The Official Calgary Flames "New Arena" thread

[conundrumed]

A city barely removed from bankruptcy:

 

http://www.districtdetroit.com/news/detroits-new-little-caesars-arena-opens-today

[travel_dude]

6 minutes ago, conundrumed said:

A city barely removed from bankruptcy:

 

http://www.districtdetroit.com/news/detroits-new-little-caesars-arena-opens-today

 

I'm not sure of the funding model for this, but I imagine there is "public" money.  Do you have any details on it?

 

[xmiika]

17 minutes ago, conundrumed said:

A city barely removed from bankruptcy:

 

http://www.districtdetroit.com/news/detroits-new-little-caesars-arena-opens-today

The arena was supposed to cost $444M out of that public money to be used was going to be $283M. Now the actual cost was $862M and then this:

 

"The Downtown Development Authority, the public entity that owns the arena, is expected to collect $726 million in school property tax revenue through 2051 as part of its tax increment financing. The money will be used to pay off $363 million in bonds for public investments in the arena and the surrounding development district." Link

 

That is a horrible prospect! For the next 33 years $726M will be used towards the arena that was supposed to be used solely for schools!

[YounGuns]

I would love another a new arena in Calgary, but I don't agree with using public money that is required for schools, hospitals, and various other public projects that everyone gets to use and serves the general Calgary public.  Arena's serve only a very specific (and often upper class) portion of the public, so why use general tax dollars for it?  Calgary is in a recession, and the city is struggling to pay for school renovations, the new cancer center, and various other important projects.  The South hospital had to open half complete because the city ran out of money to complete the construction.  It's hard to justify spending hundreds of millions of dollars on an entertainment complex when the city is struggling to properly renovate schools and build hospitals.

 

Here's an article that I think does a good job putting things into perspective:  http://www.thehockeynews.com/news/article/c-mon-calgary-flames-billionaire-owner-can-build-his-own-arena

 

However I can see the hesitation from ownership to pony up their own cash to build a billion dollar project....even though the Flames are profitable, and they would also make revenue from all other events held at the new arena, how long would it take to get a return on investment for a billion dollar investment?  They would likely be dead before they make a dollar back.

 

And so the jostling continues.  The Flames will stay in Calgary, and at some point will get a new arena, how it all pans out will be interesting to see.

[conundrumed]

On 4/1/2017 at 11:56 AM, conundrumed said:

There's a lot of good info on it in wiki and the Detroit Free Press.

Why can't we be owned by the Ilitch's, hahaha.

They got $250mil from the city in bonds sold to Merrill Lynch. The city intends to pay it off with increase in tax base in the pretty much "nothing was there" neighbourhood.

Another $200mil for state issued bonds the Ilitch's will pay back to Comerica Bank, that bought the bonds.

The initial estimate for the arena was $450mil. Actual will be around $650mil. From the getgo, the Ilitch's said they'd cover any overruns off of original, in fact, threw an extra $100mil in upgrades to it on purpose.

Olympia Holdings, an Ilitch company, has brought in much investment and developers into the area. The total cost of arena and surrounding "entertainment district" is expected to be $1.2bil. Much of that is private investors Olympia has secured.

Like that wasn't enough, the Ilitch's donated $40mil to Wayne State University in Detroit to build a new School for Business building...

Mike Ilitch was a businessman too, just like KK.

He just happened to be a really good one...

Detroit just got out of bankruptcy maybe 18 months ago, so the "economic climate" argument falls on deaf ears.

We have ginormous corporations in Calgary, shouldn't be hard to find investors...if you're Mike Ilitch...

Page 17 of this thread.

xmiika, you totally read that article wrong. Why would they be relying on education tax base? That makes no sense.

[cross16]

Council just voted 8-4 to make details of the negotiations public. Sounds like in the next few days we will learn details of both sides the proposal but rumors are, and Nenshi confirmed this was part of it, was the breakdown was a 1/3 -1/3-1/3 cost split between Flames - City - and a ticket surcharge/tax.

 

https://twitter.com/meyer_lucas/status/908030850121351168

[conundrumed]

4 minutes ago, cross16 said:

Council just voted 8-4 to make details of the negotiations public. Sounds like in the next few days we will learn details of both sides the proposal but rumors are, and Nenshi confirmed this was part of it, was the breakdown was a 1/3 -1/3-1/3 cost split between Flames - City - and a ticket surcharge/tax.

 

https://twitter.com/meyer_lucas/status/908030850121351168

Yay ticket surcharge, they aren't too expensive already. To build in the same big flood plain area that is devoid of any kind of positives, oh yay.

