Calgary city council approves arena deal (UPD: new deal upcoming?)

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muddywaters

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Jul 12, 2006
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Those are some really good ideas, but I think the debate is about who will actually be paying for all of these grandiose ideas.
A new arena is not a grandiose idea in a city our size it's a necessary part of the infrastructure .... we are lucky to have people willing to invest and help our city build this ... as a side note there is a lot of bitter people out there who hate people with money ... very telling .... the type of people who have the kind of money to pull off a project like this are the type of people that make things happen ... and the thing I want to see happen is a shiny new state of the art arena and surrounding area where events happen people can gather .... and the city to do its part and pay its fair share to make it a reality ... we all benefit ...
 
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CanadianCoyote

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Oct 11, 2020
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A new arena is not a grandiose idea in a city our size it's a necessary part of the infrastructure .... we are lucky to have people willing to invest and help our city build this ... as a side note there is a lot of bitter people out there who hate people with money ... very telling .... the type of people who have the kind of money to pull off a project like this are the type of people that make things happen ... and the thing I want to see happen is a shiny new state of the art arena and surrounding area where events happen people can gather .... and the city to do its part and pay its fair share to make it a reality ... we all benefit ...
I mean, I'd put stuff like public transit ahead of a shiny new arena, personally...but then, lots of people seem to be fighting the Green Line tooth and nail anyways.
 

CorbeauNoir

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Apr 13, 2010
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I mean, I'd put stuff like public transit ahead of a shiny new arena, personally...but then, lots of people seem to be fighting the Green Line tooth and nail anyways.

They can't even figure out a sensible way of crossing a river, would you spend billions based on that level of preparedness?
 
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muddywaters

GO FLAMES GO
Jul 12, 2006
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I mean, I'd put stuff like public transit ahead of a shiny new arena, personally...but then, lots of people seem to be fighting the Green Line tooth and nail anyways.
Personally I'd do both ... and with private investors willing to help the city build an arena it's a win win ... a new arena helps spread our brand, raise our profile and is an asset to this city in helping to bring in new business and people at a time when we need it ..... the city of Calgary does benefit ...
 

Ernie

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Aug 3, 2004
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lol there is no economic justification for an arena. Not that it doesn't add value to the city, but it comes at a pretty big cost.

Personally I just hate taxpayers subsidizing private businesses. The NHL has revenues of nearly $5bn, they can afford to pay their own way. Average player salaries might have to go from nearly $4m to under $3m, but think they'd survive.
 
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BKIslandersFan

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lol there is no economic justification for an arena. Not that it doesn't add value to the city, but it comes at a pretty big cost.

Personally I just hate taxpayers subsidizing private businesses. The NHL has revenues of nearly $5bn, they can afford to pay their own way. Average player salaries might have to go from nearly $4m to under $3m, but think they'd survive.
Calgary should dare Flames to move from oil rich Alberta to Quebec City.
 
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tarheelhockey

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Feb 12, 2010
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Personally I just hate taxpayers subsidizing private businesses. The NHL has revenues of nearly $5bn, they can afford to pay their own way. Average player salaries might have to go from nearly $4m to under $3m, but think they'd survive.

That’s not now the CBA works. The players get paid regardless of what capital investments the league decides to make.

Due to COVID the league’s revenues have been stuck at more like $4.3-4.5B for a while now. But let’s take $5B as an assumption going forward. The players get half of that no matter what. The NHL gets the other $2.5B to spread amongst its central operations and 32 franchises.

The Calgary arena is set to cost $550M. For the league to pay for that outright, it would have to spend the equivalent of 20% of a year’s revenue (plus interest if structured as debt) on a single capital project for a single team.

This is why they ask for public assistance. It’s not realistic for an owner or league to finance that kind of money for capital, not counting the even larger operating overhead they are already paying.
 

Ernie

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That’s not now the CBA works. The players get paid regardless of what capital investments the league decides to make.

Due to COVID the league’s revenues have been stuck at more like $4.3-4.5B for a while now. But let’s take $5B as an assumption going forward. The players get half of that no matter what. The NHL gets the other $2.5B to spread amongst its central operations and 32 franchises.

The Calgary arena is set to cost $550M. For the league to pay for that outright, it would have to spend the equivalent of 20% of a year’s revenue (plus interest if structured as debt) on a single capital project for a single team.

This is why they ask for public assistance. It’s not realistic for an owner or league to finance that kind of money for capital, not counting the even larger operating overhead they are already paying.

The league / players split in the CBA is negotiated based on available revenues.

This is not some un-moveable edict set in stone. Local governments have set very bad precedents in subsidizing these businesses.

