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.


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.