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

[GioforPM]

Originally Posted by Locke

Why? While its true that a poorer economy typically lowers construction costs the owners are all Oil men. Their finances would be strained by lower oil prices.

There are pros and cons. Loans are cheap, land values are declining, labour can be obtained. I don't think the cost of labour necessarily is lower, but the construction will go faster.

But yeah, the owners' other businesses are not generating much I imagine.

[Coach]

Originally Posted by Bingo

not sure I liked the rhetoric around the team moving if that was a Nenshi quote.

don't like it if the owners are threatening it
don't like it if the city is using the fact they won't leave as leverage

I took it the other way. That ownership doesn't plan on using a completely transparent threat of moving the team in order to secure public funding. Maybe they respect the intelligence of Calgarians more than Katz does of his city-folk.

[Enoch Root]

Oil prices are (pretty much) irrelevant.

1) I highly doubt any of the owners are in a situation whereby this proposal would leave them 'strained'

2) Any crunch from the oil price is offset by lower costs

3) this is (at least) a 5 year project. The price of oil, Calgary real estate, and the state of the economy, are going to change multiple times over the life of the project.

A deal this size transcends today's oil price.

[Lord Carnage]

Originally Posted by Enoch Root

Oil prices are (pretty much) irrelevant.

1) I highly doubt any of the owners are in a situation whereby this proposal would leave them 'strained'

2) Any crunch from the oil price is offset by lower costs

3) this is (at least) a 5 year project. The price of oil, Calgary real estate, and the state of the economy, are going to change multiple times over the life of the project.

A deal this size transcends today's oil price.

I'm not sure of your accuracy on point 2... seems to me that oil going for $100/barrel to $40/barrel (though not all $60 is gravy for these oilmen) would be offset or your $1 billion project would become a $400 million project (ish).

I think I agree with #1 and #3, but even if they aren't "strained", it probably isn't as easy a decision to make.

[heep223]

Originally Posted by Enoch Root

2) Any crunch from the oil price is offset by lower costs

This is the "silver lining" for sure, but this is just not correct. The owners have likely lost a ton of money in energy markets over the last 6 months. They will be personally putting up a ton of capital to build this thing and yes there will be more obtainable labour but no it does not offset what they've lost in other businesses.

[Lord Carnage]

Originally Posted by MattyC

I took it the other way. That ownership doesn't plan on using a completely transparent threat of moving the team in order to secure public funding. Maybe they respect the intelligence of Calgarians more than Katz does of his city-folk.

While I wish this is how we could take it, I firmly believe that Nenshi doesn't believe a move will happen, and will use that as counter-leverage against any $$$ or funding requests.

I've been wrong before of course, but I find my faith in Nenshi steadily diminishing overall.

[Coach]

Originally Posted by Lord Carnage

While I wish this is how we could take it, I firmly believe that Nenshi doesn't believe a move will happen, and will use that as counter-leverage against any $$$ or funding requests.

I've been wrong before of course, but I find my faith in Nenshi steadily diminishing overall.

Not really sure what you're saying here. So Nenshi doesn't believe what will happen? That the owners will try a threat of relocation to gain public funds? Or that if the owners do threaten, Nenshi doesn't believe they will and thus will dig his feet in on that point?

Both of these seem like good things to me. There's no way the team will move. The owners would be dumb to threaten so, and Nenshi should disregard it as an excuse to give public funds.

[CroFlames]

Originally Posted by MattyC

Not really sure what you're saying here. So Nenshi doesn't believe what will happen? That the owners will try a threat of relocation to gain public funds? Or that if the owners do threaten, Nenshi doesn't believe they will and thus will dig his feet in on that point?

Both of these seem like good things to me. There's no way the team will move. The owners would be dumb to threaten so, and Nenshi should disregard it as an excuse to give public funds.

I don't think the owners have any intention of relocating, but I would never say never. Your point does stand though.

There have been some mighty stupid city councils that have made some mighty stupid decisions in the past, not necessarily Calgary though. Anything can happen with the right mixture of dumbasses.

