Monday, November 22, 2010

City has been spinning its wheels on Indy too long

(by Paula Simons edmontonjournal.com 11-4-10)

Goodbye, Edmonton Indy. Goodbye, Indy Racing League. Forgive me if I don't shed too many tears as you race off into the sunset.

Forgive me if I don't condemn the city for blowing a deal with Octane Management to run the Indy here next year.

The city wanted to move the race from the west side of the City Centre Airport lands to the east side, because it has closed the eastern runway and it needs the western runway to keep the airport operational during the race. Lorna Rosen, Edmonton's chief financial officer, says the city thought the move would be better and cheaper for Octane.

Octane says it was blindsided by the decision to move the track. It wanted the city to pay for the $3.2 million extra it says it would cost to create a premium track on the new site. That's on top of the $7 million in "sponsorship" and services the city had already promised to provide Octane over the next three years.

Rosen says that without city council authorization to spend the extra $3.2 million, she had no choice but to walk away from negotiations.

Now, it's certainly arguable that city council set up the deal to fail by giving Rosen such limited bargaining power. Certainly, if councillors had been hell-bent on saving the race at all costs, they would have handled things differently. And there undoubtedly are some people who'll argue that the loss of the Indy proves that shutting the airport is a bad idea.

But let's be clear. This isn't about the airport. It's about the cash.

The "privilege" of hosting this race has cost taxpayers dearly.

In its first two years, the Indy lost a total of $9.2 million. Every penny of that was backstopped by the city purse. Northlands and the city haven't finished calculating this year's losses, but Rosen says the city will likely be on the hook for at least $3 million more.

On top of that, the city provided the race with approximately $1.5 million in "services in kind" over the last three years, to pay for things like police and fire and transit.

Total bill? About $13.7 million. It doesn't end there.

Over the last three years, the Alberta government provided $1.2 million in Indy support -- $800,000 in 2010 alone. Ottawa also got into the act. The Harper government provided Indy with a grant of $810,000.

That's some $16 million in public funds to date -- to subsidize an international pro sports event -- with Octane holding out its hand for $10.2 million more from the city.

And what exactly did we, the public, get for our money?

The Indy Racing League won't allow the release of attendance figures, so it's impossible to know how many people actually bought tickets to this year's event. But Coun. Kim Krushell says attendance was down, and few were tourists.

"Ticket sales have been declining and they were down again, obviously, this year.

"Our citizens weren't buying tickets, and tourists weren't buying tickets either," says Krushell.

"From what I could see, the tickets were from the region and from Edmonton, not international."

Certainly, the Indy didn't seem to jazz the city the way an event like the Canadian Finals Rodeo does. When the CFR kicks off, the downtown, Whyte Avenue and West Edmonton Mall will bustle with tourists filling hotel rooms and restaurants and bars and stores. Grey Cup, later this month, will work the same magic. Indy never seemed to bring Edmonton the same kind of business, or party spirit.

Did the race raise our international profile? Did it convince more people to travel, invest or move here? That's also hard to say.

In its first year, the race was carried on both ESPN, a premium sports cable channel, and ESPN International. The second year, it was dropped by ESPN proper, and run instead on an obscure cable channel, VERSUS, as well as on ESPN International. This year, it was carried only by VERSUS.

How many people watched the race? And how many of those people noticed or cared that it took place in Edmonton? And how many, if any, changed their holiday or business plans as a result? The city says the international publicity was worth $80 million. Let's say I'm skeptical.

Now maybe Octane, with its racing industry experience, would have done a better job of marketing and promoting the event than Northlands has. Maybe Octane would have brought in the crowds, brought back TV coverage, made a profit.

But given the continued malaise of the U.S. economy, the impact of the strong Canadian dollar on American travellers, the continued fracturing of the TV audience, I'm not sure Octane could have made the race into a money-maker either. Certainly, the fact that negotiations broke down over a difference of roughly $3 million suggests that Octane knew it was working with a very slim margin, that it had to squeeze every penny to make its event viable.

And if the 2011 race had failed to make a profit? Krushell, for one, believes the requests for cash would have been never-ending.

"When does the buck stop for taxpayers? I didn't see the gravy train stopping any time soon," she says. "I think we would have been on the hook forever.

"This thing is a dog. If it smells like a dog, it's a dog. And this smells like a wet dog."

The way the city handled its dealings with Octane may not have been pretty. Breakups rarely are. But it's time to cut our losses. Time to put the dog out

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