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

[RM14]

Originally Posted by flameswin

Is there an article on this? Not that I don't believe you but good lord, that was a $1 billion renovation that made it one of the most state of the art arenas out there. It's unfathomable to me that this may be the case, but it is New York, I guess.

http://m.ny.curbed.com/archives/2013...permit_war.php

This site which seems to be pro Penn station has a few articles on it.

[SebC]

Originally Posted by RM14

http://m.ny.curbed.com/archives/2013...permit_war.php

This site which seems to be pro Penn station has a few articles on it.

It doesn't speak well that for the economics of arena subsidies that there's a group that believes the area will develop better without MSG than with.

[Bend it like Bourgeois]

Forget the owners oil money, the flames as a business are out millions every year from the low dollar. Throw in a down Calgary economy for a couple years and the impact on the flames is big. I don't care how long the project runs if you take tens of millions (or more) out of the business the first few years it matters.

I'm not saying the project will die or anything - doubt King would have been talking if that were at all likely - but there's probably been a tonne of work in the last few months to figure it out. There's less money in the business, and somebody is taking on a bigger chunk of risk.

[Enoch Root]

they would consider the currency and factor in conservative levels in their NPV calculations. It is also easily hedged.

you don't build billion dollar projects and just allow yourself to get blindsided by things like currency risk.

[heep223]

Originally Posted by Enoch Root

they would consider the currency and factor in conservative levels in their NPV calculations. It is also easily hedged.

you don't build billion dollar projects and just allow yourself to get blindsided by things like currency risk.

I think you misinterpreted the previous post. He was talking about how much it hurts the team to pay their costs in USD and earn their revenues in CAD, when USD strengthens. They certainly have been hit hard by this. I think he was just generally saying that might be a factor in the arena decision generally with the health of the org. Not sure how you think currency exposure would affect the arena decision itself (it wouldn't because it'd all be CAD).

Brings up an interesting point though. Do Cdn teams hedge their USD exposure for player payroll? Would make a ton of sense. But if that was the case, a weak Canadian dollar wouldn't even hurt them. And since that's a factor in the cap calculations, it makes me think that they might not hedge for whatever reason.

[Bend it like Bourgeois]

Yeah you're right. Which is of course why banks and oil companies and anyone else in big business hasn't tested new numbers or changed their plans at all over the last 6 months. This stuffs easy.

[Cleveland Steam Whistle]

I don't understand what everyone is arguing about. Lower oil prices, lower Canadian dollar all has a negative impact on the owners of the Flames business. There is zero denying that and zero denying they are impacted.

What is also true, is IF they are financially capable and willing to invest in a major long term capital investment project like a new rink, despite all the negative current impacts to their businesses right now, they will benefit long term from doing it because it will also significantly lower the cost of their investment.

[Bend it like Bourgeois]

Originally Posted by heep223

Brings up an interesting point though. Do Cdn teams hedge their USD exposure for player payroll? Would make a ton of sense. But if that was the case, a weak Canadian dollar wouldn't even hurt them. And since that's a factor in the cap calculations, it makes me think that they might not hedge for whatever reason.

The flames have said they do, in the past at least.

Doubt they'd have taken all the risk out though.

[Enoch Root]

Originally Posted by heep223

I think you misinterpreted the previous post. He was talking about how much it hurts the team to pay their costs in USD and earn their revenues in CAD, when USD strengthens. They certainly have been hit hard by this. I think he was just generally saying that might be a factor in the arena decision generally with the health of the org. Not sure how you think currency exposure would affect the arena decision itself (it wouldn't because it'd all be CAD).

Brings up an interesting point though. Do Cdn teams hedge their USD exposure for player payroll? Would make a ton of sense. But if that was the case, a weak Canadian dollar wouldn't even hurt them. And since that's a factor in the cap calculations, it makes me think that they might not hedge for whatever reason.

I didn't misinterpret it, that is exactly what I responded to.

[Enoch Root]

Originally Posted by Bend it like Bourgeois

Yeah you're right. Which is of course why banks and oil companies and anyone else in big business hasn't tested new numbers or changed their plans at all over the last 6 months. This stuffs easy.