[Weitz]

Originally Posted by heep223

This is the "silver lining" for sure, but this is just not correct. The owners have likely lost a ton of money in energy markets over the last 6 months. They will be personally putting up a ton of capital to build this thing and yes there will be more obtainable labour but no it does not offset what they've lost in other businesses.

Agreed. The "savings" in labor in a down market doesn't equate the lost resources from Oil dropping 60% ish.

[FireFly]

Originally Posted by Weitz

Agreed. The "savings" in labor in a down market doesn't equate the lost resources from Oil dropping 60% ish.

I don't think the owners look at it like "I'm losing money in oil now so I'd better not invest in anything else...." The Calgary Sports and Entertainment Group is a separate entity and is still making money. Costs for the Flames are down as they aren't spending to the cap and all their other teams are all making money except perhaps the Roughnecks although I might be wrong on that. To them, the arena is another investment that must take into account long term projections.

If the arena is built now while oil is low, it costs less to build. When the arena is complete, oil will have rebounded which will give more options for income generation through marketing, etc.

We are talking about multi-millionaires who understand about the cost/benefit analysis surrounding this deal. I'm pretty sure they're aware they will be out of pocket on the building for a few years at least. I don't think they mind too much.

[heep223]

Originally Posted by FireFly

I don't think the owners look at it like "I'm losing money in oil now so I'd better not invest in anything else...." The Calgary Sports and Entertainment Group is a separate entity and is still making money. Costs for the Flames are down as they aren't spending to the cap and all their other teams are all making money except perhaps the Roughnecks although I might be wrong on that. To them, the arena is another investment that must take into account long term projections.



If the arena is built now while oil is low, it costs less to build. When the arena is complete, oil will have rebounded which will give more options for income generation through marketing, etc.



We are talking about multi-millionaires who understand about the cost/benefit analysis surrounding this deal. I'm pretty sure they're aware they will be out of pocket on the building for a few years at least. I don't think they mind too much.

Multi billionaires, not millionaires. I agree that the arena will go forward, but it's not because the cost savings of the recession makes up for their other losses.

[bizaro86]

Originally Posted by FireFly

I don't think the owners look at it like "I'm losing money in oil now so I'd better not invest in anything else...." The Calgary Sports and Entertainment Group is a separate entity and is still making money. Costs for the Flames are down as they aren't spending to the cap and all their other teams are all making money except perhaps the Roughnecks although I might be wrong on that. To them, the arena is another investment that must take into account long term projections.

If the arena is built now while oil is low, it costs less to build. When the arena is complete, oil will have rebounded which will give more options for income generation through marketing, etc.

We are talking about multi-millionaires who understand about the cost/benefit analysis surrounding this deal. I'm pretty sure they're aware they will be out of pocket on the building for a few years at least. I don't think they mind too much.

Although the Flames aren't spending to the cap, salary costs would be way higher than planned since the players are paid in US dollars, and the US dollar has appreciated dramatically vs the Canadian dollar since the start of the season.

[GioforPM]

The only effect the oil prices will have is that owners will be paying attention to those companies a bit more perhaps. That's a big perhaps.

I agree, financially, it doesn't make a difference.

[Enoch Root]

Originally Posted by Lord Carnage

I'm not sure of your accuracy on point 2... seems to me that oil going for $100/barrel to $40/barrel (though not all $60 is gravy for these oilmen) would be offset or your $1 billion project would become a $400 million project (ish).

I think I agree with #1 and #3, but even if they aren't "strained", it probably isn't as easy a decision to make.

The price of oil does not have a one to one relationship with this project. I swear, some people in this city don't seem to be aware that there is an economy outside of the patch.

A lower oil price puts a strain on the local economy for sure, but lower labour costs are also a direct savings to the project.

[Enoch Root]

Originally Posted by Weitz

Agreed. The "savings" in labor in a down market doesn't equate the lost resources from Oil dropping 60% ish.

They don't have lost revenues. In fact, ticket prices are going up again next year.

Citizens will continue to pay their property taxes, and the sun will in fact continue to rise in the east.

[Cleveland Steam Whistle]

It does make a difference for sure, the only thing being, we need to know the owners situation to understand if it makes a positive difference or negative as it relates to the new arena project.

