Iggy's first election gaffe?

Did Michael Ignatieff, Leader of the Liberal Party make his first political gaffe of this spring's election (the writ hasn't been dropped yet, but everyone is saying it's just a matter of which of the many issues will trigger it)? He promised to help fund a Quebec City arena that would attract an NHL franchise, if elected. He went further and said that he would do this across the country, which was a sticking point when previously debated. The Conservative Government had already nixed this idea previously and is now using the sound bite (or talking point, whichever you prefer) that this is subsidizing billionaires who hire millionaires (referring to team owners and professional players).

At first I agreed that the government should not subsidize professional sports teams, but then I reframed the issue. Obviously, the biggest beneficiary to having an arena operate is the community that it's in. It employs people, it draws in tourists who spend money in the local economy, and builds pride in that community. But typically, a local community can't afford to pick up the entire tab, and it's direct income streams (i.e. going into the municipal coffers) is limited. Thus, the province should step in. They benefit in many more ways, i.e. income tax from the people employed to build and run the operation, a portion of the HST (or the entire PST if the province doesn't have HST) in the materials used to build the arena, plus concession sales, and obviously tourism to the province. Ultimately, these two levels of government should fund the arena, but maybe the Federal level should provide some seed money to get things started.

The Federal Government receives benefits in the form of income taxes from the people that build and operate the arena, as well as GST or HST from the building and operation of the arena. So could we look at the Federal contribution limited strictly to calculating this value, over say 10-15 years, and providing funding limited to that amount and not one penny more? That any cost overruns to build the facility are not a Federal responsibility (it took forever for the Big O in Montreal to get paid off)? Surely the Parliamentary Budget Officer could crunch the numbers (he's been so good at it!)?

I would also argue that the ownership of the arena should remain in the local government's hands. It should not be sold to the private sector, as is done quite often, usually at a huge loss (see SkyDome in Toronto). This would generate an ongoing revenue stream (i.e. leasing and concession sales) to the municipality (other than property taxes and municipal services) that would allow them to recoup their investment, and hopefully, become profitable soon after.

I think this is doable, but it has to be well thought out. To recap, the Federal Government should help build sports arenas with the following provisos:

1. The Federal Government limits their contribution to the building of the arena to the direct benefit it receives in income tax and HST/GST it receives in building and operating the arena over a 10-15 year period, so that the net benefit is zero.

2. The Provincial and Municipal Governments agree on their splits for the contribution to the remaining amount required to build the arena.

3. The ownership of the arena remains in Municipal Government hands and not sold to private interests. They can set lease rates and are in the best position to attract professional teams.

Having said all this, building an arena does not guarantee a professional sports team franchise. The best example that comes to mind is Hamilton. They built a great arena, but they are too close to Buffalo and Toronto to allow an NHL team. In addition, Mr. Bettman, the NHL commissioner, has stated that an NHL team will not be going back to Quebec City. Presumably, it does not fit in with his expansion strategy into the U.S. where there is a greater opportunity to make money, but you can always hold up examples such as Atlanta, Phoenix, Nashville, etc., however that's a whole other conversation. As long as the local community assumes the risk, since they stand to benefit the greatest, I believe a working formula can be made.

This discussion should not be strictly about the best sound bite, doing what the other guys aren't to buy votes, or pandering to hockey-mad Canadians. Let's look at the business case: will the building (it doesn't have to be arenas only) attract who you want, and will the facility ultimately make money for those who need it the most, i.e. the Municipal Government.

I think a business case can be made, and I think their will be a net benefit for all Canadians. To bring it back to Iggy, yes, it is possible to fund arenas across Canada, but be VERY careful how you frame it. Also, make sure you put it into short simple terms for everyone to hear and understand, because you're only going to get 10 seconds at a time to say it.