A lot of these deals where the city/state/province contributes funds they do they a percentage of the profit.
The problem is these arenas don't generate a ton of profit or at least not enough versus a normal investment of the funds.
Here's the deal we had here in London, Ontario:
Quote:
The land on which the JLC sits is owned by the city. It is leased for 50 years to the City of London Arena Trust. In turn, the trust has entered into a 50-year lease with the London Civic Centre which owns the building for the length of the lease. In turn the civic centre has a confidential agreement with Global Spectrum of Philadelphia to manage the JLC.
The London Civic Centre is the private side of the partnership. This group contributed $9.5 million of the cost. The city put in $32 million, plus the land which it valued at $10 million. The private sector group assumes the risk for all operating losses and building repair costs, but the financial model also assumed a 12 per cent return on their investment. The city, on the other hand, expected a 1 – 2 per cent return on its investment – and so far, that prediction is bang on.
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Building was built in 2001 I believe and cost $42 million so a ton less than what the building in Calgary will cost. City paid $32 million and expected a 1-2% return on their investment which is better than a kick in the teeth but a pretty low ROI.
You run into issues when the other side of the partnership the Flames in Calgary's case, can manipulate the profit between entities. If they have to share the arena profit with the city, you can bet they are going to feed most of the profit into the Flames and away from the arena with lower rent, higher percentage of concessions, etc.