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

[Anglesmith]

Hello. Please excuse me. Business fan here, although 'my team' is the Wild. I'm just looking for information about a new Flames facility.

I see that this thread has a large number of recent posts. What has happened to cause this? Is there some new news?

And, if I could perhaps ask another question:
Am I correct that the Flames objected to the 555 split 3 ways because they said that:
1- the 185M is our portion
2- The fans' portion is really our portion because the ticket tax necessitates lower ticket prices than we could charge otherwise, so it really comes out of our pocket
3- The city's share is really our portion, because we are going to be paying property taxes, so they will get that all back, with extra.

That's my recollection.

And, if so, I expect that the final deal will actually be very close to that, except that the city will end up negotiating the property tax rate down as a way of conceding something.

In any case, please fill me in if I am wrong. I'm just interested in how all these arena deals negotiate.

Thanks.

That's pretty much it. And a lot of us are pretty pissed at the team for the team's points 2 and 3, which are basically lies.

 

[flames12]

This has never been about needs. It's a business.

I'm sorry I'm totally against this. No way should Tax Payers be suckered into paying for a private business if they are that profitable they can afford it. They can move I dare them too(they won't)

 

[Bounces R Way]

I'm sorry I'm totally against this. No way should Tax Payers be suckered into paying for a private business if they are that profitable they can afford it. They can move I dare them too(they won't)

The Flames aren't accountable to the tax payers, only their shareholders. They are just trying to get the best possible deal. Can't blame them for that. Some of the methods they've used so far in the negotiations however I can't say I care for. Ditto for Nenshi and the City tbh.

Don't know why both sides seem so hellbent on winning the appeal of public opinion. Public opinion really doesn't matter that much in billion dollar stadium deals. Never has, never will. For a city that prides itself on it's work ethic and pragmatic attitudes it's frankly embarrassing that in over a decade of pursuing a new arena no solutions or compromises have been found.

 

[Ace Rimmer]

NHL teams operating income 2017 | Statistic

This link indicates that the flames made 54 million in operating income. If that is the case why would they need public money?

The same reason(s) that the City of Calgary would like a professional sports team to operate here.

They can move I dare them too(they won't)

Sure, except when you factor in the deal they could get from US cities, where they could theoretically be gifted 100% of the ownership and operation of the arena, and operate tax free (or reduced) costing them exactly $0 to operate.

They could relocate and operate at a loss for decades and still come out ahead. Thing is, they don't need a new arena *yet* so the urgency isn't there. It will be.

 

[flames12]

The same reason(s) that the City of Calgary would like a professional sports team to operate here.

Sure, except when you factor in the deal they could get from US cities, where they could theoretically be gifted 100% of the ownership and operation of the arena, and operate tax free (or reduced) costing them exactly $0 to operate.

They could relocate and operate at a loss for decades and still come out ahead. Thing is, they don't need a new arena *yet* so the urgency isn't there. It will be.

I have a few questions.

1. Is there such on offer in place?

2. Don't the Board of Directors have final say whether an NHL franchise relocates?

3. Also if an NHL owners want's to purchase an NHL franchise why not purchase the Hurricanes, Islanders or Coyotes? They can be had for less money and I'm sure the NHL won't mind having those teams move as opposed to Calgary. I mean is the NHL a better place with a team in Calgary or one of those 3 Cities?

 

[flames12]

The Flames aren't accountable to the tax payers, only their shareholders. They are just trying to get the best possible deal. Can't blame them for that. Some of the methods they've used so far in the negotiations however I can't say I care for. Ditto for Nenshi and the City tbh.

Don't know why both sides seem so hellbent on winning the appeal of public opinion. Public opinion really doesn't matter that much in billion dollar stadium deals. Never has, never will. For a city that prides itself on it's work ethic and pragmatic attitudes it's frankly embarrassing that in over a decade of pursuing a new arena no solutions or compromises have been found.

Calgary City Council isn't accountable to the flames shareholders, but the tax payers.

Murray Edwards is worth in the ballpark of 2.2 billions dollars, why must we finance his project?

