Quote:
Originally Posted by ComixZone
That's quite speculative, and I don't agree. I'll happily eat crow, but I don't think CSEC is back at the table until the City of Calgary approaches them with something other than a 100% repayment proposal.
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Saying the City's proposal is a 100% repayment model is completely wrong . It comes from the CSEC talking points which anyone with one finance class can tell you are total BS.
First, lets assume CSEC pays $3.57Mln per year in rent for 35 years - which you claim is a 100% repayment of the city's $125 million investment. If we actually discount these cashflows at 7% per year, the true value repaid to the City is $38.7 Mln in today's dollars. This would not even cover the financing costs of the City's investment, let alone repay the capital amount. At most with an annual rental payment (or property tax) the city is asking CSEC to help with the burden of borrowing the city's share of investment.
Second, CSEC claims that the ticket surcharge is part of their contribution. Which might even be more insane than a non discounted 35 year repayment plan. We all know that ticket prices will increase in a new arena (see Edmonton), by a much wider margin than the ticket surcharge. CSEC argues that they would otherwise be able to collect this surcharge for themselves, but this "extra" ticket revenue only exists because of the new arena. And guess what, CSEC inst building the arena all by themselves. CSEC wants us to believe that all additional revenue from increased ticket prices is only attributable to their portion of the investment, and the city's portion of investment does nothing to generate additional revenue.
A ticket surcharge is actually paid for by the city, as it is their share of incremental revenue generated by the arena investment.
CSEC is pushing the Edmonton deal on Calgary, and I hope we are not desperate enough to take it.