Just build it near Cross Iron Mills, for that matter.

None of this is viewed as investment, at all. Just loss.

KK can't pull in investors and the city wants the cheapest solution.

Please, do sell the Flames, to the downtown conglomerates, there's enough of them.

There are times I feel the Flames are more a hobby than a business.

[xmiika]

1 hour ago, conundrumed said:

Page 17 of this thread.

xmiika, you totally read that article wrong. Why would they be relying on education tax base? That makes no sense.

No I certainly didn't. The Downtown Development Authority (DDA) is collecting property taxes from the downtown area (not just from "nothing was there" neighbourhood) and using most of them towards funding for schools in Detroit. This property tax is public funding and now a huge chunk of it is going towards funding the new arena and therefor less amount of public funds are going towards schools. There's a lot of good info on it in DDA's and the Detroit City Council's websites.

 

The idea here is that public funds are for the public. A brand new arena will never pay for itself. The CSEC needs to share revenue with the City of Calgary, because it is a very affordable loan when public funds are used and it needs to be paid back rather sooner than later. The ripple effect has been researched numerous times and it never comes even close to boost the public portion of the economy than what was proposed.

 

One could ask: "Where is the capitalism when it comes to privately owned professional sports teams?"

[The_People1]

45 minutes ago, xmiika said:

 

One could ask: "Where is the capitalism when it comes to privately owned professional sports teams?"

 

You make too much sense.

 

Ever heard of Too Big To Fail?  It's when giant corporations adopt failed business models and can't make money so they use the government to straight up take public money to survive so they can continue running a failed business model and outright take public money again down the road.

[conundrumed]

1 hour ago, xmiika said:

No I certainly didn't. The Downtown Development Authority (DDA) is collecting property taxes from the downtown area (not just from "nothing was there" neighbourhood) and using most of them towards funding for schools in Detroit. This property tax is public funding and now a huge chunk of it is going towards funding the new arena and therefor less amount of public funds are going towards schools. There's a lot of good info on it in DDA's and the Detroit City Council's websites.

 

The idea here is that public funds are for the public. A brand new arena will never pay for itself. The CSEC needs to share revenue with the City of Calgary, because it is a very affordable loan when public funds are used and it needs to be paid back rather sooner than later. The ripple effect has been researched numerous times and it never comes even close to boost the public portion of the economy than what was proposed.

 

One could ask: "Where is the capitalism when it comes to privately owned professional sports teams?"

Fair enough, you have an anti agenda.

I'm just discussing.

The Ilitch's and Olympia got $200mil in bonds from the city. $250mil from the state. That doesn't cover half of the $1.2bil tag.

If I remember correctly, Olympia pays the state bond off and any interest on the city bond.

Seems extremely fair.

[cross16]

29 minutes ago, The_People1 said:

 

You make too much sense.

 

Ever heard of Too Big To Fail?  It's when giant corporations adopt failed business models and can't make money so they use the government to straight up take public money to survive so they can continue running a failed business model and outright take public money again down the road.

 

Yup. If arena deals like this were so profitable and beneficial you'd have investors lining up to get a piece. Fact that its beocme the norm for pro sports teams to need so much public money tells you how economically viable these projects are. 

 

Quote

Sources tell Rogers Media the Flames sourced the cost of an arena at Victoria Park at roughly $500 million, while the City pegged it at roughly $600 million.

It’s a similar cost to Rogers Arena in Edmonton, which totaled just under $614 million.

The city offered to pay one-third of the cost, which would have to be repaid, while a ticket surcharge would pay for another third and the final third by the CSEC, sources said.

One source also said the Flames wanted the building property tax and rent free, a major sticking point for the city.

http://www.660news.com/2017/09/13/nenshi-responds-flames-ending-arena-talks-calls-city-offer-reasonable/

 

I"m sure the Flames have their version of "facts" and i'll wait to see everything but so far it sure looks like Flames are walking away from a fair process here. Sounds to me like King and co only want an arena on their terms and have used take it or we'll leave tactics. 

 

[The_People1]

4 hours ago, cross16 said:

Council just voted 8-4 to make details of the negotiations public. Sounds like in the next few days we will learn details of both sides the proposal but rumors are, and Nenshi confirmed this was part of it, was the breakdown was a 1/3 -1/3-1/3 cost split between Flames - City - and a ticket surcharge/tax.

 

https://twitter.com/meyer_lucas/status/908030850121351168

 

Sounds on radio like the Flames feel the 1/3 coming from a ticket surcharge is their money so therefore the Flames are paying 2/3 of the project.

