You need a lawyer to decrypt what the prime minister and his ministers have been saying about subsidizing a new pro hockey arena in Quebec City.
So let’s be acidly clear: if the federal government gives one cent to the project, it’s too much.
The idea is to bring the NHL back to Quebec City. These days, to make money in professional hockey you need a modern stadium with lots of corporate boxes, beer stalls and a large store where fans can buy the home, away, vintage and commemorative version of your jersey.
NHL supremo Gary Bettman has made it clear that without a new arena, Quebec City doesn’t have a hope of reliving the disappointments of its previous Nordiques franchise.
A new arena would cost about $400 million, with $225 million from the provincial and city governments. The feds would pitch in $175 million. Math whizzes will have noticed that this leaves approximately $0 as the contribution that the tycoon who owns the team will be expected to make.
Pierre Karl Peladeau, owner of the politically influential Sun Media tabloids and the TVA television chain in Quebec, is front-runner to get the new franchise. Asked if he would foot part of the bill for the new arena, he replied that “It would be impossible for us to conceive of making an investment of that nature.”
Peladeau, educated in philosophy and law in Montreal and Paris, is no dummy. He expects you to “invest” in the arena. He will keep the revenues. An NHL team in Quebec City would be fantastic for his television and tabloid businesses, not to mention the revenue streams from tickets, beer and Nordiques-branded beer mugs.
The mayor of Quebec City, Regis Labeaume, is doing a great job of whipping up support for the scheme. He lined up the Conservative MPs from the Quebec City region, who know that the polls show a landslide coming for the Bloc Quebecois, and got them to don retro Nordiques sweaters for a press conference.
He also commissioned respectable bean counters at Ernst & Young to do a feasibility study on the arena. Ernst & Young came back and said, essentially, that the arena was feasible. As long as the government paid for it.
That’s kind of like saying that you could afford the most expensive house in West Vancouver, as long as someone else gives you the money to buy it.
Ernst & Young was also liberal with its assumptions, for example including Cape Breton as part of the economic zone that would support the arena. It may make sense to assume that people from Abbotsford will drive to watch the Canucks in Vancouver, or that Oshawa folks will drive to the Air Canada Centre to watch the Leafs lose. But Cape Breton? It’s 1,227 kilometres from Sydney to Quebec City.
There were also a lot of numbers suggesting positive economic spinoffs, job creation and so on. An authoritative study with lots of numbers is an important prop for any campaign to get public money for a new arena.
Until now, Canadian politicians have been doing a much better job than their American counterparts at resisting the urge to give millions to pro sports owners and their millionaire players. Such a large number of dubious economic studies have been put forward, from Seattle’s Safeco Field to the new Yankee Stadium in New York, that economists have had a field day studying the claims made by their backers.
The general consensus among economists is that the economic benefits of subsidizing a new arena are often wildly overblown. Firstly, the consumer spending at the new arena appears to be “new money” but really is mostly redirected from other entertainment activities in the region, from movie theatres to bowling. Secondly, a lot of the money gets siphoned away by massive player salaries and profits for the owner.
Like casinos, arenas can be a great way to move economic activity. If Hamilton gets an arena, it will attract money that otherwise would have been spent in Toronto. Quebec City’s new arena will host Celine Dion concerts that otherwise would have happened in Montreal.
This might make sense for local politicians to back, but not for a national government.
The main point to remember is that an arena may move economic activity around, but it doesn’t make us more productive. This is different from normal government investments in airports, roads, schools and universities. You can make a public health case for facilities like the Canada Games Centre in Whitehorse, which encourage physical fitness by large numbers of citizens. Some argue that pro sports inspire young people to participate in sports, but this is an awfully weak argument to support a $400-million public investment.
And let’s not forget our federal government has a massive deficit of around $50 billion, and that there are lots of reports suggesting our roads, hospitals and airports need upgrading. Plus, we face the risk of a double-dip global recession.
In the prime minister’s defence, he hasn’t fully promised the money yet. Various staffers and ministers have been quoted saying that the options are being reviewed. Harper seems sensitive to the hostile reaction of taxpayers in other parts of Canada. Rather than saying “no,” however, he has made the situation even worse by musing that if Quebec gets an arena then other cities should too. “If there is federal involvement, it must be equitable across the country and affordable, recognizing that we are entering into a period of economic restructuring,” he stated earlier this week.
This seems to be setting us up for a federal hand-out, although perhaps a smaller one than Mayor Labeaume is hoping for. And even worse, it would lock the feds into handing out millions to similar schemes in Saskatchewan, Edmonton, Hamilton and elsewhere.
As much as we all like hockey and our friends in Quebec City, the prime minister should kill this idea and get back to his day job. Once he’s eliminated the deficit, solved the problem of spiralling health-care costs, and figured out how to save Afghanistan from the Taliban, maybe he can build a few arenas.
Keith Halliday is a Yukon economist and author of children’s adventure novel Game on Yukon: Mystery of the Dawson City Nuggets and the
1905 Stanley Cup.