So I'm going to propose a plan that should make everyone happy. It will transfer the risk to those invested in the arena. It will provide returns in as secure a sense as the free market can provide. It will leave the city free to spend it's money on the many high-grade infrastructure upgrades that will be needed should funding be raised. Finally it will give Edmontonian's (or other Albertans, probably open to other investors too) who want to build up, have input, and support the arena a direct way to do this.
Now before I explain this plan, I am in no way vouching for the success of the project itself. Even if this approach were taken, I would not be investing my own money expecting a return. Like any investment this one would be folly to the market's mood and if you read my other posts on this blog my long term outlook for the current global economic system is clear. However that aside, let's see how we can solve everyone's issues here.
First, the main arguments for and against (as I understand them):
- Katz should be using the free market if he is certain about the return on investment.
- Maintenance alone is not worth 100% of return on investment.
- The questionable non-compete clause.
- We are in a deficit and the arena is a luxury item.
- The meetings are too secretive.
- Infrastructure upgrading
- It's believed the arena will contribute to revitalizing downtown.
- The costs to renovate/modernize Rexall are also high.
- The Oilers might leave without an upgraded facility.
- The facility would probably get heavy use by non-hockey events.
- There are high hopes that an arena will springboard an expansion in commercial service in the area.
- It's a 1 time opportunity for the city.
- If not an arena, then what?
- And finally, Katz says he loves Edmonton.
Right now it's estimated that the cost is $450 million broken down:
- $100 from Katz Group.
- $125 directly from city.
- $125 loan from the city, which will be paid back with a utility fee in the future.
- $100 is remaining without a source.
Under this model, I also would not be *AS* opposed to city investment in the arena as there would be a direct return and we'd be able to cash out and have another player buy the shares. This would also give the hockey players themselves a chance to invest in the stadium they play in, giving them direct input. Other investors, and hockey fans would get direct input by holding shares.
So lets see, this solves the issue of Katz circumventing the free market system in hopes of placing himself in a monopoly. If he wants a non-compete clause with Northlands that is his business, but it's not the city's business to give him an edge over an already established business and then demand a monopoly. It solves the issue that the city is getting very little in return as like any other investor it could get as much a return as anyone else depending on free market risk. It places all risk and reward directly on the shoulders of those with direct interest in the success of a luxury item. I personally do not believe with the current credit crisis that an arena will increase growth, so why should I personally be on the hook with all risk and no reward? This mitigates that for me, and also leaves those who think that like Nike "Just Do It" to cover the cost. They might then make financial decisions off information instead of propaganda slogans.
Under this proposal all meetings would need to be 100% transparent to convince investors it's a viable opportunity. Good bye shadowy city counsel meetings, it should be 100% public and this system would ensure that.
When it comes to infrastructure upgrading, the city would have a lot more resources in terms of state of the art infrastructure without an already large commitment to the facility itself, and any commitment like I said would provide direct returns thus topping up the infrastructure fund if the city chooses to put it there.
Since everything on the pro-side is theoretical or fan-based, I don't see why it doesn't meet the needs. It certainly would show Edmontonians how much Katz loves us and the city by giving us direct input. It would give the expected commercial services the chance to have a direct investment in the facility as well.
That's my idea, I'll be refining it as I think about it more, but I think this model pretty well solves all of the major issues and controversies regarding the arena and should make everyone happy, or at least get their happiness out of city council’s hands as they are supposed to work for all people and any deal brokered by the city isn't going to work for everyone.
I am still refining this solution, so please comment with your constructive criticism. Additional factors I should consider, whatever...