Wednesday, September 22, 2010

Peladeau Not the Answer to the Return Of Nordiques

Montreal hockey fans were none too surprised at goaltender Carey Price's mini-holdout earlier this month, before he ultimately signed an overly generous contract with the Montreal Canadiens.
The sports radio talk shows were filled with angry fans who were mightily annoyed that the Canadiens management traded their only other bone fide NHL goaltender, Jaroslav Halak without already having Price under contract. Even the dumbest, beer-swilling, hockey moron understood that it left the Canadiens in a poor negotiating position, one where they'd have to overpay Price for his sub-par performance of last year, or be left holding air.

The same goes for a sports arena in Quebec city. It's the height of lunacy to build an arena on 'spec' without already having a deal with the NHL in the bag.
Just look what happened in Hamilton where they built the Copps Coliseum in anticipation of an NHL franchise that never came. Now the building is no longer up to NHL standards and the idea of a new building just won't fly anymore.

Could you imagine Gary Bettman's negotiating position vis-a-vis a team in Quebec City with a $400 million arena sitting virtually empty?  Whatever the price of admission would be before the arena is built, it would drastically go up after. 

Are the politicians that dumb?
Yessir, they are.
Along with most of reporters and the media analysts covering the story, who are unable to exercise critical judgment.
The debate over the arena, reminds me of the old story of the executioner asking the condemned man how he would prefer to die, by hanging or gunshot.

Neither I would think.....but in Quebec we are discussing the rope or the gun and nothing else.

Masterfully, Bettman has claimed to remain neutral, but not before warning anyone who will listen, that without a new arena, there'll be no chance of Quebec getting an NHL franchise. So like a dog chasing a rubber ball on a string, a new arena is in order, much to the delight of those pulling the string, Bettman and his sidekick, Pierre-Karl Péladeau. Round and round we go!

And so we watch in morbid fascination, the altogether familiar shakedown playing out before us. Like Fric and Frac, Bettman is swearing that Quebec needs a new arena and Péladeau is swearing that he's not going to invest a dime on the building.
Like two fiddlers calling the tune, Bettman and Péladeau are choreographing a reel that Quebeckers seem all to happy to dance to. A hockey team! Hooray!

Two consummate grifters, shaking down the marks, how sadly familiar!

Maybe we Quebeckers should also help out that fine Nigerian fellow who wrote us such a nice, polite letter, offering to let us in on a once in a lifetime deal!

Unfortunately, city after city, jurisdiction after jurisdiction across North America have fallen for the sports arena/stadium scam, run on them by sports leagues and robber-baron owners who take advantage of gullible politicians and eager fans.

While the team owners get a business that is guaranteed a profit, taxpayers get decades of debt.

And so Quebec City innocently believes that while others have been stung by the 'damn the consequences' pursuit of a professional franchise, they will not, even as they follow the same plan and walk the exact same path.

It would be prudent to pause and review the experience of others who have fallen for the same tired flimflam.
Sports Stadium Debt & the Taxpayer
Professional Sports: Taxpayer Parasites
It's Official: Florida Marlins Screwed Miami-Dade Taxpayers

If you had the patience to read all the above stories, you'd be pretty ill by now. If you read only one, read the first story.

The idea of taxpayers financing and owning an arena that loses money for the benefit of a team owner that uses the facility to make money, makes sense only if you are the team owner.

I don't think I can put it simpler than that.

I wish politicians and the public would understand, it's not that hard a concept to follow.

If he doesn't assume any stadium risk, Pierre-Karl Péladeau brings nothing to the table, after all, that's what entrepreneurs are supposed to do, assume risk. 

In the scenario that the politicians are pursuing, we are gifting Péladeau millions of dollars a year. Why? It is utter stupidity.

Now I'm not against Quebec City getting a new arena and an NHL franchise. Even if it costs taxpayers some money, it's probably worth it on many levels.

That being said, it's incumbent upon politicians to make sure that the price is as low as possible.

By owning the team as well as the building, profits from team operations can help subsidize the arena, instead of giving those profits away to an operator.

Up to now I haven't waded into the Nordiques/Arena/Péladeau question, because I wanted to read the famous consultants report prepared by Ernst & Young. After a hard slog through its 200 some pages, my first conclusion was, that had it been I who commissioned the said report, I'd ask for my money back.
You can read the full report by clicking on the picture or better still a read a summary of the report HERE.