Oil and gas companies have changed their plans because the price of oil is down so much, not because of the currency (which actually helps them right now).

Never said it was easy but it is manageable. I used to build currency hedging strategies for corporate clients, it's just math and risk management.

And the big difference between the Flames and an O&G co is that the Flames know exactly what their USD exposure will be - that makes it much easier to manage.

Anyway, enough of this garbage - as CSW said, it's a major, long-term capital investment. The current economy matters to an extent, but the project either makes sense or it doesn't. Changes in the currency aren't going to make a billion dollar project suddenly unviable

[I-Hate-Hulse]

Originally Posted by J pold

I work in commercial real estate and I can tell you that low oil prices has had an immediate and swift impact on our business. Right now any decision making, even from fundamentally stable companies, has ground to a complete halt.

Amen to this...do you all think banks are lining up to finance.... real estate development in Calgary right now? Remember this is more than just an arena/stadium. It involves building lots of residential condos and a heck of a lot of commercial real estate.

You think the lenders for those haven't gotten a little skittish?

Do the Flames owners have money? Yes, but it's not like it's sitting in an ING savings account ready to invest. Much of it is tied up in investments and other liquidity requirements the have already. At the end of the day, lenders will most certainly be involved and they aren't a friendly bunch right now.

Anyone involved in corporate finance right now knows this pain if you have a lot of exposure to commodity pricing... Is an area long term? Yes. Can people go bankrupt before the lifecycle of that arena? Yes...

[Rhettzky]

Originally Posted by Enoch Root

Oil and gas companies have changed their plans because the price of oil is down so much, not because of the currency (which actually helps them right now).

Never said it was easy but it is manageable. I used to build currency hedging strategies for corporate clients, it's just math and risk management.

And the big difference between the Flames and an O&G co is that the Flames know exactly what their USD exposure will be - that makes it much easier to manage.

Anyway, enough of this garbage - as CSW said, it's a major, long-term capital investment. The current economy matters to an extent, but the project either makes sense or it doesn't. Changes in the currency aren't going to make a billion dollar project suddenly unviable

I don't think anyone is arguing the opposite. All that was said is that one of the reason for the announcement delays could possibly be the drop in oil and the low dollar. And I think you might be getting your arguments tangled up a bit. You said...

Originally Posted by Enoch Root

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

This is false and people responded. Now it seems you are straying from that original point. Anyway, they are not abandoning this project over these issues but you can bet it's having an impact.

[Tinordi]

The drop in interest rates responding to low oil prices are a much more salient development to the financials of this project than a drop in the oil price itself.

[Locke]

Is today the day?


No. No it is not.

[1stLand]

This is getting ridiculous.
This Arena complex better be the BEST ARENA COMPLEX in the entire world, otherwise the announcement delays are unacceptable.

[CroFlames]

Someone is going to make a new thread on April 1st saying Arena Announced. Imagine the chaos on this site when people realize they were punked.

Haha.

[Blarg]

Originally Posted by CroFlames

Someone is going to make a new thread on April 1st saying Arena Announced. Imagine the chaos on this site when people realize they were punked.

Haha.

You spoiled the surprise

[Enoch Root]

Originally Posted by Rhettzky

I don't think anyone is arguing the opposite. All that was said is that one of the reason for the announcement delays could possibly be the drop in oil and the low dollar. And I think you might be getting your arguments tangled up a bit. You said...



This is false and people responded. Now it seems you are straying from that original point. Anyway, they are not abandoning this project over these issues but you can bet it's having an impact.

Are you under the impression that their revenues won't be up next year?

[Stay Golden]

So is the current delay now that Nenshi is sitting on it?
So the Flames have made a definite proposal to Nenshi?
Just wanting to know.

[Tyler]

I think lost in all this is HOW MUCH MORE revenue the Flames stand to make on these new complexes. I don't think it's beyond the realm of possibility to think that they would be far surpassing their typical gate revenue on a nightly basis.

Also, no one seems to want to talk about seat licenses. With the corporate base here in Calgary, it's a no brainier. That in itself will provide a huge amount of potential funding to this/these projects.