Editorial Slams Ontario's $263m Grant to Ubisoft for New Studio

July 8, 2009 -

When Ontario's Premier Dalton McGuinty (left) announced on Monday that the provincial government planned to give $263 million to Ubisoft to offset the cost of opening a new game studio in Toronto, some eyebrows were raised.

Game industry types seemed understandably pleased, but an editorial in the National Post expresses shock and dismay over the amount of money involved and the fact the that those funds are going to a highly profitable company:

Ontario gives $263 million to company that makes $111 million in profit. Smart. Weren't we supposed to have learned something from the recession? Apparently not...

It’s bad enough that companies with terrible balance sheets get cash from taxpayers, but encouraging software companies that make money to play the same game is something else again. If you're losing money, Ontario wants to support you. If you're making money, Ontario wants to support you.

Commenters to the editorial were, by and large, not receptive to the plan, either.

- Soooo, do the math: That's 80 jobs per year. At a cost to the taxpayer of........ wait for it......................... $328,750 EACH !!  WHAT A "DEAL" !!

 

- Let's call a spade a spade: Ontario liberals pissing away $300.000 per job created. You know what? I am not paying any more taxes. That's it... Why paying taxes, if everything I pay is getting just given away to the foreign businesses? I'd rather move to Honduras...

A few commenters, like the one below lauded the deal, however:

The author of this article clearly misses the point.  The $263M "invested" by the Ontario government are in the form of tax breaks over ten year as an incentive to set up shop here, so no cash outlay.  Further, the tax breaks are kind of a moot point since these taxes wouldn't have been paid anyway had UbiSoft not set up shop.  The fact that they're spending $500M to open a studio, clearly they'll be here for a while, thus creating more jobs... 


Comments

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

I say this might be a good thing, but only if -

A. - The budget doesn't get fucked, and

B. - There aren't any crazy strings attached, like this studio legally being required to stay open for X number of years.

The reason I put B in there is because of the volitility of the gaming industry.  Even Ubisoft isn't immune to such.

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Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

I don't really see the issue here, they want a stable and solid brand name developer to setup shop, that costs money, as long as the goverment makes sure they stick around for X ammount of years I don't see a problem with it, sure they coudl spend that moeny on a compy that employees acouple thousand wokers but I don't think there are that many well off manufatures left.... .

 


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Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

Man, I wish my Ontario based startup company that has been begging for money so we can expand could get some government money instead of one of the most profitable game publishers in the world.  It's funny how McGuinty is lining up to hand money to companys that don't need it (even if this is tax breaks, it is still money Ubisoft isn't having to spend) but the small businesses which every government calls "the backbone of the economy" are basically told to stuff it.  Forgive me if I'm a little bitter about that.

Parallax Abstraction
Ottawa, Ontario, Canada
blog.digital-lifeline.ca

Parallax Abstraction
Ottawa, Ontario, Canada

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

Don't take this the wrong way, but doesn't it make more sense for the government to focus its efforts on companies with proven track records of success, rather than small startup companies like yours which may be, in their eyes, potentially unstable?

In this day and age of economic downturn, if I have a choice, I'm going with the proven winners.

"De minimus non curat lex"

"De minimus non curat lex"

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

"Don't take this the wrong way, but doesn't it make more sense for the government to focus its efforts on companies with proven track records of success, rather than small startup companies like yours which may be, in their eyes, potentially unstable?"

We actually need the money.  Ubisoft doesn't.  We can't expand without additional capital.  They could afford to open this office without the government's help.

If the government is going to hand out money, it should be to help people succeed and encourage competition and innovation, not help those who are already succeeding to succeed more.  You can't say that your government is all about small business (as McGuinty often does) and then throw all the big bucks at large companies, especially when the same government's continued fiscal recklessness and ineptitude has it bleeding red ink.

Parallax Abstraction
Ottawa, Ontario, Canada
blog.digital-lifeline.ca

Parallax Abstraction
Ottawa, Ontario, Canada

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

 As i understand it the tax break is an incentive to make compagnies open shop here.  Not just giving away money at compagnies that might or might not need it.

like the gov. says "Oh! your looking to open a new shop? well if you open here i'll give you XX% off your taxes".   If they didn't do it, ubisoft would just go somewhere else, like another province or state where they did offer a tax break.  It's not a thing where ubisoft opens shop, then gov goes "Ah! so nice to see your joining us, you don't need to pay full price, just XX% is good enough"

I'm tired, it's late, so sorry if my exemple sounds stupid and wierd.

