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Connor McDavid Might Not Be Oilers’ Most Valuable Asset

May 27th, 2024

The Edmonton Oilers have enjoyed an embarrassment of riches on the ice in recent years with Connor McDavid and Leon Draisaitl, who ranked first and third in the NHL Network’s preseason list of the best players in the sport. The duo have Edmonton in the Western Conference Finals for the second time in three seasons, and the club is tied 1-1 in its series against the Dallas Stars.

The small-market Oilers are also thriving off the ice, with Rogers Place one of the most prosperous arenas in the NHL and the surrounding 25-acre mixed-use sports and entertainment development, ICE District, the second largest in North America, behind only Hudson Yards in New York.

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“The ICE District is really the epicenter of all the activity in our city,” Tim Shipton, Oilers Entertainment Group executive, said in a phone interview. “It’s the place that people want to be.”

OEG owns the Oilers, the ICE District, rights to operate Rogers Place, and teams in the American Hockey League and Canadian juniors’  Western Hockey League. The ICE District includes multiple levels of retail with shopping and dining, office space, a casino, residential condos, a JW Marriott hotel and outdoor plaza. OEG sold the commercial portion of the 69-story Stantec Tower for $400 million, as well as an office building to Alberta pension manager AIMCo for $300 million

During the NHL playoffs, fans have congregated outside the arena for both home and away games with more than 11,000 fans split between the plaza and fan park, in addition to the 18,000-plus inside Rogers Place, which has been full for road game watch parties. OEG captures the revenue from all of the food and drink consumed inside and outside the arena.

“We’ve been sprawling for decades, and it’s easy to not focus on development in a downtown when you have all this land,” Puneeta McBryan, executive director of the Downtown Business Association of Edmonton, said in an interview. “But it really has changed how our downtown looks and how we build our city.”

OEG has invested CA$2 billion ($1.5 billion using current exchange rates) during Phase 1 of building the ICE District, with Phase 2 scheduled to include 2,500 housing units and more green space. An additional CA$2 billion has been spent by other entities developing the real estate in the area since the Oilers announced their plans for the arena.

The Oilers generated the fifth-highest revenue in the NHL during the 2022-23 season at an estimated $281 million net of revenue sharing, by Sportico’s count. The club ranked eighth for team value at $1.6 billion with every team ahead of it in a metro area at least three times larger by population. Sportico’s valuation includes the team’s gaming operations, OEG Digital Gaming, and the sports-related components of the ICE District, which represent a fraction of the development’s total value.

This version of the ICE District was not in the original proposals. Oilers owner Daryl Katz bought the team for $170 million in 2008 and started to acquire a contiguous parcel of land downtown. The new $380 million arena was approved in 2013, and the initial master agreement called for Katz to invest only $75 million to develop the area outside the venue, which was mostly gravel parking lots and an old Greyhound station. Mixed-use developments were rare a decade-plus ago, with L.A. Live one of the few success stories—Atlanta’s Battery was still four years away.

Edmonton is the rare city that had a lot of vacant, developable land in the heart of downtown. It also has a very young population and was witnessing a net migration from across Canada.

“We had all these young people moving here, looking for apartments and cafes and everything that comes with dense urban development,” McBryan said. “We didn’t really have the scale that we needed, so it was just this perfect meeting of a catalyst and investment and demand.”

Shipton says OEG hosts a “steady stream” of senior executives and owners from all of the major sports league who are looking for insights into the success of the building and surrounding development.

“Daryl Katz had a vision when he bought the team for an arena and sports entertainment district that would drive vibrancy and economic activity in the downtown core,” Shipton said. “We are now seeing that vision in reality.”

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