Click to Read the Report(French)
The report has the feel of a high school term paper that is heavily padded by the student in order to fulfill a minimum word count requirement.
Short on much useful information it wastes 65 pages detailing the economic benefits and spin-offs of the arena, when in reality such a project is an economic net loser and any analyst worth his salt, knows it intuitively.
It's like saying casinos brings wealth to the community, so let's build more.

Here from a study from Canada's own Fraser Institute is the painful truth. 
“No matter what cities or geographical areas are examined, no matter what estimators are used, no matter what model specifications are used, and no matter what variables are used, articles published in peer-reviewed economics journals contain almost no evidence that professional sports franchises and facilities have a measurable economic impact on the economy....”

When I read the part that listed the Maritimes as an important secondary market, I almost fell out of my chair laughing. If the consultants can imagine someone driving up from Charlottetown or Halifax to take in a Nordiques game on a regular basis, they are more creative than I thought.

The only thing of interest in the 204 page report, is the one solitary paragraph at the conclusion that says the arena can break even on operations, but cannot pay the mortgage on the $400 building cost, nor can it pay another $4.5 million in annual upkeep.

So there it is.
The annual cost to the taxpayer is about $20-$25 million dollars per year, based on a mortgage of 40 years at current rates, which includes the cost of upkeep.

That's the number that nobody is talking about. Nobody at all.

Not really, it comes out to less than $7 per Quebec taxpayer per year.

But instead of demanding that taxpayers foot this annual bill, perhaps somebody should be working on a business model that would reduce this $20-$25 million 'nut' to almost nothing.......
By owning the team and making some smart business moves, the new Colisée, owner of the Nordiques can cost the taxpayers nothing, or next to it. It can be done and I'll show you how.

Tomorrow: Quebec Nordiques & The New Colisée Can be Successful.


  1. Mississauga Guy said...

    Editor! Editor! Now you're an entrepreneur? So show us your plan tomorrow, then implement it if it's so good.

    Didn't Quebec just finish paying for a crumbling Olympic Stadium four years ago? It only took 30 years to do, and two roofs--one as useless as a $1,000,000 bill because it sat in a French warehouse for 15 years at $54,000 PER MONTH for storage, then came to Montreal where it sits only God knows where, costing God knows what and the other a roof that is permanent, not retractable like the first roof and is deteriorating faster than a body in the grave!

    QUÉBEC SAIS FAIRE! blow taxpayers' money like an endless supply of confetti being blown into an everlasting parade!

    Now they want to build a $400,000,000 hockey arena that will end up with runaway costs à la Stade Olympique for a population of about a half million.

    Didn't Eric Lindros already show the NHL that superstars won't flock to Quebec when there is a lot more endorsement money to be made in the States and their much, much bigger markets? Rod Langway wanted out of Montreal and the Habs because of taxes, and why not? He had zero intention of ever living in Quebec except during the hockey season let alone the off season and the end of his career.

    Too, are non-French speaking players going to be hounded for not speaking or learning to speak French? Won't the same village idiots who bitch about the lack of Québécois on the Habs bitch about the same thing of the Nordiques? After all, they'll strive to win the Stanley Cup just like the current Group of 30, and having a team full of Quebec Major Junior players of substandard talent won't get the job done.

    There isn't enough Québécois talent out there to do the job, and I don't think the current Group of 30 will bend over backwards to let Quebec first pick all the local talent and THEN start the draft. Sam Pollack in his machinations as probably the NHL's best-ever manipulator could only twist the bigwigs in the NHL to let his team first pick TWO locals before the draft started, in the late 1960s. Gary Bettman isn't THAT stupid! Besides, the other owners in the League absolutely positively won't go for that. Quebec-based teams will get their fair share of the local talent, and the rest who go elsewhere will learn the media b/s isn't even worth coming back to Quebec. If the media isn't the deterrent, the taxes will be!

  2. If the Quebec government isn't ranting about the "dangers" of the English language (and how to eliminate all traces of it from La Belle Province), it's burning tax dollars like it's a game to rid money in record time (like the guy in Brewster's Millions!).

    Not only are they building a hockey stadium for a team that doesn't exist, nor ever will. They are spending $300-$500 MILLION on a third Olympic Stadium roof. Oh, and guess what? There's no baseball team, nor football team, or anything else it's being used for. Monster truck shows maybe?

    Yeah, let's spend about a BILLION DOLLARS on sport stadiums that will sit empty and have no purpose. Education? Health care? Oh gee, we're broke there, in fact, gotta charge that $200 health care tax and $25 per doctor visit.

