Flames to announce plans to announce arena plans in the... future...

[Caged Great]

What they should do is allow the Flames to build retail space in addition to a hotel and the stadium(s) sort of like the lighthouse project Wang was wanting in New York.

[Cleveland Steam Whistle]

Originally Posted by nfotiu

Tax breaks are one thing, but are there good examples of government directly subsidizing buildings to be used by private companies? Worth mentioning too is that public money spent on sports franchises has been demonstrated to provide about the worst economic value of all public spending. That money doesn't typically get paid back in things like increased tax revenue, job creation, and a good chunk of it leaves the community. The only real value is the mostly intangible value a sports franchise brings to the community.

The whole economics of sports is so distasteful. The most simplistic way to look at it is why should tax payers have to pay higher taxes so that 20 hockey players can make 70 million per year instead of having the team pay for their own building and paying the players 50 million a year. I have no issue with a hockey player making 10 million a year if that's what the public is willingly paying towards that entertainment. I do have a problem when 2-3 million of that comes from taxes that we are forced to pay (not to mention the $60 a year every cable subscriber pays for the RSN that 80-90% of them don't even watch).

But each city is not a vacuum and they have to compete against the other cities who are willing to subsidize their buildings. I just wish all the levels of government would get together and agree to stop this madness.

I'm not sure on the building subsidies, but the saying "same sh#t different pile" applies here. In reality, it makes no difference if it's a tax break, subsidy on something else or a building, it's still either money going out or not coming in that as you mention costs the average citizen tax payer dollars.

I also don't agree that it's been wildly proven that sports investment is the worst. I'm not saying it's not, I don't know, but people on one side of the argument often just throw that out, and provide no back up. The best attempt at backing that argument I ever saw came from someone who posted some academic papers making this claim, but those papers had 0 math or business case attached to them backing it up. I think where often those thoughts go wrong is they focus on the employment created by sports teams (and bulk of payroll spent) going to athletes who spend little time in the city they are employed in, and therefore don't spend their "salaries" in the region.

While that is true, it's certainly not where the bulk of the benefit of a sports team benefit would be created for a city. Sports teams certainly don't create value for a community because they employee high paid athletes.

The bottom line, is it's impossible for the Calgary Flames not to create SOME value and benefit for this city. It will come from 4 main pillars IMO:

1. Direct employement from the team - Not the players, but the jobs created to run the team and facility.

2. In-Direct business creation and employement - The number of business that survive and exist because of game / event traffic (Restaurants and Bars that require the event to drive people into their establishments, stores like the Fanatic)

3. Quality of life benefits - what I mean here, is the benefit the region get in being an appealing place to live because the city can offer things that people want (like sports teams, concerts, art, plays, etc...) and therefore people want to locate their businesses or offices here and create jobs.

4. Charitable contribution back to the community - Flames foundation etc..

As you can see, as you go down the above list, the benefits start to become more arms length, and therefore more subjective and difficult to measure.......but a benefit to the city and region still surely exists.

Now, what I will say, is I have no idea what the above is worth, and don't pretend to. It might be very minimal, minimal to the point that any substantial public money towards a new arena or the Flames in any fashion might not make sense. But the fact remains, the city benefits from the Flames, at least a little, and because of that should have some "stake" in making them viable to stay. What level of "stake" and whether some of the numbers being thought of on this arena project are even reasonable, that is certainly another question and up for debate.

[CliffFletcher]

Okay, so let's assume the owners just want to support NHL hockey in Calgary, and a new arena has enough value to the citizens of Calgary that it's judged worthwhile put up half the money for the project. Then why shouldn't the city simply assume 50 per cent ownership of the arena, and take in 50 per cent of the revenue from it?

[Table 5]

Originally Posted by CliffFletcher

Okay, so let's assume the owners just want to support NHL hockey in Calgary, and a new arena has enough value to the citizens of Calgary that it's judged worthwhile put up half the money for the project. Then why shouldn't the city simply assume 50 per cent ownership of the arena, and take in 50 per cent of the revenue from it?

