I have been crunching some numbers here based on the Flames’ claim that it makes more sense to stay in the saddledome versus the city’s plan.
Some assumptions:
1. 2,000,000 people go through the saddledome/new arena every year.
2. 4% interest earning potential on costs if they were used elsewhere (I.e. if the Flames put in $275 million, they don’t have $275 million to Invest elsewhere - getting a 4% ROI. If someone smarter than me can give me a better percentage to use, I can change my spreadsheet)
I’m looking at 3 different options vs the current model (playing in the Saddledome) - The Flames’ proposal, the City’s proposal assuming the ticket tax isn’t a Flames ownership cost, and the city’s proposal assuming that the ticket tax IS a Flames ownership cost.
Ok, here we go:
Option 1 (City Proposal, Ticket Tax isn’t an ownership cost)
The Flames ownership puts in $185 million. The lost investment potential at 4% is $7.4 million per year. According to Nenshi’s conference, they city could offer a negotiated property tax of $5 million per year.
$7.4 + $5 = $12.4 million per year
Divide by 2,000,000 people through the doors every year to get the additional revenue required to break even =
$6.20 per person through the doors
Option 2 (City Proposal, Ticket Tax is part of the owner’s contribution)
The Flames owners put in $370 million. The lost investment potential at 4% is $14.8 million per year. Again, the property tax per year would be negotiated at $5 million.
$14.8 + $5 = $19.8 Million per year.
Divide by 2,000,000 =
$9.90 per person through the doors.
Option 3 - Flames’ Proposal
The Flames ownership puts in $275 million. The lost investment potential at 4% is $11 million per year. In the Flames’ proposal, they do not pay rent or property tax.
$11 million
Divide by 2,000,000 people through the doors every year =
$5.50 per person through the doors.
In Summary, the additional revenue required (averaged across every person who comes through the doors) is:
Flames proposal: $5.50
City Proposal Ticket Tax not counted as owner contribution: $6.20
City Proposal - Ticket Tax is counted as owner contribution: $9.90
As has been discussed, even if ticket tax is counted, it does get offset by that revenue coming back not getting counted as HRR, which means they don’t have to give 50% to the players.
Also, This is assuming that a new arena can’t bring any new events.
The worst case scenario is a difference of $4.40 per attendee of revenue between the Flames proposal and the worst case scenario presented by the city.
But also, apparently (since the Flames publicly said that staying in the Saddledome is better for them), The Flames don’t think they can charge even $10 more per ticket in a new arena than they do now. We all know that the intention would be to jump up ticket prices by an average of more than $10 - even before the ticket tax. And that’s assuming that they can’t get more money out of connections, naming rights, luxury boxes, other sponsorships, etc.
Final Summary - The Flames’ claim that they are better off in the Saddledome than under the City’s proposal is patently false, and completely absurd.
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