Crony Capitalism

Quebec Publicly Financed an Arena to Get an NHL Team. You Won't Believe What Happened Next.

Actually, you can probably guess what happened.

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Do not publicly finance sports arenas, Canada.
Robert Beck/Icon SMI 503/Robert Beck/Icon SMI/Newscom

When the National Hockey League (NHL)'s Quebec Nordiques left the Francophone Canadian city at the end of the 1994 season for the greener pastures of Denver (where they would almost immediately become a multiple Stanley Cup-winning powerhouse as the Colorado Avalanche), the city's fans were heartbroken. Two decades later, they've got a new heartbreak to deal with — the fact that they dropped almost $400 million (CAD) to publicly finance a brand-new the Videotron Centre hockey arena — as part of the city's bid to receive an expansion franchise, only to see that franchise awarded to hedonistic desert city of Las Vegas

Readers of Reason know we often cover the almost-unfailing debacles which transpire when taxpayers either choose or are compelled to finance sports arenas for extraordinarily wealthy team owners, but this situation in Quebec includes some flourishes that managed to surprise even a ragged cynic like myself. 

For example, Quebec City Mayor Régis Labeaume said to the Toronto Star in 2011 that comparing public funding for a hockey arena with funding for true public works, such as hospitals, was both "reductive" and "inappropriate." Labeaume added, "The population of Quebec City wants an arena…We live in a society and there are lots of things in a society." The mayor also said at the time that the city planned to borrow $125 million and cut $62 million in "red tape" to meet its financial obligations for the project.

Also in 2011, the national assembly of Quebec* passed Bill 204, granting control of the arena to the Canadian media giant Quebecor, which paid just $33 million for the privilege of reaping the lion's share of potential profits on the public's investment. CTV News Montreal reported that opponents of the deal said that "the arena contract was issued without any public bidding process and that the contract amounts to the city of Quebec giving one of the largest companies in the province, Quebecor, $40 million each year for 25 years."

It gets crazier. Bill 204 protects the deal from any potential lawsuits and shields the arena's financial records through a confidentiality agreement. Still, opposition leaders recently presented documents which show the team-less arena is currently running a projected $2.2 million annual deficit, 50 percent of which the city is responsible to pay for. And as Deadspin's Barry Petchesky notes, "Conflicts of interest abound: Qubecor's controlling shareholder Pierre Karl Péladeau was the leader of the Parti Québécois from May 2015 until he resigned last month."

In addition, the fact that the province of Quebec, which only four years ago was roiled by massive student-led protests over a $1600 public college tuition hike, would commit almost $200 million to subsidize a private business is particularly gobsmacking. 

Quebec City's failure to land an expansion NHL franchise should not be such a surprise. Yes, hockey is far more popular in the country it was born in than in Las Vegas, and anyone who has ever visited Quebec knows public life practically shuts down when "the game" is on. But unlike bilingual Montreal, Quebec City is almost exclusively French-speaking, which has always made it a tough sell to free agents and top prospects. One-time phenom Eric Lindros infamously held out for an entire year rather than play for the Nordiques, and when the team finally traded him to the Philadelphia Flyers in 1992, the bounty they received formed the core of a Stanley Cup-winning team. Unfortunately for Le Québécois, that team would win in Denver

The point is, Quebec already lost a team, and the city's liabilities that make it a less economically viable location for the NHL have not changed in the past two decades. The lesson remains the same: no matter how badly you want to be a big league city, the public should never foot the bill for billionaire's vanity projects.

*-This post has been updated to accurately note the correct governmental body.

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  1. Quebec City Mayor R?gis Labeaume

    This is why no one likes you, Canada.

    1. WHOA WHOA WHOA WHOA. Quebec is red-headed stepchild of Canada. They have threatened to leave for decades. Let hope we get a Quexit soon.

  2. Dayam! After all the publicity over the wastage and cronyism connected to publicly financed arenas, these guys didn’t just pretend ignorance, they embraced the cronyism.

  3. How the fuck does a hockey team in Vegas make any sense? Who is going to watch hockey in Vegas?

    1. Tourists coming to cheer on the visiting team.

      1. This. As a season ticket holder at another team, I’m looking forward to getting to an away game in Vegas.

        That said, as a season ticket holder for one of the Sun Belt clubs, it annoys the hades out of me when there are as many Canadian jerseys in the crowd as the home team. Still trying to figure out which is the worst season down here – summer family tourists or winter snowbirds…

  4. Two decades later, they’ve got a new heartbreak to deal with ? the fact that they dropped almost $400 million (CAD) to publicly finance a brand-new the Videotron Centre hockey arena ? as part of the city’s bid to receive an expansion franchise, only to see that franchise awarded to hedonistic desert city of Las Vegas.