That's my thinking too. If we're going to put in money, fine. But then we better be getting a cut of the profits too.

[Cleveland Steam Whistle]

Originally Posted by CliffFletcher

Okay, so let's assume the owners just want to support NHL hockey in Calgary, and a new arena has enough value to the citizens of Calgary that it's judged worthwhile put up half the money for the project. Then why shouldn't the city simply assume 50 per cent ownership of the arena, and take in 50 per cent of the revenue from it?

Same could be said on any business that locates in Calgary then (large business). Just like with any business, I assume it's because they prefer to provide to give the one time hand out / or arms lengthy hand out (like a tax break) so they don't assume the responsibility and risk of running the business.

If the city becomes the owner of the building, they are on the hook for paying for 50% of the costs of running that facility moving forward. I'm sure they'd rather make the up front payout, then reap the 2nd order benefits after the fact.

Investing XX dollars in something that you feel will generate XX benefit for you for XX years in the future (life of the building in this case) is a much different proposition than I'm going to be a 50% owner in this business moving forward.

[the2bears]

Originally Posted by CliffFletcher

Okay, so let's assume the owners just want to support NHL hockey in Calgary, and a new arena has enough value to the citizens of Calgary that it's judged worthwhile put up half the money for the project. Then why shouldn't the city simply assume 50 per cent ownership of the arena, and take in 50 per cent of the revenue from it?

I assume you mean 50% of profits (or losses) and not revenue?

[squiggs96]

Originally Posted by EldrickOnIce

Not sure I understand what exactly you mean.
All recent MLB stadiums built are heavily publicly funded as well.
If it's not blackmail, it's irrelevant, the end result is the same - lot's of public money

It's in the next two sentences you cut out. With LA not having a team, each NFL city can blackmail the current city they are in to publicly fund the stadium, or they will move to LA. If LA gets a team, the biggest threat of a move is gone, and then the cities have more leverage to force the owners to pay for their own stadium. Because the cities usually cave, they are rewarded with a Super Bowl, which brings in thousands of people that help the economy.

[indes]

I don't see why the city can't put the money up front and then collect a small percentage of profits until the money is paid back. This seems like it would work for both parties imo

[heep223]

Originally Posted by indes

I don't see why the city can't put the money up front and then collect a small percentage of profits until the money is paid back. This seems like it would work for both parties imo

Would the city be loaning them money then at a fixed rate? I'm sure the flames could get better debt financing than whatever the city could offer them. Or if not, then the city is essentially a part owner with all the risk but then their upside is capped?

Some variation of this idea may work but it'd be complex. And keep in mind the flames will take on debt to build this arena (at very low rates).

[Bend it like Bourgeois]

I am not convinced this will be the money maker some seem to think.

Maybe...maybe it can work for the flames on an arena.

No way on the football stadium. Not even close.

[EldrickOnIce]

Originally Posted by squiggs96

It's in the next two sentences you cut out. With LA not having a team, each NFL city can blackmail the current city they are in to publicly fund the stadium, or they will move to LA. If LA gets a team, the biggest threat of a move is gone, and then the cities have more leverage to force the owners to pay for their own stadium. Because the cities usually cave, they are rewarded with a Super Bowl, which brings in thousands of people that help the economy.

Right, I do understand that part - but every NHL arena and MLB stadium in recent history has been built with a highly disproportional amount of public funding as well... so whether LA can be used by the NFL as blackmail isn't really relevant when it amounts to the same thing in the end - mostly public funding for all NFL, MLB and NHL facilities.

[Flash Walken]

Originally Posted by Locke

Again, it should be recognized that the owners dont generally make any profit through the operation of the club but rather through the increase in the Franchise's value.

The flames ownership had mismanaged the team considerably.

If they can't make money in one of the wealthiest cities in Canada in a cap system, it's not a feather in their cap that they lose money, it's a sign of convenient accounting methods or ineptitude.