 

In a way, they are right.  Ticket prices are what the market can bare.  If a surcharge is added, then the flames have to lower ticket prices.  Ultimately, that means the flames are paying that 1/3.

 

The Flames want something more 50/50.

 

Of course the argument can be made the Flames should pay 100%.  They are lucky the city is willing to pay in 1/3.

[The_People1]

4 hours ago, conundrumed said:

Yay ticket surcharge, they aren't too expensive already. To build in the same big flood plain area that is devoid of any kind of positives, oh yay.

Just build it near Cross Iron Mills, for that matter.

None of this is viewed as investment, at all. Just loss.

KK can't pull in investors and the city wants the cheapest solution.

Please, do sell the Flames, to the downtown conglomerates, there's enough of them.

There are times I feel the Flames are more a hobby than a business.

 

The Flames have proposed a $1.8-billion multi-sport facility on the West side of downtown  The city has countered with a $600-mil single sport solution East side of downtown.

 

So obviously, middle ground is a $1.2-billion multi-venue project smack in the middle of downtown.

 

Right? Lol

[xmiika]

2 hours ago, conundrumed said:

Fair enough, you have an anti agenda.

I'm just discussing.

The Ilitch's and Olympia got $200mil in bonds from the city. $250mil from the state. That doesn't cover half of the $1.2bil tag.

If I remember correctly, Olympia pays the state bond off and any interest on the city bond.

Seems extremely fair.

I am just saying no public funds to help out a private business in this magnitude at this time. But I'm not against a new arena. They need to negotiate a fair deal for both sides. I'm glad the proposals are going to be published so we can evaluate and make up our minds what's fair and what's not. The fact still remains if we use a huge chunk of puplic funds now to a new arena there's less public funds to be used elsewhere for several years whether the funds are going to be paid back or not. I don't want to see other important public projects to be crippled by this arena deal.

 

And it's not really fair to say that you are just discussing and I have an anti agenda. Not really a valid argument since I am just presenting a different view on the same matter we are discussing about.

[xmiika]

3 hours ago, The_People1 said:

 

You make too much sense.

 

Ever heard of Too Big To Fail?  It's when giant corporations adopt failed business models and can't make money so they use the government to straight up take public money to survive so they can continue running a failed business model and outright take public money again down the road.

I've heard about it but never watched the movie or read the book. Sounds a lot like the Big Short. That was a depressing movie! Maybe next time when I'm feeling too happy I'll have a look ?

[Thumper17]

Would really appreciate the Mayor and Flames ownership acting like adults about this. They both need to make some sacrifices.

[The_Tribal Chief]

i have heard it was cause calgary refused to pay a rent on the new building

[CheersMan]

15 hours ago, xmiika said:

I am just saying no public funds to help out a private business in this magnitude at this time. But I'm not against a new arena. They need to negotiate a fair deal for both sides. I'm glad the proposals are going to be published so we can evaluate and make up our minds what's fair and what's not. The fact still remains if we use a huge chunk of puplic funds now to a new arena there's less public funds to be used elsewhere for several years whether the funds are going to be paid back or not. I don't want to see other important public projects to be crippled by this arena deal.

 

And it's not really fair to say that you are just discussing and I have an anti agenda. Not really a valid argument since I am just presenting a different view on the same matter we are discussing about.

Imagine for a moment the city of Calgary without the Flames, or Toronto without the Maple Leafs or Montreal without the Canadians or NY without the Rangers.  These teams not only entertain each fan base but they stimulate their city/state/provincial economy in unimaginable ways.  How many dollars would you estimate exchanged hands due to just one regular season or playoff game?  Planes, trains, buses, cars, restaurants, hotels, etc are all receiving the benefits of having an NHL team in their city.  To say zero public money should be given to a business that stimulates the economy on a regular basis would be rather narrow minded.  I prefer a dynamic city that offers various entertainment venues even though I can not support all.  I certainly don’t mind supporting the proposed structure which provides the largest entertainment value for this city.  For those who prefer stoic and less dynamic municipalities there are plenty of those in rural AB that would love your support.  

[cross16]

16 hours ago, The_People1 said:

 

Sounds on radio like the Flames feel the 1/3 coming from a ticket surcharge is their money so therefore the Flames are paying 2/3 of the project.

 

In a way, they are right.  Ticket prices are what the market can bare.  If a surcharge is added, then the flames have to lower ticket prices.  Ultimately, that means the flames are paying that 1/3.

