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|Ask Patrick - Patrick LaForge, President & CEO - Edmonton Oilers Hockey Club From October 19th to the 23rd, Mr. LaForge will be answering your questions here on C2E.|
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|20-10-2009, 10:27 PM||#1|
President and CEO Edmonton Oilers Hockey Club
Join Date: Oct 2009
Ask Patrick LaForge - Tuesdays answers, enjoy
As with yesterday I collected all of your questions from today and posted one long list of answers. Thx again for inviting me. I actually enjoy the debate
1. Have the Olers given consideration to having their minor league farm tem relocate to Edmonton (to Rexall once we get a new arena) similar to Philadelphia?
We have at it and we went with the Edmonton Oil Kings, WHL model instead
2. Would the new arena contain an Edmonton Oilers Hall of Fame?
The Oilers have a great tradition of honouring our past. You can be sure we’ll keep that going in the new building one way or another.
3. I would love to see the new arena have an organ in it. Are there any ideas floating around towards the arenas theme? I'm hoping for a retro theme, similar to what Baltimore did with Camdon Yards Ballpark.
We aren’t at the point of talking about specific designs or themes, but I love your idea of an organ.
I would just like to end with a comment....can you do anything about getting rid of the "winchester bells theme" (I believe they are called) that are played when there is a penalty. Its done by a few other teams, and is really annoying.
Thanks for supporting C2E through your participation this week.
1. Is there any chance that you would consider running for mayor in 2010? (And have you been approached by anyone to run for mayor?)
Nope. I have a great job and plenty of opportunity to help the city thrive through the Oilers, the Capitals, the Oilers Community Foundation, our downtown revitalization project and my various other roles with the Chamber of Commerce and other community groups.
2. Does the Oilers Community Fund generate a tax write off for the team? (If so, how much is it?)
3. How much will the Oilers save this year due to a higher than expected Canadian dollar?
The strong dollar is definitely going to help us this year but unfortunately that’s been the exception and not the rule. Over the past ten years the Canadian dollar has averaged about $0.76 to the US dollar. The rough shape of the US economy this year also means that we are having to subsidize some of the US franchises that are struggling.
4. Can you say, categorically, that the Oilers will NOT play in Rexall Coliseum past the expiration of the current contract with Northlands?
We think the Oilers – and all of Edmonton – will benefit from a new arena – and all the development that would come with it – and we want that to happen as soon as possible, but “possible” is going to be the operative word there. These things take time and I have to believe the Oilers would be welcome at Rexall Place beyond 2014 if need be.
5. Have you had discussions with EEDC or the Shaw Conference Centre to manage the new downtown arena?
We have focused our discussions around the management of the new arena on Northlands. We’ve made them a proposal that would give them a significant role in the overall development project, including the role of arena manager. Those discussions are ongoing but we hope to get a positive response from Northlands.
6. Since the new arena would compete with Rexall Coliseum for concerts, would you endorse the demolition of Rexall Coliseum once the new arena is opened?
That’s not something we get to decide, but it’s fair to say if Edmonton is going to have a vibrant city centre we should all want to make sure we have as much going on there as possible.
1. Can you please explain how the team will make money operating and financing a new rink when it can't make money operating virtually rent free and getting all lot of the revenues from the existing building, both during game days and a share of other events?
First I think it’s important to correct some misconceptions. The Oilers don’t actually operate rent free. This year we will pay about $1.4 million in rent, and over the past ten years we have invested about $13 million into improving Rexall Place. We get very little of the revenue from non-hockey related revenues at Rexall Place. We play hockey there about 50 – 60 nights of the year, but Northlands gets by far the lion’s share of the revenue from the other 200 or so nights that the building is in use. That’s different from nearly every other team in the league, which gets all of that revenue.
For the Flames, just to pick a random example, we estimate that’s about a ten to fifteen million dollar advantage over us, each year.
2. Does the success of this business model require the elimination in some way of the current rink? If so, how will this be done? Can you compete on a level playing field with the Shaw, Northlands, etc for these other events?
That’s not a decision we get to make and I’m not sure we even know the answer yet. What we do know is that for the arena project to succeed it is going to need a certain amount of critical mass.
3. Can the Oilers afford to operate the Oil Kings and Rush out of the new building if revenues need to be maximized and other events are able to pay more for the same days/nights?
Way too much detail at this point
4. Why do the Oilers support subsidizing the Phoenix Coyotes for millions of dollars a year if the money is needed for operations at home? Should taxpayers and ticket holders here be paying for a failing team in another city?
Like all NHL Clubs we entered into a Collective Bargaining Agreement in 2005, it covers these matters in total
Got some questions the local media usually is shy of asking.