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

Not to mention it tends to be easier on the brain cells to focus upon the large and successful companies. There are litterally thousands upon thousands of small companies. How do you decide which ones deserve aid and which ones don't? How many do you support? If you're supporting a few, how do you make that decision? If you're supporting them all, will the funding be of any use at all given it will have been diluted by so many?

And so on and so forth. Since people aren't elected based on their actual intelligence, rather their ability to act and sound intelligent and charming, then mind bogglers like the above won't be addressed.

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

If you don't mind my asking, which grants or tax credits have you looked at?

I don't know if this applies to you (or anyone else), but the Scientific Research and Experimental Development (SR&ED or 'Shred') tax credit is a good one for developers.

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

I think it's safe to ignore people who say they will stop paying taxes, and move to a Central American military junta.  (TUFF GUY TUFF GUY RAR RAR RAR!!!)

It's also worth pointing out (as in an earlier thread on this very topic) that smaller companies do get tax credits and incentives from the government.  It's all a matter of scale, and for them, it's all about the number of jobs.

I would presume that if UbiSoft pulled out five years down the road, the government of Ontario is under no obligation.  Spreading it out over a decade puts everything up front on UbiSoft.

Something else to consider is that wherever you create jobs, you create secondary business, when employees pay for housing, groceries, and taxes.  Property values rise, creating more demand, and so on.  It's a lot like Sim City.  :)  Except without all the earthquakes and monsters rising out of the sea.

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

"Except without all the earthquakes and monsters rising out of the sea."

So Japan is exactly llike Sim City?

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

Yes.  :)

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

 Don't understand why you people aren't getting this. They didn't give them cash, it's a tax break. As in, they pay 250$ instead of 500$. 

As in, we're getting jobs and more money, just not as much money had there been no tax break.

of course, had there been no tax break, there'd be neither 250$ nor 500$.


Not complicated, folks..

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

This guy knows what he's talking about.

This was a good decision to make, not only will it bring those jobs for potentially a fairly long time, but it means more tax dollars.

I thought the comment from the article about learning what to do in a recession was funny. This IS what you do in a recession, try to bring as many jobs and companies into your area as possible.

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

I'm not going to pretend to know the intricacies of economics, but this doesn't blatantly not make sense. And when the opposing argument basically amounts to "$300,000!!! They took our muny! I'm movin' to South America!", it makes this seem a lot smarter.

I mean, clearly Ontario isn't looking to waste money. And I'm sure they don't think paying 300k per citizen directly to Ubisoft is going to do anything. So basically, if you think about it for even a few seconds, you see that what this article is saying can't possibly be true.

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Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

If it's a capital investment, then it's about more than jobs, it's about 20% of the revenue. I'm not really up on all the details though. I don't really care. They'll never build a studio in Toronto.

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

I have to say I'm not sold on this either.  They're essentially bribing Ubisoft to come to Ontario when they already have the money to do so themselves.  Aside from the fact that the provincial government always sees Toronto as the only city in the province that matters (Ottawa is considered Silicon Valley North, not Toronto), handing out this much money for this number of jobs doesn't make much sense, especially when the province has been bleeding money for years because McGuinty's solution is never to cut anything but to find other ways to bleed money out of a dying economy.  McGuinty's just looking to beat Quebec whose grant that funded over 50% of Ubisoft's wages in the province just ran out and he wants to try to steal them away from that province eventually.  I'm glad to see the industry expand in Ontario (even if in the wrong place) but not at this kind of expense versus return.

Parallax Abstraction
Ottawa, Ontario, Canada
blog.digital-lifeline.ca

Parallax Abstraction
Ottawa, Ontario, Canada

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

EDIT: Disregard my comments, should have read the whole article first.

Nobody "handed out money", at least not in the sense you are thinking. Those are tax breaks. Meaning Ubisoft will be paying less taxes, but will still be paying Ontario taxes. Just less of them. Not recieving money, but paying less. OK everyone?

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

Ottawa isn't the Silicon Valley North, that would be Waterloo.

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

Actually, they've been calling Ottawa (and specifically the Kanata neighborhood in the west end) "Silicon Valley North" for years.  It's not just a label we're pulling out from behind our ears.

