This casino thing is only the tip of the iceberg


I’ve been hard on Melnyk in these pages. I’ve written, at length, about how the way he talks about the sustainability of his hockey club is problematic. I’ve accused him of playing with public sentiment. I’ve basically called him a liar and a buffoon. Those are a fan’s reactions, and I stand by them.

So, how do I react during his most recent radio interview? I am, as usual, conflicted. (I take all this transcript stuff from the6thsens guys. Great work on their part to make it available to fans.)

Let’s get to what, to me, is the money quote:

On whether he believes the City owes him, if not a casino license, owes him the opportunity to do something to support his hockey team that is losing money…

“No, not me; they owe everybody. Like I said, I don’t care if I win, lose or draw, just do it right. Do a competition. It’s like, you’re not the only guys in the race and let’s see if you can stand on your own. If I lose, I lose. I go home and come up with a Plan C. Right now, there’s no Plan C. Can we survive? You know what, it all depends on how the team does. It all depends on, can we find a third revenue source. There’s only so much (we can do). I tried to build, like you said earlier, a soccer stadium. I said, ‘Okay’. They say, ‘Well, you guys are all out in the boonies out in Kanata.’ And I say, ‘Yeah, because I’ve been trying to build the damn thing for ten years now.’ So I say… I get Garbor, the Commissioner of the MLS – the soccer league. Okay, so we fly around in helicopters. I show him where the place is. He says, ‘Look, if you get a stadium in there’, virtually without committing, he says, ‘You’ve got a team. This is a great place. Beautiful.’ We propose (the MLS bid to the City) and no, what do they do? Bring CFL football back to Ottawa (for) a third time and they gave a $400 million gift of land to a group of insiders there. And that was it, so I get killed there. All of a sudden, I don’t know what their fixation is, but if anybody knows about horseracing… these horses (at RCR) run for $4,000 a race. That’s their purse. I heard that before slots came in, it was $2,000, but that’s the level of competition you’re talking about versus the cheapest of the cheapest races anywhere in Toronto, (the Toronto purse) would be $40,000.”

There are a few things going on here, so let’s unpack it…

First of all: I don’t know anything about what motivated city council to ‘sole source’ their decision to put the casino at Rideau Carleton Raceway, except to say that the pressures on them are not just between competing factions of business people. There’s a significant health policy portfolio at play here. I work in health policy, and I know that there’s opposition all over the damn place, from pretty much every research, advocacy, and policy segment of the health community, to building a casino.

Gambling, the argument goes, is a tax on the poor. In a conservative or libertarian world you blame an individual for his or her decisions. In the world where I come from, you realize that unhealthy decisions like whether or not to smoke, gamble, or drink to excess are complex ones, tied up in class and culture and poverty. These are the social determinants of health. It’s not as simple as casino = jobs and taxes. There are other ramifications and costs to consider, both economic and social. And for that reason, I can understand the city saying, “let’s have our casino, which will have some benefit for us, but let’s keep it a rinky-dink little thing out in the middle of nowhere.” They want to control it by keeping it small.

Melnyk doesn’t seem to get that, especially in his dream world of $40,000 purses. Why would he get it? Losing a few thousands bucks here and there doesn’t phase him, and maybe he hasn’t seen what a gambling addiction for those without his means would do to a family.

Secondly, mixing up the Landsdowne / CFL decision, the soccer decision, and everything else is both complicating matters and dumbing them down simultaneously. To state that there was no competition at Landsdowne is sort of asinine for anyone who lived through the years of debate it spurred. Having said that, I would like to know more about how the city makes the decision to go to an open bid. When is a contract simply awarded? When do you rely on council debate and public consultation, and when do you rely on a competition? Light rail has been a clusterfuck over the past decade, but the most recent contract signed was a fantastic deal for the city, and that was brokered by these same people who apparently, at least according to Melnyk, give gifts to insiders.