 

I hope they can clarify the ticket tax/surcharge. I've heard Ken King talk about it before and the way he explained it was the Flames already have one and right now it's just kept as local revenue and doesn't get included as part of their general revenue reporting (in terms of the CBA i mean). To pay for the building they would be essentially moving the money from that tax from their own revenue to stream over as payments towards the building but it would not result in a new tax. I mean let's be honest tickets will go up with a new building as it is anyway but depending on the structure the Flames may not actually "lose" money if that makes sense but he only touched on it briefly so i'm not sure I heard him correctly or not. 

 

From what I can gather the City would be fronting the Flames their 2/3 of the project as essentially an interest free loan and then expecting CESC to basically pay back principle only via the ticket tax and rent payments over 30 years on the building. So while Nenshi was making it sound like the City would be paying 1/3 that doesn't really appear accurate based on what i've read/heard. Sounds like the Flames have no interest in paying 1/3 AND making rent payments which I personally find pretty unreasonable. 

 

That's not an unfair deal. Slants towards the city but IMO it should and I think CESC is not going to look good for walking away here. They will end up paying for the vast majority of it and given what happened in Edmonton I can see why they would be frustrated and walk away but as I said before I don't think the Edm deal is fair to the city and they should realize that. End of the day is if this is enough for CESC to break off talks and look into moving then CESC will lose all of my respect. 

 

 

[MAC331]

Ever hear the saying "timing is everything" and this isn't a good time in Calgary to be making such a decision.

[DKim]

1 hour ago, CheersMan said:

Imagine for a moment the city of Calgary without the Flames, or Toronto without the Maple Leafs or Montreal without the Canadians or NY without the Rangers.  These teams not only entertain each fan base but they stimulate their city/state/provincial economy in unimaginable ways.  How many dollars would you estimate exchanged hands due to just one regular season or playoff game?  Planes, trains, buses, cars, restaurants, hotels, etc are all receiving the benefits of having an NHL team in their city.  To say zero public money should be given to a business that stimulates the economy on a regular basis would be rather narrow minded.  I prefer a dynamic city that offers various entertainment venues even though I can not support all.  I certainly don’t mind supporting the proposed structure which provides the largest entertainment value for this city.  For those who prefer stoic and less dynamic municipalities there are plenty of those in rural AB that would love your support.  

 

Imagine the Flames without the City of Calgary.  If they are foolish enough to go to somewhere like Seattle, they will NOT have it as good as they do here.  I laugh at their thinly veiled, and empty, threats to move the franchise.  They are more than a handful of clubs that would LOVE to switch places with us, dilapidated arena and all.  In fact, it really pisses me off.

 

While I agree that there is an economic effect from having a sports team in the city.  That effect does not, in a direct way, translate into an ability for the City to collect higher property taxes.  Your argument makes more sense to the Federal, and to a lesser extent the Provincial government who receive most of the benefit of the increased tax revenue, and both are going to contribute zero to a new arena.  If you want City money, then it has to be tied to some sort of revitalization or redevelopment initiative (to increase property taxes), and then you must comply with what is in the best interests of the City.

 

This is not about being stoic, it is about not being strong armed into a bad deal.  Calgary is much more than the Flames, but the Flames are not much without Calgary.

[cross16]

40 minutes ago, DKim said:

 

Imagine the Flames without the City of Calgary.  If they are foolish enough to go to somewhere like Seattle, they will NOT have it as good as they do here.  I laugh at their thinly veiled, and empty, threats to move the franchise.  They are more than a handful of clubs that would LOVE to switch places with us, dilapidated arena and all.  In fact, it really pisses me off.

 

While I agree that there is an economic effect from having a sports team in the city.  That effect does not, in a direct way, translate into an ability for the City to collect higher property taxes.  Your argument makes more sense to the Federal, and to a lesser extent the Provincial government who receive most of the benefit of the increased tax revenue, and both are going to contribute zero to a new arena.  If you want City money, then it has to be tied to some sort of revitalization or redevelopment initiative (to increase property taxes), and then you must comply with what is in the best interests of the City.

 

This is not about being stoic, it is about not being strong armed into a bad deal.  Calgary is much more than the Flames, but the Flames are not much without Calgary.

 

Really good post. I agree 100% but you laid it out perfectly.

 

to be clear I don't want the Flames to leave and I don't think they will, but I also think that if they did Calgary would get phone calls from other owners wanting to move here. This is an extremely attractive market for hockey and the NHL isn't going to leave it untouched. 

