Monday, September 12, 2011

Montreal Symphony's Shiny New Money Pit

With great fanfare and before Montreal's political, business and showbiz glitterati, a new  mega-million dollar classical music hall was inaugurated in Montreal last Thursday.

I'll bet dollars to doughnuts, that Montreal's lunch bucket crowd hadn't a clue that this project was on, since there never was any real public debate over the cost, the need or appropriateness of the project.

While the debate over Quebec City's new amphitheatre is ripping the province apart, nary a word has been said about the government's 100% financing of something 99% Quebecers don't want or have any need for.
"The roughly $269 million price tag includes estimated operating expenses for this 27-year period, the project managers said during the tour. (The cost of building the hall was roughly half that amount.) " NYT
The announcement in March of the winning consortium pegged the price at $267 million - almost 2-1/2 times the $105-million sticker attached to the project when it was launched in 2006 by Charest. LINK

“It’s not a fashion building, not one that’s ‘a la mode,’” ventured project director Michel Languedoc, of the Montreal firm Aedifica. “It’s a building that spends the money to make sure users will have a great experience.”

It respects taxpayers, Languedoc added, noting he’s done some calculations and found that Icelanders are paying about $1,000 per person for their new concert hall. Montrealers will pay about $15 each.
LINK
Respect for taxpayers, my eye!

I don't know what kind of voodoo mathematics Mr. Laguedoc used to arrive at a cost of $15 per Montrealer. Divide the $270 million cost by the $15 dollars per Montrealer as he claims, we would need a city population of 18 million to pay for the project. Considering that two-thirds of Montrealers don't pay any tax anyways, it would actually take a city of 54 million to pay the bill.

The truth is, that if the cost were apportioned to the 600,000 or 700,000 real taxpayers in Montreal, they'd be paying in the neighbourhood of $400 each.
And to hold up Iceland, a country more bankrupt than Greece, as any sort of model of fiscal responsibility is the height of idiocy which only insults our intelligence.

I have no objection to people enjoying classical music or Opera, but I don't attend concerts and don't like the genre. I share that non-appreciation with the vast majority of citizens who are nonetheless called upon to subsidize a fancy new facility for the la-di-das who do enjoy it. LINK

Let me now engage in my own fanciful mathematics and instead of apportioning the cost to Montrealers, let's apportion the benefits to concert goers themselves.

Dividing the $270 million cost by the 27 year span of the PPP project, it works out rather neatly to a cost to taxpayers of about $10 million dollars a year.

The venue holds just 2,100 seats and is filled approximately 100 nights a year, yielding a potential total of 210,000 yearly concert tickets. Divide the 10 million subsidy by those 210,000 tickets and you get a per ticket subsidy of....wait for it....$47.
Yup, Every single concert ticket is subsidized by the taxpayers to the tune of -  $47

By the way, that doesn't even include the subsidy that the orchestra receives from the various levels of government!
In fact, the Montreal symphony orchestra receives about half its operating budget from taxpayers, another twelve million dollars per year. LINK

This means that in addition to the $47 per ticket subsidy for the new concert hall, there's another subsidy of about $52 per ticket to pay for the orchestra itself!

And so every time someone buys a ticket to see the MSO play at its fancy new digs, the public is subsidizing the ticket to the tune of $100.  

Yup, a $100 taxpayer subsidy for every single ticket sold to see the MSO play in its new building!

The Journal de Montreal wrote two pieces about the extravagance of the building and complained that it is mostly attended by the rich.
On this count I cannot agree, society cannot build public spaces and institutions exclusively for the hoi-polloi. It's like complaining that universities shouldn't be funded because they discriminate against dumb people. 

In complaining about the costs of the building, the newspaper missed the point entirely. The three hundred million dollar price tag is not that big a deal for a society of 8 million. The problem is that this expenditure benefits so few people, smart or dumb, rich or poor.