 

[Tkachuk Norris]

I'm sorry I'm totally against this. No way should Tax Payers be suckered into paying for a private business if they are that profitable they can afford it. They can move I dare them too(they won't)

There is definitely positives about having an NHL team. And specifically building an NHL building. It will have positive impacts on the economy of at least 200 million. And basically that’s the number the city should contribute. But Murray Edwards is a savvy buisnessman who’s only concern in life is to die with as many million dollars in his bank account...

 

[Lunatik]

NHL teams operating income 2017 | Statistic

This link indicates that the flames made 54 million in operating income. If that is the case why would they need public money?

Just for some clarity "Operating income" is the same as Gross income (before expenses). It is not profit.

For those not familiar with the accounting cycle, this is a pretty basic way to describe operating income:
Operating Income - (Expenses + Depreciation of Assets) = Net Income

In fact, if those numbers are accurate, it means the Flames lost money in 2016-17.

 

[Anglesmith]

Just for some clarity "Operating income" is the same as Gross income (before expenses). It is not profit.

For those not familiar with the accounting cycle, this is a pretty basic way to describe operating income:
Operating Income - (Expenses + Depreciation of Assets) = Net Income

In fact, if those numbers are accurate, it means the Flames lost money in 2016-17.

A quick google search I just did contradicts this. The only thing you subtract from operating income is tax. It is already post-expenses.

 

[Lunatik]

A quick google search I just did contradicts this. The only thing you subtract from operating income is tax. It is already post-expenses.

I misread, my mistake. But I still have my doubt about the accuracy of the link. Also, is that just the Flames, or all of CSEC?

 

[Ace Rimmer]

I have a few questions.

1. Is there such on offer in place?

2. Don't the Board of Directors have final say whether an NHL franchise relocates?

3. Also if an NHL owners want's to purchase an NHL franchise why not purchase the Hurricanes, Islanders or Coyotes? They can be had for less money and I'm sure the NHL won't mind having those teams move as opposed to Calgary. I mean is the NHL a better place with a team in Calgary or one of those 3 Cities?

1. No, but that doesn't mean there won't be. Kansas City immediately comes to mind having a relatively new arena in place. Hell, they could negotiate a sweet deal with Quebec's government and move next season (unlikely considering the same tax rules generally apply, so no special deals for them there) Like I said - Flames ownership doesn't have a reason to move, until they do.
2. Sure. Name a relocation they've blocked.
3. The NHL wants to grow the game in the south, so the Hurricanes and holy shit especially the Coyotes won't be moving after what they've been through, unless it's about to go nuclear. The Isles - I won't pretend to know enough about them to tell you their situation.

 

[Mobiandi]

2. Sure. Name a relocation they've blocked

I'm not sure if they've ever formally blocked a relocation but they've always done everything possible to prevent it from happening.

Arizona and Nashville to Hamilton come to mind

 

[Lunatik]

I'm not sure if they've ever formally blocked a relocation but they've always done everything possible to prevent it from happening.

Arizona and Nashville to Hamilton come to mind

That was more to block the owner than anything, the guy refused to go through the proper channels.

 

[Unlimited Chequing]

That was more to block the owner than anything, the guy refused to go through the proper channels.

I was just thinking about that guy the other day too. What an idiot he was.

 

[Fig]

Hello. Please excuse me. Business fan here, although 'my team' is the Wild. I'm just looking for information about a new Flames facility.

I see that this thread has a large number of recent posts. What has happened to cause this? Is there some new news?

And, if I could perhaps ask another question:
Am I correct that the Flames objected to the 555 split 3 ways because they said that:
1- the 185M is our portion
2- The fans' portion is really our portion because the ticket tax necessitates lower ticket prices than we could charge otherwise, so it really comes out of our pocket
3- The city's share is really our portion, because we are going to be paying property taxes, so they will get that all back, with extra.

That's my recollection.

And, if so, I expect that the final deal will actually be very close to that, except that the city will end up negotiating the property tax rate down as a way of conceding something.

In any case, please fill me in if I am wrong. I'm just interested in how all these arena deals negotiate.

Thanks.

I think some of us were chatting about the arena because we have had time to mull it over and speak with a little more understanding of the situation. We also have nothing else to chat about due to the Flames not having a shot at the post season. Chatting about Gully and Peters and unreasonable trade targets only go so far sometimes.

The Olympic bid rumblings do add to add to our willingness to chat the business side of hockey though, I think.