To me, the much bigger point in all this is for voters (and hey, we have a municipal election next year!) to be aware that the debate doesn’t begin and end with the casino. Melnyk is being spurious when he claims the Senators pump $200 million into the local economy, and create “thousands” of direct and indirect jobs, or when he sings the continuous, and equally spurious refrain that a franchise that has doubled in value in ten years is “losing” $10 million a year and needs a third source of revenue in order to survive. But the question it raises is one of the social contract between sports franchises and the cities that love them. What do we owe them, if anything? Is it anything more than buying the goods we value from them at a fair price? What is all of this talk of fairness when, as the owner of a sports franchise, Melnyk can go on a radio talk show and make his case anytime he likes, spouting insults and making spurious claims of his immense generosity without much in the way of corroboration? He’s right that’s it’s not a fair process; he has advantages that the other ‘bidders’ in this case don’t.

Melnyk can invoke all the good he’s done to get his bid in. That’s one thing, and I don’t think anyone would think it unreasonable to give him his shot. But to bow to this pressure for the wrong reasons would also be precedent. What’s to stop that same justification from being invoked in order to favor his bid, or the next time he comes up with a strategy to make Kanata viable? My thinking is that, sure, he should get to bid, because that’s the principle of an open bid. But keep all of this other manipulative bullshit out of it.

To me, the looming, and gargantuan subtext to this whole debate–what people are really debating–is the next arena. Canadian Tire Centre is about 20 years old, and has a lifespan of 30. With upgrades, maybe you push that to 35. But new arena deals need to be in place a few years in advance in order to get the thing built in time. Which means that some time in the next half-dozen years, Ottawa is going to have to live through a protracted, hyperbolic, insanely misleading debate between Senators ownership and city council about who should pay for a building that will cost between $300 and $500 million.

I don’t always understand city council’s decision making, and I, like any reasonable person, encourage transparency. But I understand that small concessions now are only the first of many, and I feel much more mislead by Melnyk in all this than by city council.

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13 thoughts on “This casino thing is only the tip of the iceberg

  1. Great read!

    I myself work in procurement, and have a general understanding of how BPS (Broader Public Sector) procurement works. In my personal experience, an organization looking to procure anything over a certain dollar amount utilizing public funds(im sure a casino would fall into this category), the organization must hold a competitive bidding process. This process consists of releasing a document to a publicly available website, or publication indicating the deliverables, specs, scope of work etc (everything you want and are looking for), timlines, as well as a list of criteria with pointing system in place to evaluate the merits of each vendors proposed deliverables. After the deliverable criteria have been scored, that score is combined with the financial score (which is determined using a formula) which then calculates the final score, the foundation of which the decision is made.

    As annoying as Mr. Melnyk is, I too would be interested in hearing city council’s justification for sole sourcing (bypass the competitive bidding process) such a competition as this. From a BPS procurement stand point the City had already decided what it was going to do before there was even talk of a potential casino.

    Just my thoughts.

    • That’s a great article. Thanks for sharing it. I especially like your point about how because it can be a multi-use facility with trade floors and the like, the same codependency between team and arena won’t be as acute. If you ever want to contribute additional thinking on the topic to the site, I’d love to see it.

      • Sure. Im an engineer and architecture runs in the family. Look at Place Bell in Montreal, ACC in Toronto and even Rogers Arena in Vancouver. All urban locations that are accessible by public transit. None of them suffer due to the lack of parking revenues. Far from it. Notice that teams that are troubled tend to have arenas that are islands within empty parking lots: Phoenix, Florida, NY Islanders (and they’re about to move to Brooklyn!). The two are related.

  2. A few comments…

    First of all, the city (and certainly the mayor) seems to want a bigger casino. Watson wanted a big downtown casino, but it didn’t have public support. The city actually asked for TWO casinos from OLG, one (small one) at the Raceway and another open for public bidding (and presumably to be awarded to Melnyk), but to OLG said Ottawa could only support one casino. With that, the city decided to preserve the Raceway’s slots (and, by extension, its very existence since they’re so heavily dependent on revenue from those slots) by limiting any casino to that location. Councillors also seemed to be under the impression that there was some sort of time-crunch in the mix and they had to make a decision in order to prevent OLG from placing a casino wherever they wanted (which couldn’t happen, because the city would have to approve zoning and so on). It sure looked like the city sees the casino as a revenue opportunity, just as Melnyk does.