[PeteMoss]

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:

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.

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.

[Aarongavey]

Originally Posted by EldrickOnIce

Right, I do understand that part - but every NHL arena and MLB stadium in recent history has been built with a highly disproportional amount of public funding as well... so whether LA can be used by the NFL as blackmail isn't really relevant when it amounts to the same thing in the end - mostly public funding for all NFL, MLB and NHL facilities.

The Air Canada Centre in Toronto was built by private money

The Bell Centre in Montreal was built by private money

The Rogers Arena in Vancouver was built by private money

Ottawa's rink was almost entirely built with private funds (something like 3 percent was paid by the taxpayer)

I am not sure where these public palaces are but as a general rule they are not in Canada.

[Bend it like Bourgeois]

Originally Posted by Aarongavey

The Air Canada Centre in Toronto was built by private money

The Bell Centre in Montreal was built by private money

The Rogers Arena in Vancouver was built by private money

Ottawa's rink was almost entirely built with private funds (something like 3 percent was paid by the taxpayer)

I am not sure where these public palaces are but as a general rule they are not in Canada.

What about their football stadiums?

[SebC]

Originally Posted by Beatle17

Call me Rick Bell, but show me where the millions of dollars we have spent on "art" has made anyones life better. The money could be utilized to fund after school programs, shelters etc., way better than any art work is doing.

It's simple:

Art makes the city more attractive.
A more attractive city helps attract/retain wealthy people.
Wealthy people invest in the economy.
The economy grows.
The city's tax base increases.
The increased taxes, if you like, could fund after school programs, shelters, or any other red herring that people who only care about their taxes bring up.

This is why we have art - the quality of a city is directly tied to its prosperity. (The Peace Bridge, however, is a heavily used piece of transportation infrastructure, and falls outside this discussion.)

Originally Posted by dustygoon

I love the since he's rich he should pay. He should donate his money to charity which he does before being a good pal and buying an arena.

We all can agree that the Econ impact from arena et al project is good for community and coffers.

Local govt doesn't have to write a cheque. Could be just no taxes of any kind until owners recoup original investment. Lots of ways to do a PPP deal

No, we can't. The whole crux of the matter is that if anything, the consensus is the opposite.

And if charity is better use of money than an arena for the Flames owners, then surely it's also a better use of money for our governments.

Originally Posted by heep223

it's simply not the case that owners in Calgary are making piles of cash on the Flames.

Cash flow, no. Lots of net income though.

Originally Posted by Cleveland Steam Whistle

But the fact remains, the city benefits from the Flames, at least a little, and because of that should have some "stake" in making them viable to stay.

It's no a question of whether there are benefits, it's a question of whether there are net benefits. And then whether those net benefits are greater than the other things the city could spend money on instead.

[EldrickOnIce]

Originally Posted by Aarongavey

The Air Canada Centre in Toronto was built by private money

The Bell Centre in Montreal was built by private money

The Rogers Arena in Vancouver was built by private money

Ottawa's rink was almost entirely built with private funds (something like 3 percent was paid by the taxpayer)

I am not sure where these public palaces are but as a general rule they are not in Canada.

These 'public palaces' are in the National Hockey League.
But we should tell the whole story of these 100% privately funded Canadian facilities, because outside of the ACC, they are not outstanding success stories.

Bell Centre - Montreal
Molson funds construction of the $400 million Bell Centre, which opens in
1996. By 2001, Molson, seeking to “refocus on its core brewing business”, sells the team to American George Gillett.

GM Place - Vancouver
Arthur Griffiths spent approximately $180 million to build GM Place.
Having overextended himself funding the construction, he is forced to sell
a majority interest in the team to John McCaw

Scotiabank Place - Ottawa
Rob Bryden borrowed $184 million to fund construction of the Corel
Centre (now Scotiabank Place). His development company subsequently
declared bankruptcy and he lost control of the Senators to current owner,
Eugene Melnyk.