Now let us compare this deal to the sweetheart management contract that the Quebec City government gave to Pierre-Karl Péladeau for the new amphitheatre to be built in Quebec City at public expense.
The building is reported to cost $400 million dollars and given financing costs it works out to a cost about of $21 million dollars per year ( a $400 million mortgage @5% for 30 years)

 This $21 million represents the total cost to taxpayers (before recoveries,) as Péladeau is responsible for any losses accrued in operating the building.

Péladeau has agreed to pay a $5 million annual rent and another 2 million each year for the right to name the building after his company, Quebecor.
With those recoveries, the arena will cost taxpayers about $14 million a year, any profits or loss generated in operation belonging to Mr. Péladeau.
There is a provision for Péladeau to pay 10% of any profit generated to the government, but with little creative Hollywood type accounting, it will never happen.

It's a pretty stupid and desperate deal, but as incredibly bad as it is, it is infinitely less stupid and costly than the the MSO and its new building in Montreal.

For the 21 million dollars that the government is spending each year on the orchestra and buliding, only 210,000 spectators benefit directly.

In the case of the Quebec city arena and given pretty much the same parameters, that is that the arena will be filled to capacity 100 days a year, the difference in the amount of specaters using the building is staggering. The arena will hold 18,000, which translates to 1,800,000 tickets a year.
Divided by the annual subsidy of $14 million, it translates into a $8 subsidy per ticket.

So let us recapitulate.

Every time a music lover attends an MSO show at Montreal's new concert venue, taxpayers ante up $100 to help  him or her pay for her ticket.

Everytime a fan goes to a Nordiques game or a rock show in Quebec City's new amphitheatre,  it cost taxpayers $8 to help him or her pay for her ticket.

Perhaps the math isn't quite perfect and the variable not quite realistic, but you can easily understand the vast amounts of money being spent on both projects.

While the absolute dollars being spent on the two projects is similar, the amount of people who benefit, varies wildly.

It's like the government offering the exact same 15 million dollar subsidy to two different cities, one which has 1,000 residents and one with 12,000. Nonsense!

The sad part is that neither project is necessary, not in the least.

The MSO had a very nice home in the perfectly viable Salle Wilfrid Pelletier in the very natty Place des Arts complex.
Considering the minuscule impact that the MSO has on Montreal, the orchestra was lucky to have such a nice home. In a province that is broke, the expenditure on a new concert hall is unconscionable.

On the other hand, the amphitheatre in Quebec is being built on the moronic 'Field of Dreams' premise of, "Build it and they will come."
The Quebec Mayor has already been told by Gary Bettman, the commissioner of the NHL, that building a new arena won't guarantee a team, but Regis Lebeaume, the Quebec mayor, knows better.

At any rate the old Pepsi Collisée could be refurbished and even though smaller than most NHL arenas could be run  based on the same business plan successfully implemented in Winnipeg.

But when pride is at stake, Quebec logic rules and prudent financial management goes out the window!

At any rate, to those of you in the rest of Canada, you can all help make this thing right.

Next year, instead of sending Quebec $8.2 billion dollars in equalization payments, you can help keep Quebec's culture strong by a one-time donation of just $700 million more, which will nicely cover both the Quebec arena and the MSO and its brand new building.

Come on Canada, Its not a big deal, you can afford it!  If we in Quebec are to be kept up in the style we are accustomed to, you're going to have to make an effort!

12 comments:

  1. Editor, with ANY luck, Quebec will have to grow accustomed to another style in 2014--LESS equalization---hopefully! Quebec's leverage on the federal scene is on the wane, and with any luck Harper will remember how Quebec didn't support him and save real Canadians tax dollars not paid to Quebec. I'd like an $8 billion tax cut, esp. if it's on Quebec's back.

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  2. I bet they could finish the Dorval Circle or repair Turcot faster and so on with this money.
    No comment ...

    I really hope that the separatists will prevail in the nearest future and see how Quebec will do on it's own...they will all sell their cars ( no roads ) and they will join hands and starve at the new Opera house :) while preserving their culture.
    Good luck guys !