1. On February 20, 2007, you were quoted in the Globe and Mail:
"The cap has climbed dramatically," said LaForge, referring to growth from $39-million a year ago to $44-million this season. "Much more than people thought it would or I thought it would.”
"We're in Year 2 of a six-year deal and we'll see where it goes. But if the cap was a few million dollars less it would change the world for us."
Can you explain what you meant by this sentiment? For an entity that has paid into revenue sharing each year since the lock-out [Indicative of top 10 revenue generating team in the NHL], in what sense would a lower cap ''change the world'' for the Edmonton Oilers?
Again, we are working with a Collective Bargaining Agreement.
According the link below, the Oilers are doing very favourably in terms of one of the fewest ticket giveaways and among league leaders in gate receipt revenue.
No comment on this information but we do not give tickets away
The Oilers already have a$1 lease on Rexall Place. Taxpayers already subsidize the deal to the tune of $2.5 million annually. The Oilers want more? Isn't the owner already a billionaire?
Why do Edmonton taxpayers subsidize the Oilers lease to the sum of $2.5M annually when the team is clearly a top 10 revenue generating organization, and the team has very favourable lease terms?
A lot of the information you find out there about NHL teams’ supposed profitability isn’t accurate. Rexall Place does receive a subsidy from City Hall but it is not tied to the Oilers lease. It is a contribution from City Hall to Northlands for the operation of Rexall Place and only they can explain why it exists
That said, we have a lease at Rexall Place that requires the Oilers to pay a nominal base rent and fund a significant part of the operating costs of the building. So our rent next year will be approximately $1.4 million. And not including items like the scoreboard and Oilers locker room, the Oilers have invested about $13 million over the past 10 years in things like new luxury suites, concessions equipment and retail space and the media room. Those things are used to support all of the events that go on at Rexall but unlike other teams we get very little of that revenue.
The long and short of it is that Rexall Place is an old building and yes we (and Northlands) have spent to keep up our building, even though we don’t own it, and we have to spend to stay competitive. Other teams have to do those same two things, but they can draw on a much bigger source of revenue than we can.
3. You recently claimed the Edmonton Oilers ''lost quite a bit of money'' in the past year, in addition to implying the Oilers could relocate without the help of a new arena. If a top 10 revenue generating team is having difficulty making money, are you unintentionally implying 20 other teams in the league are in financial difficulty?
Wow, that’s a loaded question. It’s become pretty clear from what’s happened in Pittsburgh, Quebec City and elsewhere that the viability of an NHL franchise is directly tied to the adequacy of its arena facility. That said, we are totally focused on putting the Oilers at the heart of our city and the revitalization of our downtown.
4. According to the link below, it was effectively the Alberta Taxpayers who paid for the Oilers $3.5M dressing room renovations [via provincial grant].
The provincial government put up millions of dollars in grants to build the former Northlands Coliseum in the 1970s, and Calgary's Saddledome in the 1980s. And only last year, each venue got more provincial dollars for upgrades, including $10 million for Rexall Place that helped renovate the Oilers' and visitors' dressing rooms
On an Oilers pay-per-view segment after these renovations were complete, the Oilers organization was taking credit on these renovations, implying the EIG paid for these renovations. Would it not have been fair to give at least partial credit to the public [read: taxpayers] for funding these luxury dressing room upgrades?
I think we’ve been pretty clear about the government’s support helping to keep an old but important arena working. These are public investments aimed at keeping the building competitive in the NHL’s smallest market.
5. Does it not concern the Oilers that a new arena could push the CFR [Canadian Finals Rodeo] out of Edmonton to the rival city 3 hours south? The CFR draws considerable economic benefits for the City of Edmonton in that a number of patrons in attendance are from out of town. How come this factor has been ignored/undermined/not disclosed in the powerful efforts for the new arena movement?
Why do people keep saying this? If they can have rodeo’s and the Barnum & Bailey Circus in Madison Square Gardens I don’t see why we couldn’t host the CFR at a downtown arena in Edmonton. The CFR is important to me and it is to Edmonton, I am sure we will work together with all stakeholders to keep it here for as long as we want it
6. When massive amounts of public [i.e. taxpayer] funding are transferred to a private entity [i.e. Edmonton Oilers], the public would generally desire transparency and full disclosure to make informed decisions [i.e. whether they support the allocation of tax dollars to a new downtown arena]. Would the Oilers organization be willing to open their books to the public, which would provide assurance as to whether or not the Oilers require a new arena to remain a going concern?
We support the recommendation of the Mayor’s Leadership Committee for a mix of public and private funding of this project, and that’s probably what it will take to make it happen, but at this point no one is talking about anything being transferred to anyone and no one is going to force the City of Edmonton or anyone else to invest in this project.