Rodgers Place - Edmonton
Under construction - about 80% publicly funded

Outside Canada - By my count, 8 of 23 NHL arenas were constructed with less 40% public funding, 11 with over 80% public funds.

(percentage indicates Public Funding as % of Total Construction Cost)
Anaheim Honda Center 1993 $120 million 100%
Boston TD Garden 1995 $144 million 89%
Buffalo HSBC Arena 1996 $122 million 44%
Carolina RBC Center 1989 $154 million 87%
Chicago United Center 1999 $175 million 17%
Colorado Pepsi Center 1999 $180 million 3%
Columbus Nationwide 2000 $175 million 0%
Dallas American Airlines Center 1994 $380 million 41%
Detroit Joe Louis Arena 1979 $57 million 100%
Florida Bank Atlantic Center 1998 $212 million 87%
Los Angeles Staples Center 1999 $700 million 18%
Minnesota Xcel energy Center 2000 $130 million 73%
Nashville Sommet Center 1996 $144 million 100%
New Jersey Prudential Center 2007 $468 million 67%
NY Islanders Nassau Veterans Memorial Coliseum 1972 $28 million 100%
NY Rangers Madison Square Gardens 1968/1990 $200 million 0%
Philadelphia Wachovia Center 1996 $218 million 15%
Phoenix Jobing.com 2003 $225 million 80%
Pittsburgh Consol Energy Center 2010
(Est. $231 million $15 million per year of State gaming revenues for 30
years, plus $4.2 million per year from Penguins)
San Jose HP Pavillion 1993 $163 million 82%
St. Louis Scottrade Center 1994 $170 million 20%
Tampa Bay St. Pete Times Forum 1996 $139 million 89%
Washington Verizon Center 1997 $260 million 23%

Again, I am in no way an advocate for a huge % of public money to go to a new NHL arena in Calgary. I just don't think 0% is appropriate either.

[EldrickOnIce]

Originally Posted by SebC

It's simple:

Art makes the city more attractive.
A more attractive city helps attract/retain wealthy people.
Wealthy people invest in the economy.
The economy grows.
The city's tax base increases.
The increased taxes, if you like, could fund after school programs, shelters, or any other red herring that people who only care about their taxes bring up.

This is why we have art - the quality of a city is directly tied to its prosperity.

I assume the bolded above is in your opinion? (which I agree with, btw)
But others would say (and I would agree with them too)

It's simple:

An NHL team in a brand new world class facility makes the city more attractive.
A more attractive city helps attract/retain wealthy people.
Wealthy people invest in the economy.
The economy grows.
The city's tax base increases.
The increased taxes, if you like, could fund the arts, after school programs, shelters, or any other red herring that people who only care about their taxes bring up.

This is why we have an NHL team in a brand new state of the art facility - the quality of a city is directly tied to its prosperity.

[JayP]

Originally Posted by EldrickOnIce

I assume the bolded above is in your opinion? (which I agree with, btw)
But others would say (and I would agree with them too)

It's simple:

An NHL team in a brand new world class facility makes the city more attractive.
A more attractive city helps attract/retain wealthy people.
Wealthy people invest in the economy.
The economy grows.
The city's tax base increases.
The increased taxes, if you like, could fund the arts, after school programs, shelters, or any other red herring that people who only care about their taxes bring up.

This is why we have an NHL team in a brand new state of the art facility - the quality of a city is directly tied to its prosperity.

This is quite the stretch. People move to cities because of their world class culture all the time (which art is a big part of). I've never heard someone moving cities because the local sports team built a new building.

[_Q_]

Originally Posted by JayP

This is quite the stretch. People move to cities because of their world class culture all the time (which art is a big part of). I've never heard someone moving cities because the local sports team built a new building.

Really?

If I was offered a job in a city with world class sports facilities and a city with none, I would chose the city with the sports facilities 10 times out of 10.