Flames 'New' Arena II - 'No it's yours, I insist'

[Frank Booze]

This really isn't about Nenshi and to pinpoint even half of this on him is indeed just lazy scapegoating. He's one vote on the council. He's not in the negotiating room. If enough councillors were in favour of Calgarynext or whatever the Flames were drumming up, then it would happen, no matter how much Nenshi opposed it. But it didn't because even the city councillors recognized how much of a joke Calgarynext was.

Seems pretty straightforward to me; the Flames want the Edmonton deal and at this point in time, aren't willing to settle for less. They don't just want the arena, they also want the stadium, the prime location and free land for developmental opportunities.

And the city isn't at all interested in something like that because Calgary isn't Edmonton. Entirely different situation, entirely different set of needs. Honestly, if this was really just about an arena it would have been done a while go. The cities proposal was a more than generous offer and they were even willing to negotiate further on that.

Agreed. And this is why the two sides are so far apart. I admit that Nenshi rubs me the wrong way as well, but I have appreciated his stance of "If you want the city to be a partner in this, then the financial benefits need to be shared". This is the stance that every mayor should be taking with arena and stadium deals.

If you really break down the Katz deal and the Flames proposals (at least the East Village one due to lack of specifics for Calgary NEXT), it amounts to their contribution being only in the form of rent (upfront from the Flames, yearly for the Oilers). And in both situations the city cannot recover any money they put in from revenue generated directly from the arena. The Flames want the city to own the facility because it allows them to avoid paying property tax, which is fine. This leaves them as a tenant to pay rent, which again is fine. But a tenant should not be receiving 100% of all revenue generated from a facility they do not own. In this situation, the Flames, just the like Oilers, would receive naming rights money from an arena they do not own, and all money associated with advertising in the arena, again in the arena they do not own. This is completely unacceptable.

I have a hypothetical scenario for people to consider. Let's say the city bids for the Olympics and we win the bid. Then the provincial and federal governments chip in some money, and the city decides to use some of that to build a new arena. And then let's say that the city just builds the arena completely on their own, without any "contributions" from the Flames. And then the city tells the Flames that if they want to play in the new arena, they will (a) pay an appropriate amount of rent (b) not receive any revenue associated from naming rights to the building and advertising, because they do not own the building (c) not receive revenue from parking, because again they don't own the land. What would the Flames do in the situation?

 

[Fig]

I hope the new arena has a water slide.

Not more tunnels? Bridges?

 

[Anglesmith]

Agreed. And this is why the two sides are so far apart. I admit that Nenshi rubs me the wrong way as well, but I have appreciated his stance of "If you want the city to be a partner in this, then the financial benefits need to be shared". This is the stance that every mayor should be taking with arena and stadium deals.
If you really break down the Katz deal and the Flames proposals (at least the East Village one due to lack of specifics for Calgary NEXT), it amounts to their contribution being only in the form of rent (upfront from the Flames, yearly for the Oilers). And in both situations the city cannot recover any money they put in from revenue generated directly from the arena. The Flames want the city to own the facility because it allows them to avoid paying property tax, which is fine. This leaves them as a tenant to pay rent, which again is fine. But a tenant should not be receiving 100% of all revenue generated from a facility they do not own. In this situation, the Flames, just the like Oilers, would receive naming rights money from an arena they do not own, and all money associated with advertising in the arena, again in the arena they do not own. This is completely unacceptable.

I have a hypothetical scenario for people to consider. Let's say the city bids for the Olympics and we win the bid. Then the provincial and federal governments chip in some money, and the city decides to use some of that to build a new arena. And then let's say that the city just builds the arena completely on their own, without any "contributions" from the Flames. And then the city tells the Flames that if they want to play in the new arena, they will (a) pay an appropriate amount of rent (b) not receive any revenue associated from naming rights to the building and advertising, because they do not own the building (c) not receive revenue from parking, because again they don't own the land. What would the Flames do in the situation?

How would this situation compare to the current situation with the Flames and the Saddledome? I'm not fully aware of the financial arrangement currently.

 

[Ace Rimmer]

Not more tunnels? Bridges?

New idea

A tunnel, on a bridge, going through a tunnel.