 

Edit: Good summary in this article I think about the pros and cons of public funding towards arena projects and some of the issues I think CESC needs to overcome asking for sure a high amount of public funds

 

http://www.cbc.ca/beta/news/business/sports-facilities-subsidies-1.4289149

[cccsberg]

6 minutes ago, cross16 said:

Imagine the Flames without the City of Calgary.  If they are foolish enough to go to somewhere like Seattle, they will NOT have it as good as they do here.  I laugh at their thinly veiled, and empty, threats to move the franchise.  They are more than a handful of clubs that would LOVE to switch places with us, dilapidated arena and all.  In fact, it really pisses me off.

 

While I agree that there is an economic effect from having a sports team in the city.  That effect does not, in a direct way, translate into an ability for the City to collect higher property taxes.  Your argument makes more sense to the Federal, and to a lesser extent the Provincial government who receive most of the benefit of the increased tax revenue, and both are going to contribute zero to a new arena.  If you want City money, then it has to be tied to some sort of revitalization or redevelopment initiative (to increase property taxes), and then you must comply with what is in the best interests of the City.

 

This is not about being stoic, it is about not being strong armed into a bad deal.  Calgary is much more than the Flames, but the Flames are not much without Calgary.

If the Flames moved to the US all of their income would be US$ which automatically improves their income by anywhere from 20-35% due to the exchange rate.  If they moved to a huge population area like Seattle, which is roughly 3-4 times the population base as the Calgary area, there is a much stronger population base to pull in fans, not to mention local TV contracts which are pretty much non-existent here.  Seattle also has several mega-companies, e.g. Boeing and Microsoft that dwarf anything in Calgary so even though Calgary does have a huge corporate base I don't think Seattle is losing anything in that regard.  They may actually be better.  To imagine that the Flames are not much without Calgary may sound good as a homer Calgarian, but really its nonsense.  

 

As far as the Flames' tactics go, sure it seems pretty standard fare, but really take a look at the Dome.  It just got flooded (2013) and remains in a floodplain surrounded by parking lots and dilapidated housing.  What's being developed is 100% Stampede which might be good for them, and Calgary but not sure if it enhances the CSEC at all.  The Dome has roof design issues that result in the loss of a lot of high-level concerts and events, limiting income opportunities.  I've heard 30-something event losses in the past year... which seems like quite a lot.  The concourse level at the Dome is pretty bad.  Overcrowding is the name of the day and I'm somewhat surprised the fire marshall is OK with it.  Bathrooms...need I say more?  Food...need I say more?  Although the team can keep playing there, which they will, the deficiencies will become more and more a detriment as time goes on.  As far as other teams being ready to switch with us, may be but is the NHL going to encourage much less allow that?  Very doubtful.  Finally, good points about taxes.  The Province and Feds should be involved in the discussions somehow because they are definitely benefitting from taxes.  We may have to wait until the Olympics talks really heat up, and perhaps that may be the bottom line thing the Flames are waiting for-the Olympics discussion which automatically brings the Province and Feds to the table.

 

 

[travel_dude]

I have to ask this because I am not fully understanding the city's "offer".

In effect the city is paying nothing for the new arena as a backstop to the revitilization of the area around the proposed site.

There will be an investment in the area for the other projects.  There will be new restaurants etc.  

 

So, the city pays upfront towards the cost of building it, by the way of loans that the CSEC has to pay back starting at once.

The Flames pay 1/3.  The ticket levy pays for another 3rd.  

 

What exactly is the city paying for with the new arena?  I see nothing.  Is that the jist of it?

[The_People1]

56 minutes ago, cross16 said:

 

Really good post. I agree 100% but you laid it out perfectly.

 

to be clear I don't want the Flames to leave and I don't think they will, but I also think that if they did Calgary would get phone calls from other owners wanting to move here. This is an extremely attractive market for hockey and the NHL isn't going to leave it untouched. 

 

Edit: Good summary in this article I think about the pros and cons of public funding towards arena projects and some of the issues I think CESC needs to overcome asking for sure a high amount of public funds

 

http://www.cbc.ca/beta/news/business/sports-facilities-subsidies-1.4289149

 

Totals.

 

Except, who the hell will move here to the Saddledome?  The answer is nobody. 

 

So therefore, if the Flames move away, then we will have to build a new arena from scratch to attract a team to move here or to attract an expansion franchise.  We as Calgary is back at square one, or worse, we have to build a new arena and pay 100% of it.

 

This is of course, the exact conversation the flames want us fans to have.  And we are falling right into their trap.