  3. "Not only are they building a hockey stadium for a team that doesn't exist, nor ever will.[...]"

    Throwing good money after bad?

  4. Notre but est de construire la meilleure équipe Francophone de la LNH.Imaginez tous nos joueurs Québécois dans une même équipe.Nous serions totalement imbattables.A nous la coupe Stanlé!

    Maybe i'm just a dreamer but i'm not the only one...

  5. "Not only are they building a hockey stadium for a team that doesn't exist, nor ever will. They are spending $300-$500 MILLION on a third Olympic Stadium roof. Oh, and guess what..."

    Vous devriez être aussi fiers que nous le sommes.Vous participez pleinement a nos rêves.Votre soutient financier est fort apprécié et les Québécois vous en seront très reconnaissant,quoi que vous pensiez.

    Vous profiterez autant que nous des retombées économiques de ces grands projets.Vous pourrez dire a vos enfants qu'il y a du Canadien dans le succès du Québec.

  6. The Olympic Stadium nightmare has gotta stop. They are currently talking about $300 million for a new stadium. What a waste of money. Just get rid of the roof, and turn the damn thing into a farmers market, and parking lot. At least, they'll put it to some use most of the year.

    As for the Quebec City stadium idea, another waste of money. $400 million for this! Of which aprrox. $145 million the Quebec government has pledged to put up. What a waste. What they are saying is that NHL Hockey can't succeed in Quebec City without public funds. That is like saying you can't sell ice cream on hot days. This is hockey. If you can't make it work here, then you should forget it.

    The residents of Quebec should not have to provide corporate welfare for the wealthy ego maniacs in the sports & broadcast industries.

    The residents in this province have go to wake up, and deal with real issue problems. As the saying goes, pride will be ones downfall.

  7. For Anonymous at 08:21:

    "Notre but est de construire la meilleure équipe Francophone de la LNH.Imaginez tous nos joueurs Québécois dans une même équipe.Nous serions totalement imbattables.A nous la coupe Stanlé!"

    Here we go again.

    Please respond to my post in the thread below at 12:15 about building a Francophone hockey team. I really want to see which Francophone players you are talking about.

  8. Mississauga Guy responded...

    8:21AM: Quite ARE a dreamer. There was a Russian looking to buy an NHL team about ten years ago and ice an all-Russian team. The talent is too spread out and many of the Québécois players have overlooked the Habs for the media stupidity and the taxes. The Habs tried hard to get Daniel Brière when his contract expired in Buffalo, but Philadelphia snagged him.

    Every year the newspapers in Montreal carry rumor stories about Vincent Lecavalier coming to Montreal, yet it has never happened and probably never will; besides, a lot of the Halak fiasco happened because of what Bob Gainey did the summer before: He took off Glen Sather's hands a huge salary dump in the name of Scott Gomez. That Shmuck was paid $8 million last year and scored 14 goals for the Habs last year--12 in the 82-game regular season and two more in a playoff run that went 20 games. Had Gainey not made that imbecilic move amongst other imbecillic moves, the Habs would likely have been able to keep Halak and rightfully dump Price. They couldn't stall Halak when they knew what his market value was and didn't have the cap room to keep him. The keeper this past summer was Mr. do-nothing-in-the-playoffs Tomas Plekanec.

    The Habs will go absolutely nowhere for the next four years given the albatross Gomez will be. They couldn't afford Halak amongst others because that good-for-nothing is eating up 1/7th of the team's cap room. Score one for Gainey.

  9. The idea that stadiums or teams provide economic benefits is a canard. Fans attend these events with their disposable incomes. With no team in Quebec city the fans simply spend their money on something else, films, eating out, etc. They would simply 'shift' their disposable income around if there were a team there. But the team or stadium provide no real wealth creation. Building a stadium is a big, showy project and appeals to politicians egos, but it doesn't create any wealth in the community. As a good rule of thumb, if the private sector isn't willing to pony up the cash, its probably a bad idea. The Toronto guy.

  10. For the Toronto Guy:

    This discussion is rather academic, and may not directly relevant to the topics. Your premise is correct if we are talking about a local, gate revenue-driven sport team. Once we are talking about big-time leagues, that premise is not valid.

    Big leagues attract revenue beyond its local market. Best examples are the National Football League and the English Premier League. In those leagues, TV revenue makes up a significant portions of their revenue streams. As well, gate revenue for each clubs comes from spectators beyond the club's local market.