 

[InfinityIggy]

New idea

A tunnel, on a bridge, going through a tunnel.

Inside of a water slide.

 

[JPeeper]

Why can't they just both get along, figure out the money stuff and build this already:

 

[Unlimited Chequing]

New idea

A tunnel, on a bridge, going through a tunnel.

Inside of a water slide.

You guys need to be in charge of public art projects.

Seriously.

 

[Johnny Hoxville]

Haha I love the hat.

Although it might give us a bad name with a certain extremist group.

 

[Snazu]

You guys need to be in charge of public art projects.

Seriously.

 

[Ace Rimmer]

You guys need to be in charge of public art projects.

Seriously.

Are you sure? Last one I was involved with didn't go well.

OK so my involvement was pretty much limited to making arrangements to allow this thing to get power... Basically the equivalent of saying I was involved in the baking of the cake because I washed the dishes.

 

[Johnny Hoxville]

I live by that magnificent circle of art.

 

[InfinityIggy]

Are you sure? Last one I was involved with didn't go well.

OK so my involvement was pretty much limited to making arrangements to allow this thing to get power... Basically the equivalent of saying I was involved in the baking of the cake because I washed the dishes.

Personally I love the giant blue ring. If the goal of art should be to generate discussion, then it was an excellent investment.

 

[Fig]

Are you sure? Last one I was involved with didn't go well.

OK so my involvement was pretty much limited to making arrangements to allow this thing to get power... Basically the equivalent of saying I was involved in the baking of the cake because I washed the dishes.

Your mistake was allowing Oiler colors within Calgary city limits. But that is an easy mistake to correct in all future projects.

 

[Snazu]

Are you sure? Last one I was involved with didn't go well.

OK so my involvement was pretty much limited to making arrangements to allow this thing to get power... Basically the equivalent of saying I was involved in the baking of the cake because I washed the dishes.

I'm still waiting for a pilot to prove his co-pilot wrong and fit a plane through that.

 

[JPeeper]

I don't mind the rooster ring, but the scaffolding and bricks "art" in the south is f***ing stupid.

 

[Ace Rimmer]

I don't mind the rooster ring, but the scaffolding and bricks "art" in the south is ****ing stupid.

I can assure you that I had nothing to do with the shish-kebabs of garbage.

Assuming that's what you're talking about.

 

[Spitfire94]

Agreed. And this is why the two sides are so far apart. I admit that Nenshi rubs me the wrong way as well, but I have appreciated his stance of "If you want the city to be a partner in this, then the financial benefits need to be shared". This is the stance that every mayor should be taking with arena and stadium deals.

If you really break down the Katz deal and the Flames proposals (at least the East Village one due to lack of specifics for Calgary NEXT), it amounts to their contribution being only in the form of rent (upfront from the Flames, yearly for the Oilers). And in both situations the city cannot recover any money they put in from revenue generated directly from the arena. The Flames want the city to own the facility because it allows them to avoid paying property tax, which is fine. This leaves them as a tenant to pay rent, which again is fine. But a tenant should not be receiving 100% of all revenue generated from a facility they do not own. In this situation, the Flames, just the like Oilers, would receive naming rights money from an arena they do not own, and all money associated with advertising in the arena, again in the arena they do not own. This is completely unacceptable.

I have a hypothetical scenario for people to consider. Let's say the city bids for the Olympics and we win the bid. Then the provincial and federal governments chip in some money, and the city decides to use some of that to build a new arena. And then let's say that the city just builds the arena completely on their own, without any "contributions" from the Flames. And then the city tells the Flames that if they want to play in the new arena, they will (a) pay an appropriate amount of rent (b) not receive any revenue associated from naming rights to the building and advertising, because they do not own the building (c) not receive revenue from parking, because again they don't own the land. What would the Flames do in the situation?

"But a tenant should not be receiving 100% of all revenue generated from a facility they do not own."

Why not? If I'm running a business out of a building that I'm renting, why should the landlord be entitled to any of the revenue I make on top of the rent? That doesn't happen in any other business circumstances, why should it happen in this circumstance?

