also without a pro franchise, the city at one time had hopes of accessing federal support. Instead, it announced that the costs would be a municipal-provincial split, mitigated by media giant Quebecor’s late arrival as naming sponsor.

In Edmonton, the arena is a cornerstone to Mayor Steven Mandel’s vision of revitalizing the capital city’s breezy downtown. But the provincial funds he’s hoping to access will be under the microscope of Premier Alison Redford’s Tories in their quest for austerity. As for Ottawa, in 2010 it passed on the chance to fund Edmonton’s World Expo 2017 bid. And if Quebec can’t count on the feds to pony up, Edmonton shouldn’t hold its collective breath.

After an initial estimate rose by $30 million, the city capped the project’s budget at $480 million. Ken Pilip, CEO of the Consulting Engineers of Alberta, says meeting that target is not such a long shot. “There’s good planning here,” Pilip says. “They’ve assembled the best possible team.” In a hockey-crazed town, that’s saying something.