[News] CalgaryNEXT Announcement. New arena details emerge.

[Travis Munroe]

Originally Posted by The Voice of Reason

This is a very odd way to negotiate. Basically saying "this is our best offer, take it or leave it."

It should help speed up the process and negotiations.
Common in real estate if a property has just hit the market. You go in with a take it or leave it and a quick deadline to decide. Avoids a 1-2 day negotiating period where another offer can come in and drive the price up.
Not that they are worried about competition on the site but perhaps it is a ploy to avoid negotiations which hit the media and the negativity that surrounds it.

[Erick Estrada]

Originally Posted by Barnes

Some news! Well, not really but a few things we assumed/feared are clarified in this interview with KK.



No implied threat but we know what it means. $200mm is what the owners will be offering to pay for and there is no plan B.



http://www.calgarysun.com/2015/09/12...ls-calgarynext

There's a likely plan B but lets just hope it never gets to that as that would likely involve threats of selling/moving. I would imagine that they will have to eventually sweeten the pot on $200 million though as while KK says it's not a starting point anybody that knows business negotiations knows you never table your final offer at the beginning of negotiations. There has to be a little wiggle room especially seeing they haven't really invested any money into a proper design.

[RW99]

So he said the $250m ticket tax would be a city loan and that they would pay the interest on it, just going with the city for the low rate. Is there any downside for the city/tax payer to go this route?

[Fire of the Phoenix]

Originally Posted by RW99

So he said the $250m ticket tax would be a city loan and that they would pay the interest on it, just going with the city for the low rate. Is there any downside for the city/tax payer to go this route?

If the team goes bankrupt I imagine the city would be left holding the bag. Not that it would ever happen but that's the only thing I could see.

[morgin]

This just feels so poorly handled from a media/optics perspective at this point. I guess who am I to say what will result in the best deal for everyone, but to me, this is a totally unnecessary one-sided public negotiation where they appear completely out of touch with current public perspective. Why are they even talking about best offers and plan A and plan B at this point? The communication bungles are why this project feels like a total rush job, which is insane given how long they've purportedly been working on it.

If you want public funding, don't treat the public like morons. Treat them like stakeholders and make them privy to your information. Are there legitimately no other sites that work? Do you know exact total project costs including contamination cleanup? Do you have a good idea of what sort of infrastructure improvements will be necessary? Do you know costs of those? Public funding means this entire project should have its books opened up as it would be for any other funding partner. If you want to do this by only releasing select information that is deemed palatable for the public, then self-fund it. No other investor would think of handing money over without disclosure, why should the public be any different if tax money is being asked for at the same level that the owners are willing to contribute.

Ridiculous. There was no reason for them to have gone down this combative sales pitch route making veiled references to there being no future with the status quo and "seeing what that would mean" when we haven't even received a clear sense from them WTF makes this site so good and what exactly they want us to build aside from some overtures of it being cutting edge next gen [insert more superlatives from KK]

[Cube Inmate]

Originally Posted by RW99

So he said the $250m ticket tax would be a city loan and that they would pay the interest on it, just going with the city for the low rate. Is there any downside for the city/tax payer to go this route?

A municipality is not in the business of acting as a bank. One potential downside is that if we float this particular loan, it serves as a precedent for future developers starting to demand the same type of treatment.

Then again, for all I know maybe the CoC actually does use its good credit rating to get cheap loans for developers already?

[underGRADFlame]

Originally Posted by Fire of the Phoenix

If the team goes bankrupt I imagine the city would be left holding the bag. Not that it would ever happen but that's the only thing I could see.

I don't blame the line of thinking either, when I'm looking at a loan or mortgage I try a sniff out the best rate... government by far gets the best lending rate out there. I'm curious what the interest rate is for the city borrowing vs. a corporation.

I'm not saying I agree that the city should front the $$$ for the "user pay" but why not shoot for the best rate they could.

[Strange Brew]

Originally Posted by Fire of the Phoenix

If the team goes bankrupt I imagine the city would be left holding the bag. Not that it would ever happen but that's the only thing I could see.

There is that. Also by initially borrowing the money there is certainly some chance, albeit slim, that it could affect the City's bond or credit rating down the road and increase their future costs of borrowing. I would say its a reasonable trade off to get something like this done.

I do have a question though. KK throws around the $250M ticket tax as if it is only the Flames collecting these fees. But would the ticket tax not also apply to non Flames events at these facilities? Concerts for example? Because if so, it certainly counts as user pay but such events are not being operated by the Flames ownership group. Or would the tax not apply in these situations?

[morgin]

One other thing. This quote is really grinding my gears.

“But if we came from London or New York or Paris or Toronto and said: ‘Hey, we’ve got $450 million and an idea. We like this area down here. Would you be interested in talking to us?’