 

[InfinityIggy]

"But a tenant should not be receiving 100% of all revenue generated from a facility they do not own."

Why not? If I'm running a business out of a building that I'm renting, why should the landlord be entitled to any of the revenue I make on top of the rent? That doesn't happen in any other business circumstances, why should it happen in this circumstance?

Pretty much every commercial rental space requires tenants to pay op costs. In the case of things like stadiums, putting on events falls under op costs. Same way it works for any business operating out of a venue that puts on events.

 

[Spitfire94]

Pretty much every commercial rental space requires tenants to pay op costs. In the case of things like stadiums, putting on events falls under op costs. Same way it works for any business operating out of a venue that puts on events.

When you say operational costs, are you talking about the costs to pay for electricity and building maintenance? Because I assumed that was included in the rental fee. I've never heard of a case of a building owner taking extra money from his or her tenants on top of the rental fees because they are running a business out of the building. That seems pretty unreasonable to me.

 

[Flames Fanatic]

When you say operational costs, are you talking about the costs to pay for electricity and building maintenance? Because I assumed that was included in the rental fee. I've never heard of a case of a building owner taking extra money from his or her tenants on top of the rental fees because they are running a business out of the building. That seems pretty unreasonable to me.

As someone who leases over 300,000 square feet of retail and office space for work, it's standard.

Rent is paying to use the space. The landlord does not pay the costs of operating out of the space.

There are leases where it's baked in, but we have leases with some pretty big name tenants (major banks, engineering firms, oil and gas firms, resturants, AHS, etc) and they all pay Op Costs as a separate thing from rent.

 

[1989]

When you say operational costs, are you talking about the costs to pay for electricity and building maintenance? Because I assumed that was included in the rental fee. I've never heard of a case of a building owner taking extra money from his or her tenants on top of the rental fees because they are running a business out of the building. That seems pretty unreasonable to me.

Even if it wasn't standard operating practice in property management (though it is), the scale of a professional sports league event renting out a venue for multiple weeks a year is not standard. Operating costs such as security (pay-duty police/contract/in-house), on-site medical and fire response personnel isn't exactly the same as renting out the community hall for a wedding reception, and those are just some of the personnel (which, by the way, CSEC has so helpfully pointed out that they do not wish to pay for the police presence in/around the building any longer in one of the ongoing proposals) and not even standard property rental costs.

 

[Spitfire94]

The statement I took issue with was "A tenant should not be receiving 100% of all revenue generated from a facility they do not own."

Excluding the cost of rent and utilities (OP costs), why shouldn't they be entitled to the rest of their revenue? They are already paying taxes at the top bracket, why should the city be allowed to shakedown the Flames organization for extra money because they own the building? Not to mention the Flames are operating with thin margins from a weak dollar as it is.

I don't want to see a situation where the city makes such outrageous terms for a new arena that the Flames move.

 

[Flames Fanatic]

The statement I took issue with was "A tenant should not be receiving 100% of all revenue generated from a facility they do not own."

Excluding the cost of rent and utilities (OP costs), why shouldn't they be entitled to the rest of their revenue? They are already paying taxes at the top bracket, why should the city be allowed to shakedown the Flames organization for extra money because they own the building? Not to mention the Flames are operating with thin margins from a weak dollar as it is.

I don't want to see a situation where the city makes such outrageous terms for a new arena that the Flames move.

Because the city wants to follow industry standard?

Generally tenants pay for repairs and maintenance, property taxes, utilities, security, etc.

 

[Anglesmith]

Seems to me like you all agree with one another, and there is just a semantic misunderstanding about what "100% of all revenue" means. Costs and revenue are separate, are they not?

Some of the revenue goes to costs (part of which is rent), sure, but none of it goes directly to the landowner. Everyone agrees with that, right?

 

[Lunatik]

Because the city wants to follow industry standard?

Generally tenants pay for repairs and maintenance, property taxes, utilities, security, etc.

Those costs and have nothing to do with revenue, in fact they are the complete opposite of revenue.

Here is an example of what he means.

Say you rent out a space to a to a company that does trade shows, but during the week things are slow so they host conventions there for extra revenue, would you get a percentage of that new revenue stream.

The answer is no.