 

[Johnny Hoxville]

Burke was the reason Nenshi didn’t like the Flames. So the arena will get built now.

 

[Unlimited Chequing]

Burke was the reason Nenshi didn’t like the Flames. So the arena will get built now.

I'm sure whatever was said, Burke was right

 

[Volica]

The arena will be built.
With the grey cup coming our way, and there being more optimism in the city, I think it’ll happen.

I’d be willing to wager the 2020-21 will be played in the new stadium.

 

[Frank Booze]

I'm curious to know what people's thoughts are regarding the ticket tax/user fee being a Flames contribution. From what I understand, the Flames would argue that without a ticket tax, they could just charge that amount as part of their ticket prices.

The issue I have with this is that the Flames cannot charge more for tickets without the new arena first being constructed. Let's say the Flames and City both contributed 50% to a new arena, and part of the new arena was going to be paid off with a ticket tax of $20 per ticket. Why isn't the City entitled to claim $10 of this surcharge as their contribution?

 

[Lunatik]

I'm curious to know what people's thoughts are regarding the ticket tax/user fee being a Flames contribution. From what I understand, the Flames would argue that without a ticket tax, they could just charge that amount as part of their ticket prices.

The issue I have with this is that the Flames cannot charge more for tickets without the new arena first being constructed. Let's say the Flames and City both contributed 50% to a new arena, and part of the new arena was going to be paid off with a ticket tax of $20 per ticket. Why isn't the City entitled to claim $10 of this surcharge as their contribution?

Because the loan would be to the hockey club. They would be on the hook for paying it if they don't sell enough tickets to cover the loan. Even if the city co-signs to get the Flames a better interest rate, the city wouldn't be liable to pay unless the Flames don't pay it.

 

[Ace Rimmer]

I'm curious to know what people's thoughts are regarding the ticket tax/user fee being a Flames contribution. From what I understand, the Flames would argue that without a ticket tax, they could just charge that amount as part of their ticket prices.

The issue I have with this is that the Flames cannot charge more for tickets without the new arena first being constructed. Let's say the Flames and City both contributed 50% to a new arena, and part of the new arena was going to be paid off with a ticket tax of $20 per ticket. Why isn't the City entitled to claim $10 of this surcharge as their contribution?

Technically it's not a "Flames" contribution, it's a contribution directly funded by users of the facility - whether they're going to go see the Flames, the Roughnecks, or Jann Arden (not sure why the hell she came first to my mind, clearly I need more coffee)

I mean they could charge extra whenever they wanted (like the recently announced price hike) but the user fee likely wouldn't be implemented until the new arena was (at minimum) under construction but more likely after it opened. When you bought a ticket, it would be another "charge/fee" on the list, much like the Ticketmaster surcharge/delivery fee. My guess it would be based on percentage of the ticket price. So you'll have the cost of ticket + user fee + ticketmaster charge + delivery charge + GST.

 

[Frank Booze]

Technically it's not a "Flames" contribution, it's a contribution directly funded by users of the facility - whether they're going to go see the Flames, the Roughnecks, or Jann Arden (not sure why the hell she came first to my mind, clearly I need more coffee)

I mean they could charge extra whenever they wanted (like the recently announced price hike) but the user fee likely wouldn't be implemented until the new arena was (at minimum) under construction but more likely after it opened. When you bought a ticket, it would be another "charge/fee" on the list, much like the Ticketmaster surcharge/delivery fee. My guess it would be based on percentage of the ticket price. So you'll have the cost of ticket + user fee + ticketmaster charge + delivery charge + GST.

Hasn't Jann Arden been in some Toyota Rav 4 commercial lately?

I'm trying to make sense of what the Flames offer actually boils down to. I've been referring mainly to the image at https://i.redd.it/kwlzur753cnz.png that shows what makes up the Flames "$275 million dollar contribution". This is what I see.

1. $225 million from a CRL from the city, which doesn't exist. The city has already devoted this to developing the East Village. And even if the CRL was used for the arena, the city wouldn't be allowed to get this money back because the Flames refuse to pay property tax. That defeats the point of a CRL. You take out a loan to develop an area, and then pay it back from the property taxes generated in that same area.

2. $150 from a user fee. I also tend to agree with you that this technically is not a Flames contribution.