    One example is the Green Bay Packers. The city is only 101 000 big, yet the stadium is 73 000 in capacity. Obviously, fans come from beyond the city boundary. As well, the revenue from TV means that the club and its personnel are tax objects with revenue from out of the local area.

    Is the NHL a big enough league to meet the revenue conditions above? I have my doubts. Also, looking at Canada's geography where population centers are farly separated, I also have my doubts that there will be fans from NB, NS, PE, NL flocking the new Colisee. Not to mention that if the new club is marketed with too much Quebec separatist flavor.

  11. I agree about the Olympic Stadium. Either leave the existing roof as-is (even if it means it's unsafe during the winter months and the stadium remains closed during those months--WHO uses it anyway?) or remove the roof entirely, and leave it opened aired. The Stadium existed and survived with NO roof between 1976 to 1987, didn't it?

    What's more is there is no tenant for the stadium. For all intents and purposes it's been abandoned like Mirabel Airport (another Quebec-made disaster of wasted tax money). Why not send a half billion dollars renovating the abandoned terminal at Mirabel too once we're at it?

    Nevermind, once the PQ is re-elected in 2012-13 the province will be forever doomed. There will be absolutely no hope of saving it.

  12. "...Nevermind, once the PQ is re-elected in 2012-13..."

    Si J.J Charest continu la gestion de l'état de la même façon qu'il l'a commencé,il se pourrait bien que ce soit en 2011.3 mandats alligné c'est beaucoup trop pour ces libéraux.

  13. Prix Polaris remis à Toronto: Meilleur album ''canadien'' Karkwa, des Québécois ! Félicitations ! Il me semble avoir souvent lu sur ce blogue que la musique québécoise était ringarde ?! ''In your face'' comme le veut l'adage ! Vive la musique québécoise et francophone !

  14. Reply to Troy:

    I don't inherently disagree with some of what you are saying, although I would mention that you have cherry-picked your examples here. I don't know anything about the English premier league (although England is a lot smaller and more densely populated then Canada or Quebec) but what you have to remember about the NFL is that it has a huge TV contract all across America and has a team revenue-sharing system. This doesn't apply to the NHL. But the real issue here is not pro teams but sports stadiums. Pro teams can easily be uprooted and relocated somewhere else. Many successful teams have moved. A stadium is another matter altogether. Many become white elephants and few are economically successful.

    As for the other poster(s). Mirabel? Olympic stadium? Is it just me or does Quebec have just too many of these pork-barrel show projects? Federal meddling to buy Quebecs' loyalty? Quebec government corruption? Francophone egotism? It all gets back to what I said some posts ago but there just being SOMETHING about Quebec and it not being something good... The Toronto guy.

  15. @6:06 PM :

    Vous avez oubliez le meilleur film canadien
    (prix de la ville de Toronto)

    Incendie (Denis Villeneuve)
    Très ouvert sur le monde.

    Bravo et bonne chance pour représenter le Canada aux Oscars!

  16. Notre but est de construire la meilleure équipe Francophone de la LNH.Imaginez tous nos joueurs Québécois dans une même équipe.Nous serions totalement imbattables.A nous la coupe Stanlé!

    Hmmm…to be Quebecois you must be Francophone. Got it; actually I already knew that. I sometimes get confused, because some pseudo-inclusive Quebecers will tell you otherwise, but you’d have to be a fool to believe them. Anyway, you have to be a total freakin ethnocentric imbecile to believe you can build a winning hockey team drawing on players from only one linguistic group. Seriously, I think what you really meant to say is ‘Notre but est de construire la meilleure équipe sans Anglophones.’

  17. @Troy

    I know it may sound counterintuitive, but English Premier League clubs are actually not profitable business ventures. They lose more money than they generate.

    “Soccer clubs need to know what they are. They shouldn’t kid themselves that they are Titanium Metals. Rather, they are like museums: public-spirited organizations that aim to serve the community while remaining reasonably solvent. It sounds like a modest goal, but few of them achieve even that.” P.95

    Soccernomics by Simon Kuper and Stefan Szymanski (both are soccer fans)
    Ch.4: “The Worst Business in the World – Why Soccer Clubs don’t (and shouldn’t) make money”

    In this chapter, the make comparisons with American team sports and refer to the book Moneyball: the art of winning an unfair game, which proves that the same principles are at work within American team sports.

    In a nutshell, professional teams are money pits. They eat up more revenue that they generate.

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