As for capital projects.. surely you realize they are amortized? So spread that cost out over 30 years, which interestingly enough is close to the number of teams in the league. So the $550m is a good place to start as a yearly league wide infrastructure cost. But that is in Canadian dollars, while we track league revenues in USD. Convert and we end up with $440m.

BUT! most teams either already spend some money on arena rent or own their arenas outright, so it's not like the costs aren't partly being paid. Even the Flames are paying half of the arena.

So let's divide that $440m by two, to estimate what the league would be paying moving forward if they weren't supported with public subsidies. That's $220m.

Then we'll use your number of $4.5bn league revenues. $2.25bn goes to the players. Assuming the infrastructure cost comes out of players salaries, that's just about 10%.

So in summary, players salaries would have to decline by just 10%, from an average $3m to $2.7m, in order to get the league off of public subsidies. Considering that the league has cut salaries by that much or more in two successive lockouts, it doesn't seem like it would be the end of the world.
 

tarheelhockey

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Feb 12, 2010
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The league / players split in the CBA is negotiated based on available revenues.

This is not some un-moveable edict set in stone. Local governments have set very bad precedents in subsidizing these businesses.

As for capital projects.. surely you realize they are amortized? So spread that cost out over 30 years, which interestingly enough is close to the number of teams in the league. So the $550m is a good place to start as a yearly league wide infrastructure cost. But that is in Canadian dollars, while we track league revenues in USD. Convert and we end up with $440m.

BUT! most teams either already spend some money on arena rent or own their arenas outright, so it's not like the costs aren't partly being paid. Even the Flames are paying half of the arena.

So let's divide that $440m by two, to estimate what the league would be paying moving forward if they weren't supported with public subsidies. That's $220m.
Then we'll use your number of $4.5bn league revenues. $2.25bn goes to the players. Assuming the infrastructure cost comes out of players salaries, that's just about 10%.

So in summary, players salaries would have to decline by just 10%, from an average $3m to $2.7m, in order to get the league off of public subsidies. Considering that the league has cut salaries by that much or more in two successive lockouts, it doesn't seem like it would be the end of the world.

The players’ percentage IS set in stone as far as these negotiations are concerned. They can’t just say, “hold up a minute while we rewrite the CBA”.

And do you seriously think the players are going to take a 10% cut to pay for new arenas for the owners? Come on now, imagine your boss saying you need to take a 10% cut to pay for a new office building. It’s not even an ask they could make with a straight face.

Also, you appear to be saying they are going to pay for the arena over 30 years without incurring any interest?

Finally, how does a team paying rent to its own owner cut the capital costs in half? At the end of the day, it’s an owner cutting himself a rent check. Yes it’s more profitable for those who own their arenas outright, but again that leaves the owner on the hook for the entire half-billion capital cost which is unreasonable even for a billionaire.
 

Ernie

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Aug 3, 2004
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The players’ percentage IS set in stone as far as these negotiations are concerned. They can’t just say, “hold up a minute while we rewrite the CBA”.

And do you seriously think the players are going to take a 10% cut to pay for new arenas for the owners? Come on now, imagine your boss saying you need to take a 10% cut to pay for a new office building. It’s not even an ask they could make with a straight face.

Also, you appear to be saying they are going to pay for the arena over 30 years without incurring any interest?

Finally, how does a team paying rent to its own owner cut the capital costs in half? At the end of the day, it’s an owner cutting himself a rent check. Yes it’s more profitable for those who own their arenas outright, but again that leaves the owner on the hook for the entire half-billion capital cost which is unreasonable even for a billionaire.

They can eat the costs in the short term (not a problem for a league worth roughly $20bn) then get it back from the players when they negotiate the next CBA.

As far as the employee relations go, if I was making $3m in salary but had to drop 10% of that because my company had increased costs, would I really be in a position to complain? Too much whining from both players and owners in this league.

Teams will pay interest, yes, but the league certainly could get that interest rate to very low rates by collectivizing the debt, as it currently does with its line of credit. When balanced against inflation, we're not talking about a great deal of money, maybe $20m / year of interest.

To answer your last point, I was averaging. Some teams pay very little in arena costs, other teams cover them completely themselves. So I estimated that teams, on average, cover about 50% of costs themselves.
 

tarheelhockey

Offside Review Specialist
Feb 12, 2010
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They can eat the costs in the short term (not a problem for a league worth roughly $20bn) then get it back from the players when they negotiate the next CBA.

LOL.

As far as the employee relations go, if I was making $3m in salary but had to drop 10% of that because my company had increased costs, would I really be in a position to complain? Too much whining from both players and owners in this league.

This is not how making money works.