You have $200MM. You are going to charge your users an additional $250MM by taxing their tickets. You are contributing $200MM, and you are asking your users to fund the other $250MM. We are not idiots. This will not be a percentage of existing ticket costs. This will be an additional fee on top of existing ticket prices. If that's how the funding model works, fine, but don't drink my beer and then piss on my face and act like we're even.

[Weitz]

Originally Posted by morgin

One other thing. This quote is really grinding my gears.

You have $200MM. You are going to charge your users an additional $250MM by taxing their tickets. You are contributing $200MM, and you are asking your users to fund the other $250MM. We are not idiots. This will not be a percentage of existing ticket costs. This will be an additional fee on top of existing ticket prices. If that's how the funding model works, fine, but don't drink my beer and then piss on my face and act like we're even.

That whole article screams "we are smarter than you, just accept it" to me. Terrible optics for King in my opinion.

[automaton 3]

The owner's $200M contribution is a drop in the bucket towards the true cost of this proposal, once the site cleanup and required infrastructure/transportation upgrades are added in.

This can't be their whole plan, can it? If this is in fact a take or leave it offer, I'm thinking a polite "no thank you" is in order.

[Fire of the Phoenix]

Originally Posted by morgin

One other thing. This quote is really grinding my gears.

You have $200MM. You are going to charge your users an additional $250MM by taxing their tickets. You are contributing $200MM, and you are asking your users to fund the other $250MM. We are not idiots. This will not be a percentage of existing ticket costs. This will be an additional fee on top of existing ticket prices. If that's how the funding model works, fine, but don't drink my beer and then piss on my face and act like we're even.

I don't know about that. I assume the Flames always charge what the market will bear to maximize revenue, tax or no tax. They aren't going to just add the tax on top of the max that they think they can get, that would hurt demand. They are always going to charge the maximum that they think they can get away with and still sell out.

In other words, that money would've ended up as part of there revenue stream if there was no debt to pay, so in a way the owners are paying for it. Of course the revenue would go up in a new arena so the Flames will be making more money anyway but they are still making less than if that 250m debt didn't exist.

[morgin]

Originally Posted by Fire of the Phoenix

I don't know about that. I assume the Flames always charge what the market will bear to maximize revenue, tax or no tax. They aren't going to just add the tax on top of the max that they think they can get, that would hurt demand. They are always going to charge the maximum that they think they can get away with and still sell out.

In other words, that money would've ended up as part of there revenue stream if there was no debt to pay, so in a way the owners are paying for it. Of course the revenue would go up in a new arena so the Flames will be making more money anyway but they are still making less than if that 250m debt didn't exist.

I suppose that is accurate, but (and I'm going from memory of those sports arena financing papers that have been written) I think there was a clear trend that ticket revenues go up because ticket prices go up in almost every case where a new stadium/arena has been built. So, future revenue from users, only able to be captured because of the new building, will pay for the building. It's still not that same as saying the Flames ownership are walking up to the city with $450MM of ready to spend capital - they are leveraging a future revenue stream that will only exist if they get the building and can charge that ticket tax. I get why KK is characterizing it the way he is to fit the narrative as this being a transformative project, but it also fits into the story of them being purposely obtuse with the numbers. It just comes off as slimy to me.

If I'm wrong, and the reality is that ticket prices will stay exactly the same (tied to inflation or whatever other metrics you want) but a percentage will now go to paying this user-pay debt, then they should say so. I would be shocked if that was the case. That is why I'm a little bit miffed at the characterization - we as users will bear the brunt of that cost by paying more to attend events at the facilities, and we are being treated as if we should be grateful for that and "roll out the red carpet". Like I said, if that's how the funding model works to get this built, it is what it is, but be honest about it.

[ThisIsAnOutrage]

Originally Posted by morgin

This just feels so poorly handled from a media/optics perspective at this point. I guess who am I to say what will result in the best deal for everyone, but to me, this is a totally unnecessary one-sided public negotiation where they appear completely out of touch with current public perspective. Why are they even talking about best offers and plan A and plan B at this point? The communication bungles are why this project feels like a total rush job, which is insane given how long they've purportedly been working on it.

If you want public funding, don't treat the public like morons. Treat them like stakeholders and make them privy to your information. Are there legitimately no other sites that work? Do you know exact total project costs including contamination cleanup? Do you have a good idea of what sort of infrastructure improvements will be necessary? Do you know costs of those? Public funding means this entire project should have its books opened up as it would be for any other funding partner. If you want to do this by only releasing select information that is deemed palatable for the public, then self-fund it. No other investor would think of handing money over without disclosure, why should the public be any different if tax money is being asked for at the same level that the owners are willing to contribute.