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Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

I have to agree that Waterloo at the very least, deserves to share the title.  But yeah, my main point wasn't so much that Ottawa was the tech capital, just that Toronto isn't.  But to most provincial governments we have had in this province, if it isn't Toronto, it obviously isn't important.

Parallax Abstraction
Ottawa, Ontario, Canada
blog.digital-lifeline.ca

Parallax Abstraction
Ottawa, Ontario, Canada

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

Ottawa may (or may not, it's completely debatable) be the tech capital of Canada, but one of the big reasons Ubisoft went to Toronto was because of Toronto's close ties to the film industry and its large existing talent pool in related fields such as 3D animation, visual effects and sound design. Setting up shop in Toronto also gives Ubisoft access to Markham, another self-appointed "tech capital," which is within the GTA.

And, yes, Toronto is important. Smaller cities have to get over that. Toronto has 2.5 million residents, has one of the largest stock exchanges in the world, and is the top financial center in Canada (not just Ontario, the entire country.)

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

Up until I googled it I had never heard of Ottawa being called Silicon Valley North.  Waterloo definitely seems to fit that role much better.  They've got RIMM and University of Waterloo (much more renowned for computing advances than Carleton).

From what I found in google, this Silicon Valley North title is a locals thing and not really found outside of the people that really think the title belongs to them.

The below linked article describes the state of Ottawa's tech industry... and though the author thinks that it will recover the Ottawa tech industry is definitely not up to its former glory.

http://www.cbc.ca/technology/story/2009/06/26/t-tech-silicon-valley-north-ottawa.html

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

Maybe I am wrong here, but I thought the title of Silicon Valley was for jobs not education.  Again, I could be mistaken, but I think for tech jobs Ottawa is much bigger, if only due to being larger, although for degrees Waterloo certainly wins.

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

The original reasoning was an incentive to get them to open the studio, which would employ X number of people. That's great.

Now just do that for companies that actually *need* the incentive instead of the companies in the very lucrative video game industry...

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

People are only complaining because they don't live in a country where taxpayer money go to politician pockets (even ilegally) and that no such grants are ever made.

 

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--- Maurício Gomes twitter.com/agfgames

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

I live in a country like that and I'm complaining.

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Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

 Not to forecast doom on Ubisoft, but studios open and close all the time, even as branches of a larger company. Ten years for a developer seems like highly optimistic lifespan.

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

I'm with the commenters. Wasteful.

--------------------------------------------------

I LIKE the fence. I get 2 groups to laugh at then.

-------------------------------------------------- I LIKE the fence. I get 2 groups to laugh at then.

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

EDIT: Ok, maybe I am stupid. It was my understanding these were tax break incentives, but the wording used in the article actually makes it looks like these will be actuall payments made to Ubisoft. I still believe it to be a smart gamble, Ubisoft is a big company with a long history and governments have offices whose sole job is to calculate the costs and returns of decisions like this.

You are all STUPID. This is only going to bring MORE money into the public coffers. Do you guys even realize why companies are given tax breaks like these? 

They are being given a tax break, meaning the government is NOT giving them money, just not charging them the full tax rate they would have had to. This ensures that the company moves to their region, bring lots of money (like the mentioned 500m complex they built), jobs for the locals, and guess what? TAX REVENUE! They are getting a break, but they'll still have to pay taxes. For a company that size that adds up to a lot of money.

So make no mistake, this is a great deal for Ontario.

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

Agree. I'm one for goverment support for new jobs and all but this just seems like over board to me.

http://www.magicinkgaming.com/

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

Likewise. I'm so glad the governement is showing support for new cybernatography jobs, but this is too much. $100 mil would have been more than enough.

Re: Editorial Slams Ontario's $263m Grant to Ubisoft for ...

That "$300,000 per job" is STUPIDLY misleading.  Take some effort to think please.  If the employee works 5 years, a relatively short time, that 300,000 really means about $60,000 a year, which is well within the salary range of [entry level to experienced] programmers, designers, etc.  Plus, the government is investing in Ubisoft, betting that they wont fold.  This means an even longer period of time to diffuse the cost.  And it doesn't even have to be the same employee for the whole time.  80 jobs for five years means $60,000 per job, regardless of changeover.  And if we assume that the new Ubisoft location will last TEN years, that's only $30,000 per job, a paltry amount even for entry level workers in the computer industry.

 
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