    HA HA! /Nelson

    I may have to ice off the cockles of my heart, this warms them so.

  5. Ha,ha,ha,damn French.Maybe they’ll build another Maginot Line next.

  6. …the city’s fans were heartbroken.

    Well, maybe you shouldn’t have been so French that Eric Lindros wouldn’t come play for you.

  7. What happened in Cobb County, Georgia was atrocious enough, but at least the Braves remained committed.

  8. There is also that Quebec would be another Eastern city, which would further unbalance the conferences or make the league have to dump Columbus or Detroit back into the Western after Detroit bitched and moaned themselves into the Eastern.

    1. ^So much this. Although I understand the argument since it meant Detroit always traveled the most miles of any team.

      The smarter idea would be to just have 4 divisions and rotate the inter-division playoffs/regular season balancing. So some years Boston might have to play Vancouver in the final round only, and in other years Boston might have to play Vancouver in the regular season and in the early playoff rounds. You could even set it up so that whatever divisions wind up squaring off in the final are guaranteed to be the 2-division non-final round/wild card matchup the following season which guarantees you won’t have the same two teams in the final in consecutive years (not that it happens often, like it does in the NBA). This way everybody eventually has a crappy travel schedule some years and an easy travel schedule in others.

  9. There is also that Quebec would be another Eastern city, which would further unbalance the conferences or make the league have to dump Columbus or Detroit back into the Western after Detroit bitched and moaned themselves into the Eastern.

  10. ‘$400 million (CAD)’ What’s that, like $75-$80 USD?

    1. Back when they built it, it was worth pretty close to $400 million US. It’s also quite badly built, cement already cracking.

  11. Also in 2011, the Canadian National Assembly passed Bill 204, granting control of the arena to the Canadian media giant Quebecor, which paid just $33 million for the privilege of reaping the lion’s share of potential profits on the public’s investment

    . Still, opposition leaders recently presented documents which show the team-less arena is currently running a projected $2.2 million annual deficit, 50 percent of which the city is responsible to pay for.

    So, from the article, Quebec City got about 30 years of deficit covered, while Quebecor paid $33 million for the privilege of going 1.1 million into the hole each year? It’s like a Cripple Fight.

    Oh and,

    “Conflicts of interest abound: Qubecor’s controlling shareholder Pierre Karl P?ladeau was the leader of the Parti Qu?b?cois from May 2015 until he resigned last month.”

    The PQ would be the opposition in questions, Liberal Party being in charge of Quebec 2003-2012, PQ 2012-2014, and Liberals 2014 onwards.
    Canadian National Assembly that passed the bill to hand arena to Quebecor is presumably the Quebec legislature, not federal Canadian one, actually called. National Assembly of Quebec (or just National Assembly).
    Shit, I’m not even from Quebec and this article is triggering muh Gell-Mann Effect! Wait till Rufus gets here…

  12. funding for true public works, such as hospitals,

    Anyone that thinks hospitals are public works deserves the boondoggle of taxpayer-funded sports arenas.

  13. Oh and it gets worst : for a while they were actually talking about using the Caisse de D?pot et de Placements du Qu?bec, which is responsible for managing the equivalent of social security and other public pensions funds to be a partner in acquiring a team, all to the profit of Pierre Karl P?ladeau. (He changed his name from Carl to Karl when studying in Europe, for you know who).

    The opposition party Anthony is talking about is probably more the Coalition Avenir Qu?bec which is kinda like a third party. It’s pretty much a bunch of neo-liberal opportunists that spun off from the death of the ADQ, which was the only right wing party here. Of course, the Parti Qu?b?cois would never dare criticize their savior.

    Fun fact, the guy actually fought tooth and nails in order to keep his controlling shares of his media empire, even if he might have been the next prime minister. How do you spell Berlusconi again ?

    There is a lot more factions in Canadians politics than in US politics, but it’s always the same players that are on the ice.

    Oh and guess how that R?gis Labeaume guy made all his money? He and a few well connected associates managed a deal with the government when they denationalized some asbestos mines. Turned around, sold them at 10 times the prices they bought it. But say that in a Qu?bec media and you’ll never get an interview from anyone from the City Hall again.

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