3. $125 from the Flames, which they have stated would be a rent payment up front for 35 years.

So, I don't really understand what the Flames are actually contributing. If they are paying rent to use the facility, I don't see that as a contribution to the arena. That's just paying rent, which is an expected cost associated with being a tenant. And furthermore, they are dictating what their rent is going to be. $125 million/35 years = $3.57 million per year. The Flames pay Troy Brouwer more per year than this!

And this doesn't even account for the cost of land and all of the other things the Flames have demanded: All parking revenue, a slice from the Stampede Casino revenue, first dibs on development in the surrounding area, flood insurance, police for any events, and free LRT tickets for anyone attending the event, etc. (I am sure I missing something)

Why are members of City Council taking the initiative to start talks with the Flames based on this being "the best offer they can provide"? And then the Flames have the nerve to say "We doubt the city has changed anything in their position", as if implying that the offer the city made was completely unreasonable.

 

[Ace Rimmer]

I think everyone is on the same page regarding the Flames' offer for Victoria Park...

It’s garbage.

My guess? The Flames don’t want the arena there. They want Calgary Next in the west village because of the development potential / value of the land ($$$) once the pollution is cleaned up.

One of these days I’m going to try and calculate the property tax on the arena based on the city’s valuation for chits and giggles.

 

[herashak]

I don’t get why some of these big concert companies like live nation don’t step up and throw in like 100M and be the main concert/ event holders.

The flames haven’t really made any reference to the concert revenue opportunity besides just saying big concerts go to Edmonton. This is fair because their a sports company but having a real concert company involved in the building process will probably help the final product.

The whole argument between the city and flames looks a bit like an avoidance to deal with construction and architectural design firms. The Calgary next presentation really made it look like they spent little time with professionals in the sports complex industry.

 

[Frank Booze]

I think everyone is on the same page regarding the Flames' offer for Victoria Park...

It’s garbage.

My guess? The Flames don’t want the arena there. They want Calgary Next in the west village because of the development potential / value of the land ($$$) once the pollution is cleaned up.

One of these days I’m going to try and calculate the property tax on the arena based on the city’s valuation for chits and giggles.

The sad thing is that the Calgary NEXT proposal is actually worse. From the $890 million dollar cost of the facility, the funding breaks down as follows.

1. $240 million from the city from a CRL. Again, the Flames refuse to pay property tax so there is no way to make even a single cent to pay this loan off. And this doesn't even account for the fact that the land needs to be remediated in the first place!

2. $250 million from a ticket tax. Again, we seem to be in agreement that this is technically not a Flames contribution.

3. $200 million from the city for a "field house". The city doesn't have money for this, and it's not really a field house. It's a stadium for the Stamps to play in.

4. $200 million from the Flames, in the form of upfront rent for 35 years. Once again, this isn't a contribution, and the Flames are dictating their rent. That's just $5.71 million dollars per year for both the Flames and Stamps to use the facility.

So the city spends close to $2 billion dollars to clean up the land and give the Flames and Stamps a free facility where they will collect 100% of all revenue. And the city gets back $5.71 million a year for 35 years.

I actually thought the Calgary NEXT project was never a serious consideration from the Flames. It seemed to me that they proposed this (and for sure knew this proposal would never be accepted) so that they would be seen as "making a compromise" to look at the Victoria Park option, thereby giving them justification to ask for more money for Plan B "to be economically viable".

I don’t get why some of these big concert companies like live nation don’t step up and throw in like 100M and be the main concert/ event holders.

The flames haven’t really made any reference to the concert revenue opportunity besides just saying big concerts go to Edmonton. This is fair because their a sports company but having a real concert company involved in the building process will probably help the final product.

The whole argument between the city and flames looks a bit like an avoidance to deal with construction and architectural design firms. The Calgary next presentation really made it look like they spent little time with professionals in the sports complex industry.

I guarantee that the Flames will demand they manage all concerts, in order to receive all revenue from them. And they will likely ask the city to pay a "management fee" to them to do so. The logic is sound! The city will pay the Flames millions of dollars per year to manage the arena, and in return the city will receive no revenue. I'm pretty sure the city of Glendale agreed to something similar to this with the Coyotes, before finding a loophole to break the agreement because it made no sense in the first place.