If the ownership groups financials and liquidity is in a place that they can with stand what will likely be a temporary down turn, and still afford to invest, then now is the perfect time to start this project or any capital investment because the costs of said project should be lower. So in the long run, this would be a benefit to the Flames ownership group to build now, assuming they can afford it in the short term.

If their financials are in a state as such that they really can't afford to take the short term hit, or simply don't have the means to invest while things are bad, then now is obviously not the time to invest because it's too damaging to their in period economic picture and they are likely in a place that they need to manage their business on a shorter outlook period. If that's the case then this is a bad thing for the arena project.

Generalized statements, but essentially this is likely what the situation boils down to. If they can afford it, they should be all over this and making sure they take advantage of the lower costs to build in the short term. If they can't, it may force them to push off the start of this project. Got to think the former is the more likely for this ownership group, but who knows.

[Cleveland Steam Whistle]

Originally Posted by Enoch Root

They don't have lost revenues. In fact, ticket prices are going up again next year.

Citizens will continue to pay their property taxes, and the sun will in fact continue to rise in the east.

I highly doubt Flames ticket prices going up are going to offset the revenues from their Oil businesses. Net, net, they have to be losing revenues right now.

[Travis Munroe]

Originally Posted by Enoch Root

They don't have lost revenues. In fact, ticket prices are going up again next year.

Citizens will continue to pay their property taxes, and the sun will in fact continue to rise in the east.

I was asking this guy about his orange julius he just bought and he said it was really good but on a more interesting note, the guy who blended it was telling him that the sun may relocate and rise in the west next year.

It is ridiculous to think the flames would relocate but I also think it is ridiculous to think that ownership won't use the option to relocate as a bargaining chip. The money required from the provincial govt will be more than paid back over the life of the arena when you consider the additional tax revenue for musicians who won't skip over Calgary.
Isn't it something like 10 musicians a year skip over Calgary? Give it a 30 year life span and thats 300 concerts to help off set the asked for money.

[GioforPM]

Originally Posted by Realtor 1

It is ridiculous to think the flames would relocate but I also think it is ridiculous to think that ownership won't use the option to relocate as a bargaining chip. The money required from the provincial govt will be more than paid back over the life of the arena when you consider the additional tax revenue for musicians who won't skip over Calgary.
Isn't it something like 10 musicians a year skip over Calgary? Give it a 30 year life span and thats 300 concerts to help off set the asked for money.

If a bargaining position is ridiculous (as you concede) it is not the sign of a good negotiator that they continue to use that position. It is not a bargaining chip if the chip is worthless.

[Cleveland Steam Whistle]

Originally Posted by Realtor 1

I was asking this guy about his orange julius he just bought and he said it was really good but on a more interesting note, the guy who blended it was telling him that the sun may relocate and rise in the west next year.

It is ridiculous to think the flames would relocate but I also think it is ridiculous to think that ownership won't use the option to relocate as a bargaining chip. The money required from the provincial govt will be more than paid back over the life of the arena when you consider the additional tax revenue for musicians who won't skip over Calgary.
Isn't it something like 10 musicians a year skip over Calgary? Give it a 30 year life span and thats 300 concerts to help off set the asked for money.

Despite what people think both the City and the Flames want this new rink, although fair, the Flames want and NEED it more. It's just a huge song and dance that will occur, and timing is key.

All the city cares about is that the Flames stay in Calgary, and that they don't miss out on too many "other events" like concerts. Realistically, the Saddledome ins't old enough yet that it's costing the Flames revenue wise that they would seriously consider re-locating at this point, and I doubt we are losing out on enough "other events" yet for the city to really care yet either.

But the city also knows that those things becoming real problems sometime in the 10 to 15 year range. So it becomes a song and dance of this mayor not wanting to give too much away at this point and upset tax payers, along with the balance of probably wanting to be the mayor that was in office when an amicable solution was found for both. They also know that the Flames are going to push them to do something before the age of the building become a real issue for both parties because they know there are short term benefits for their business to do it sooner.

So, lots of back and forth, lots of fake bargaining chips will be thrown out, but I don't think we should lose site of the fact that both parties probably want this to get done. One just wants it and needs it a lot more than the other at this point.