    As for the Lansdowne/Kanata stadium question, his point was valid: The city was only going to invest in one outdoor stadium, and Melnyk wanted it to be an MLS stadium in Kanata while the Lansdowne group wanted it to be a CFL stadium at Lansdowne. The city chose Lansdowne, and the developers there were given a sweetheart deal on the land (I don’t know if the $400M figure is accurate, but it wouldn’t surprise me–the public land that’s since been privatized in that area is significant and very valuable). So Melnyk isn’t mixing things up or complicating them, but is outlining the two development projects he’s sought support for and how the City has chosen instead to sole-source that project for someone else.

    The soccer stadium was Plan A and the casino was Plan B in Melnyk’s journey to finding an extra revenue stream (and develop his massively underdeveloped land holdings in Kanata). There is no publicized Plan C, but that’s probably because Melnyk’s current campaign is an attempt to re-open the Plan B scenario and find a way to get his casino back on the table.

    • These are really good points, Peter, and thanks for that.

      I think that Watson has changed his stance over the last couple of months from the fairly typical “we get the fallout from Leamy but not the revenue” to something perhaps more informed by the public and health element. At the very least it seems like the council has more of an appreciation for how contentious gambling can be, and that’s enough for them to tie up debate. I don’t know if that’s because of the intervention of health groups, as I doubt any are really all that powerful on a municipal level. But I read what the deputy mayor said today about how it’s not really worth it to open that can of worms and have the city divided for the next year during an open competition, all for the sake of a casino that isn’t really at the top of the council’s agenda.

      As for Landsdowne, I don’t disagree with how you’ve outlined it, though I remember there being fairly extensive public consultation, if not a public competition between vendors. It could have been a lot more transparent, but if Melnyk is using that as exhibit A of the council’s corruptness, I think it’s misleading. We haven’t had that same level of public debate around a casino.

      • The consultation was “we’re doing this” with pasteboards.

        OSEG came about because a Montreal development firm was about to put a bid on Lansdowne and enter the Ottawa market as a big player. The trio that make up 80% of Ottawa’s development oligarchy made sure that didn’t happen as they didn’t want a much larger outside actor getting a toehold in Ottawa’s construction market.

        You have to understand how civic politics works. Old money and old favors rule. The family that owns Rideau Carleton Raceway are old Ottawa money. The Greenbergs have a former mayor in the family tree. Jim Watson still owes favors from the 1980’s. Ottawa politics is a relationships business.

        Melnyk assumes he can walk into city hall with a proposal and be listened to. It doesn’t work that way in this town. It takes twenty years of currying favor and building relationships with politicians and city staff before they even remember you exist. It is a legacy of Ottawa being several small towns cobbled together.

        • There was more public debate on Lansdowne than on any other issue this decade. That bit about the Montreal firm sounds like conjecture and conspiracy theory to me. Where is this information coming from? A Montreal firm was ready to take on the arena and stadium? Seems unlikely. If another firm really had a big play in the works, surely they would have made that known during the debate, as it would have been entirely relevant to the City’s decision-making process. Absolutely no one came forward.

          As for Melnyk, he is the one person who doesn’t have a complaint about the procurment process for Lansdowne. While there wasn’t an RFP for the development, there was a comparative analysis of the two stadium proposals (OSEG’s and Melnyk’s). The City chose OSEG, rather than putting another major sports facility in the burbs (see the 6thSens post for some of the reasons why).

  3. Great post Varada–I don’t think anyone else has talked about the social cost of a casino. The debate seems to be framed as either “give Eugene what he wants to help the hockey team” versus those who reject that the team actually needs that injection of cash (so the casino would help Eugene, rather than the entity that is the Ottawa Senators).

    • But where does the link between the health concerns of having a casino and the decision that it must be at RCR come in?

      The claim in this post is that by having a smaller casino, city council can better “control it” (whatever that means) and that this may then be the way to mitigate the health concerns. The logic behind both aspects of this are lost on me.

      And I’d argue that a smaller, “more rustic” casino is likely to appeal more to the demographic that are hurt the most from gambling – people who really can’t afford to lose $500 bucks in one night of poor judgment.

  4. Pingback: Senators News: September 11th | eyeonthesens

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