Reality check on Richard Peddie’s Markham Arena comments

Ken Campbell
gtacentreblog

When it comes to the prospect of building an NHL-caliber arena in the Toronto area, it has long been the opinion of this corner that if the taxpayers and elected representatives in the suburb of Markham truly believe this is a bad idea and is a boondoggle waiting to happen, they should absolutely kill the project and run those who are heading it out of town.

But they should also do so based on facts, not innuendo or suspect information. Less than three weeks before the Dec. 3 council vote on whether to accept or reject the financial framework, former Maple Leaf Sports and Entertainment president and CEO Richard Peddie weighed in on the matter, calling into question almost every aspect of the project, saying its numbers are “bogus” and the group is going about things all wrong.

Forget for a moment that Peddie’s claim to fame was that he leveraged one of the most profitable and recognizable sports brands in the world into untold wealth for the Maple Leafs. Critics will suggest that to make money with the Maple Leafs, the only skill one would need would be to unlock the building every day. Peddie made enormous profits for the company, but his on-ice/on-field/on-court record was nothing short of dismal.

Peddie, who is promoting his book Dream Job, which recounts his 15-year tenure with MLSE, was shot on a video by MarkhamToday.ca in which he uses his experiences with the Leafs to make some fairly broad statements. Some of them are below, with a reality check following them:

• Peddie said the Air Canada Centre cost $265 million to build in 1999 and, “to replace the Air Canada Centre today is like $600 million and $320 (million) doesn’t buy you a very good arena.”

Reality check: Basically Peddie is saying that inflation has more than doubled costs in the span of 14 years. Not so, according to the Bank of Canada’s inflation calculator, which sets the 2013 price of the Air Canada Centre at $349 million and includes a 15-story office tower that was built onto the facility.

The GTA Centre project has been priced out at $325 million by PCL Construction and BBB Architects, the same companies that built the Air Canada Centre. The MTS Centre in Winnipeg, albeit with 5,000 seats fewer than the GTA Centre, was completed in 2004 at a cost of $133 million, which is the equivalent of $156 million today. And according to numbers provided by BBB, the average cost of 13 NHL and NBA arenas built since 1999 is $263.6 million in today’s dollars.

The new arena in Quebec City has been priced at $400 million, but that includes a $40 million clean-up of the site. The new arena in Edmonton is priced at $480 million, but includes an office complex and entertainment district.

• Peddie opined that the way to get an NHL team is to do it is quietly, the way the Winnipeg Jets did and that, “I think Mr. Roustan (GTA Sports and Entertainment president and CEO Graeme) is playing it all wrong.”

Reality check: In fact, Roustan has never once mentioned the NHL in his statements about the arena and claims it can be self-supporting without a team. Of course, getting an NHL team is the end game here and Roustan would welcome one, but he has never publicly lobbied for one.

“I have no idea what he’s referring to,” Roustan said.

• On the notion that the GTA Centre could survive on 130 non-hockey events per year: “Not a chance. Not a chance. I can make $200,000 off an event and lose $100,000 on the next. I don’t know where 130 top-notch events are coming from.”

Reality check: The GTA Centre will be operated by Global Spectrum, an arm of the empire owned by Philadelphia Flyers owner Ed Snider.

“I can assure you that Global Spectrum will not be backing events that will lose money,” Roustan said. “Mr. Peddie may back events that lose $100,000, but I can assure you that Global Spectrum will not be doing the same.”

Peddie also questioned the notion that there would be run-off from events the Air Canada Centre can’t handle because of its hockey and basketball commitments and said he doesn’t ever remember losing an event because the Air Canada Centre was booked. To which Roustan responded that many promoters look at the Maple Leafs and Raptors schedules when they come out and don’t even make a call because they know they won’t fit in.

“Global Spectrum is a world leader in operating facilities around the world,” Roustan said, “and they know this business better than anyone, including Mr. Peddie.”

• On what advice he would have for Markham councilors in advance of the Dec. 3 vote: “Really question those numbers because I think they’re bogus and I really question whether they should put much money into it.”

Reality check: Of the $325 million, Roustan has raised half the amount ($162.5 million). The other half will be paid by Markham, but will be raised largely via a voluntary levy on developers, which they will then likely pass on to those who buy new condos around the facility. (Although Roustan maintains some have told him they’ll take the money out of their promotion budgets.) Roustan’s group has tried to assure taxpayers that no new tax money will go to the project, to middling success. Should a levy on new condos be considered public money? That’s for Markham’s council to decide when it votes Dec. 3. It should also be noted that under the current financial framework, Roustan, and not the city, will be responsible for covering cost overruns.

As for the numbers being bogus, Roustan said, “I find it sad that Mr. Peddie is injecting himself into a situation which he knows nothing about. For him to say that the numbers from PCL contractors are bogus is embarrassing.”

Here’s Markham Today’s interview with Peddie.