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  3. Financing culture (even if it's highly targeted): not so bad.
    Financing a private company so it can make more money with our taxes: No thank you.

    The Bell Center didn't need government financing, why would we finance one with worse prospects?? Péladeau can pay for it himself, or get a loan at a reasonable interest rate.

    "I really hope that the separatists will prevail in the nearest future and see how Quebec will do on it's own...they will all sell their cars ( no roads ) and they will join hands and starve at the new Opera house :) while preserving their culture."

    I can imagine the "Independent Quebec" aristocracy at their little concerts while the rest of the "independent quebec" population are working hard on their farms.

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  4. I am still waiting for those 30 new seats in the rest of Canada(Alberta, BC and Ontario)

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  5. To say that this province is run by idiots is a complete understatement...

    I want to see my taxes cut, not increased! What are these guys thinking??!!??!?!?!?!?!?!?!

    So does anyone know what's going to happen to the "Salle Wilfrid Pelletier"???

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  6. ...to Jason: You want tax cuts? Wait for the result of our provincial election (and yes, Ontario IS a real province). If Hudak wins for the Conservatives, we'll get them. If the Liberals or NDP win, you'll see what those leaders learned in the Quebec school of tax-and-spend.

    What am I talking about? You'll get a 30% tax cut just moving to Ontario, even with the status quo! Is there stupid tax waste in Ontario? Certainly, but to nowhere near the magnitude it happens in Quebec, and our infrastructure is still holding better than Quebec's. It pays to focus on roads and bridges and forget about language police.

    ...to Anon @ 8:53AM: Very well put, and no, the population won't be working hard on their farms, they'll be begging their government for handouts. See what's been happening in Greece the last few days. Quebec will follow, esp. when it doesn't have the Canadian dollar to support itself. Greece will soon be back on worthless drachmas, Quebec on...francs, frites, whatever they want to call their worthless currency. They can join Zimbabwe and their hundred trillion dollar notes not worth the paper they're printed on...Quebec won't be far behind!

    http://en.wikipedia.org/wiki/File:Zimbabwe_$100_trillion_2009_Obverse.jpg

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  7. @ Mr. Sauga

    You made my day man ... thanks.

    NM

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  8. We are so sick and tired of our English speaking money being funnelled into the racist, bigoted province of Quebec, words can’t describe the hatred for this province.

    Waste, more waste, corruption, fraud, money laundering, cash in brown paper envelopes…what a disgusting, sleazy, slimy cesspool Quebec is.

    Equalization should end immediately. Just sick where billions go yearly…no accountability…slimy, sleazy politicians…just a disaster. Poor Canada, poor Quebec, what a mess.

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  9. "English speaking" money? LOL LOL LOL

    No Dogs, you sure have some brilliant followers...

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  10. On a separate issue:

    C'est le 13 septembre. Bonne fête de la conquête tout le monde ! N'oublions jamais ce jour glorieux.

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  11. Mr Sauga said: "You want tax cuts? Wait for the result of our provincial election (and yes, Ontario IS a real province). If Hudak wins for the Conservatives, we'll get them." Remember McGuinty's promise not to raise taxes when he first got elected 8 years ago? Well, this one has about the same value. The most recent deficit forecast that I've seen (August) was calling for a $16 billion shortfall for 2011/12. The economy is likely slowing because of the European and U.S. debacles, McGuinty handed out some stupidly large pre-election labour contract, no one has a clue how to put a lid on healthcare spending (indeed, Hudak wants to "invest in" (spend more on) healthcare and education), but trimming government waste will pay for tax cuts, spending promises and balancing the budget? Hudak is just taking a page from the Liberals : promise them what they want to hear then, when you get elected, say "Sorry, we can't do that because we didn't realize how bad the fiscal situation is."
    It's political rule #1: telling a lie and winning is a lot better than telling the truth and losing.

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  12. Has Eric Duhaime attacked the Quebec City arena deal? If anybody can provide a relevant link, it would be most appreciated.

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