Teams will pay interest, yes, but the league certainly could get that interest rate to very low rates by collectivizing the debt, as it currently does with its line of credit. When balanced against inflation, we're not talking about a great deal of money, maybe $20m / year of interest.

You know what makes it a lot harder to carry a bunch of half billion dollar loans? Carrying a bunch of other half billion dollar loans.

Yes this could be done for one building. Could it be done for 32 buildings? Can the league actually carry $16 billion of debt for capital expenses alone? If not, then the model doesn’t work.

To answer your last point, I was averaging. Some teams pay very little in arena costs, other teams cover them completely themselves. So I estimated that teams, on average, cover about 50% of costs themselves.

Makes sense.
 

Ernie

Registered User
Aug 3, 2004
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2,153
LOL.



This is not how making money works.



You know what makes it a lot harder to carry a bunch of half billion dollar loans? Carrying a bunch of other half billion dollar loans.

Yes this could be done for one building. Could it be done for 32 buildings? Can the league actually carry $16 billion of debt for capital expenses alone? If not, then the model doesn’t work.



Makes sense.

It's funny how little people understand about business on a business of hockey forum.
 
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K1984

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Feb 7, 2008
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Just a reminder for some that the volume of "revenue" and "worth" have absolutely no relevance to how much money a business should invest in a capital project.

I'd recommend a certain someone here accusing others of not knowing anything about business do some googling.
 
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Ernie

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Aug 3, 2004
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Just a reminder for some that the volume of "revenue" and "worth" have absolutely no relevance to how much money a business should invest in a capital project.

I'd recommend a certain someone here accusing others of not knowing anything about business do some googling.

Explain how putting 10% of revenues towards capital expenses is excessive.

Spoiler: it's not.
 

Marshmallow Man

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Nov 6, 2020
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Where are we getting this idea that the league pays for a team's arena? Unless things have changed the past few years, that's not the case. Every penny for Edmonton's new arena came from the ownership group, the city, and the province.
 

BKIslandersFan

F*** off
Sep 29, 2017
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Where are we getting this idea that the league pays for a team's arena? Unless things have changed the past few years, that's not the case. Every penny for Edmonton's new arena came from the ownership group, the city, and the province.
I believe NFL threw in some money for Raiders stadium in Vegas.
 

hockeyguy0022

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Feb 20, 2016
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Off topic but related.... any Calgary guys... is stampede going on? Damn could I ever use a good Ranchmanns and Bull bustin night.
 

Mightygoose

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Nov 5, 2012
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Ajax, ON
I believe NFL threw in some money for Raiders stadium in Vegas.

The NFL contributed 200 million through it's P4 program. It's loan made to the team. They do this for every team and I believe it's up to 250 million for renovations.

What that $100 Raiders deposit actually gets you

The team must contribute $500 million beyond its $650 million loan from Bank of America toward the stadium. The NFL will provide $200 million through a loan program earmarked for stadium construction, and the Raiders plan to make up the remaining $300 million through a combination of PSL sales,

NHL has nothing like this to my knowledge
 

Mightygoose

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Nov 5, 2012
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Ajax, ON
Not too many details on what happened a few days ago but got a voting line.

Council approves change to arena deal, but details not yet public | Calgary Herald

"Council discussed the event centre behind closed doors Tuesday, and then approved a series of confidential recommendations when they emerged. One of the items was adopted as a reconsideration, meaning it’s a change from what council previously agreed to in a vote.
Reconsiderations require 10 votes in favour, and it passed 11-3. Coun. Druh Farrell, Jyoti Gondek and Jeromy Farkas were opposed."

11 yes votes was the same count and approved the deal 2 years ago so this change appears to be more 'Flames friendly' but I guess we'll find out more a week this Monday.
 

Mightygoose

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Nov 5, 2012
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Ajax, ON
City, Flames to each put extra $12.5M toward arena, CMLC off project | Calgary Herald

Flames to cover anything above the 25 million overrun that the 2 parties are splitting. Apparently this split was part of the 2019 agreement so it won't need a vote to approve.

More details to come out this week, looks like city will pay more for Saddledome demolition. CMLC will be removed as project manager in lieu of partners the Flames choose in exchange of covering the rest of the overruns.

Project now scheduled to break ground December or early 2022
 
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BKIslandersFan

F*** off
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City, Flames to each put extra $12.5M toward arena, CMLC off project | Calgary Herald

Flames to cover anything above the 25 million overrun that the 2 parties are splitting. Apparently this split was part of the 2019 agreement so it won't need a vote to approve.

More details to come out this week, looks like city will pay more for Saddledome demolition. CMLC will be removed as project manager in lieu of partners the Flames choose in exchange of covering the rest of the overruns.

Project now scheduled to break down December or early 2022
Break ground or break down?
 
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