To get down to basics, no one has even talked about using “taxpayer” funding of the sort that’s implied by this question.
For the record, though, 26 of 30 NHL arenas have been built with some portion of public investment and two, if not three, of the owners who financed construction privately were subsequently forced to sell their teams.
More than that, to step back a bit….cities, provinces, states and countries make investments all the time in their public infrastructure. For Edmonton in recent years, that has produced the Agricom for $150 million, the wonderful new Art Gallery, the 23rd Street Interchange, one of the most vibrant educational centres in North America and even a few filled potholes. As the Mayor’s Leadership Committee made clear, a revitalized downtown will benefit all Edmontonians, and it only happens with the critical mass of a new entertainment and sports venue at its core. (If not, why hasn’t it happened in the 30 years we’ve all been talking about it?) This is a very exciting time for Edmonton.
Thanks in advance,
In light of recent coverage of the ongoing arena developments, do you feel that the local media has been unfair to the Katz Group/ Oilers organization?
We’re all big boys and girls so I’m not going to complain about how we get treated by the media. What I will say is that people should wait to see what we have in mind and then judge it on its own merits. These things take time but we are not alone in thinking that revitalizing downtown and securing the Oilers’ long-term sustainability are things worth doing, worth waiting for and worth getting right. Even if it means having to bite your tongue when you see things in the paper that are unfair or inaccurate.
Especially regarding the complaints of secrecy, will we be seeing the Oilers work more closely with the city on the arena as a partnership, or is the intent to develop essentially as a private development that would not require the high degree of transparency and public input that the media (and many citizens) have been demanding based on the assumption that the arena project would be a city-led initiative?
I appreciate your question but I’m not sure there’s been any real “secrecy” – just a desire to figure things out and have some confidential discussions of the sort that go on every day between developers and other stakeholders. For the record, we’ve been criticized for saying too little, and for saying too much, for not wanting to talk to key stakeholders and for wanting to talk to key stakeholders!)
Thanks For your time.
1. In terms of feasability, how imperative is it for Rexall Sports to be the sole owner of a new arena?
Building a new arena will soon be necessary because Rexall Place will have finished its workable life. So building a new arena should bring many things including financial sustainability for the Oilers in Edmonton --- for the long term, so this is a pretty important piece. Every other NHL team (save one) have a big financial advantage over the Oilers year in and year out because they control their arena. Together we should try and fix that when the time is here.
2. When Mr. Katz was pursuing purchase of the Oilers he stated that he would fund a training facility for the Oilers at the U of A. Is this facility still on the radar? If so, has any planning started in relation to this facility? And would this facility be accessible to the public in any compacity during times of non-use by the hockey club?
Yes, it’s still on the radar. One of many things we’re looking at and hoping to move forward in one form or another.
Thank you for your time
While I don't follow hockey I have admired your accomplishments and the vision shown in all of your projects. You seem to have great insight in what it takes to make great things happen in the world around you.
Edmonton has a short term history of dithering and talking rather than creating a vision and moving ahead. In short talking not doing.
What are your thoughts on how we as a city can break this cast and take advantage of all the opportunities that come before us?
You’re being way too kind, but at this point I’ll take it!! I think Edmonton is a great city with a big heart and loads of potential. Yes, sometimes we get in our own way. I’d like to think it’s because we all care so much about what happens. I really believe this project – and what Daryl Katz, who is an Edmonton native son – born and raised, is trying to do for the city – is so positive and so important that I really do hope people will give it fair consideration.
I’d really encourage everyone to go down to the proposed site alongside 105th avenue and look around. Or follow this link for a bird’s eye view: http://maps.google.com/maps?client=safari&rls=en&oe=UTF-8&um=1&ie=UTF-8&q=baccarat+casino,+edmonton&fb=1&hq=baccarat+cas ino,&hnear=edmonton&cid=0,0,17074274211490864099&e i=wzneStnfE4-wswOmlrXnDw&sa=X&oi=local_result&ct=image&resnum=1 &ved=0CAwQnwIwAA
Now imagine a new arena with a practice facility/community rink, new shops and restaurants, a hotel, new public spaces…and so on. Imagine we have more people living, working, playing, celebrating and enjoying downtown. We have a new iconic image for Edmonton.
Will that only benefit the Oilers or Daryl Katz? Did it only benefit the EIG when we came within 20 minutes of winning the cup a few years back? This is so perfect. We all share in the team’s ups and downs. But more than that, we all share in the economic growth, civic pride and vibrancy of our great Northern city.
Thank you for joining us and taking the time to answer our questions.
Last edited by Patrick LaForge; 21-10-2009 at 05:39 PM..
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