Ridiculous. There was no reason for them to have gone down this combative sales pitch route making veiled references to there being no future with the status quo and "seeing what that would mean" when we haven't even received a clear sense from them WTF makes this site so good and what exactly they want us to build aside from some overtures of it being cutting edge next gen [insert more superlatives from KK]

I agree with everything quoted. Frankly the whole situation is starting to remind me of the last provincial election. Ken King is doing exactly what Jim Prentice did: just keep telling people over and over that there's no other real choice economically so shut up about the details and just do what I say. The longer this "negotiation" takes the more likely it is that I think we'll see the same public reaction as in the election too: the public decides to do anything other than what is being touted as "the only real option."

[Bend it like Bourgeois]

The stamps and flames saying they want the ticket tax money from the city (obvious) and expect to pay interest (less obvious) is at least another piece in the puzzle.

I think people are being overly critical of the owners because a complicated idea is, well, complicated.

Saying there is no plan b or we won't put in more money is meaningless. They want they city to work with them on this idea, not create a moving target that no one can ever say yes or no to. That's not disingenuous that's smart - for everyone.

If the city thought there was a better cheaper location available you bet your ass it would have the first response. The fact that they are this involved in working through it should tell people that a) they at least buy the concept enough to check it out and b) they see enough potential benefit to Calgary in it to bother.

[Daradon]

Exactly, a project this big needs a certain amount of criteria, or borders in the plan or it will never get off the ground. You start giving everyone a say and it either never happens, or turns out really craptacular. Yes, the owners might be giving off the aura of playing hardball, but really, they're putting in way more than Katz did (which was bupkiss) and pretty much every arena/stadium project in North America in the last 25 years.

[nik-]

Sorry, when your Plan A is a site you can't even build on unless millions upon millions of cleanup work happens, you have a plan B.

That's not moving target, that's common sense.

[Fighting Banana Slug]

I get why KK says there is no Plan B, (to focus on the proposal at hand), but there is a Plan B (or he should be fired). They've been looking at this for years.

[Erick Estrada]

Originally Posted by morgin

This just feels so poorly handled from a media/optics perspective at this point. I guess who am I to say what will result in the best deal for everyone, but to me, this is a totally unnecessary one-sided public negotiation where they appear completely out of touch with current public perspective. Why are they even talking about best offers and plan A and plan B at this point? The communication bungles are why this project feels like a total rush job, which is insane given how long they've purportedly been working on it.

If you want public funding, don't treat the public like morons. Treat them like stakeholders and make them privy to your information. Are there legitimately no other sites that work? Do you know exact total project costs including contamination cleanup? Do you have a good idea of what sort of infrastructure improvements will be necessary? Do you know costs of those? Public funding means this entire project should have its books opened up as it would be for any other funding partner. If you want to do this by only releasing select information that is deemed palatable for the public, then self-fund it. No other investor would think of handing money over without disclosure, why should the public be any different if tax money is being asked for at the same level that the owners are willing to contribute.

Ridiculous. There was no reason for them to have gone down this combative sales pitch route making veiled references to there being no future with the status quo and "seeing what that would mean" when we haven't even received a clear sense from them WTF makes this site so good and what exactly they want us to build aside from some overtures of it being cutting edge next gen [insert more superlatives from KK]

First of all the Flames aren't in the business of civil road construction so how exactly would you expect them to come up with firm estimates on infrastructure improvements or cleanup without working heavily with the city? See this is where the "moron" statement comes in to play and I'm not calling you a moron but I am saying that you are expecting way too much from an initial announcement of their plans to have all the T's crossed and I's dotted. There's a reason that the project is far off and it's because there's a lot of work to be completed before the team and city can actually finalize on facilities, infrastructure and clean up. In the coming years your questions will be answered but you expecting those details today is akin to fans expecting the facilities to be built next year. Unrealistic and an excuse to complain and place the ownership group in a negative light.

I see so when the Flames are combative (that's your opinion BTW) that's a bad thing but when Nenshi does it years before there's even a pitch it's fine an dandy. You do realize Nenshi hasn't exactly played nice with the Flames so I would argue the Flames wouldn't have began in such a tone if the mayor didn't spout off to the newspapers his position long before an announcement.

You are the typical anti-funding taxpayer and that's fine as you are entitled but your spin is pretty transparent and you are going to have to do a little better to sway the fence sitters or pro-funding opinions as it's just retread contempt for the project.

[corporatejay]

Originally Posted by Erick Estrada

First of all the Flames aren't in the business of civil road construction so how exactly would you expect them to come up with firm estimates on infrastructure improvements or cleanup without working heavily with the city? See this is where the "moron" statement comes in to play and I'm not calling you a moron but I am saying that you are expecting way too much from an initial announcement of their plans to have all the T's crossed and I's dotted. There's a reason that the project is far off and it's because there's a lot of work to be completed before the team and city can actually finalize on facilities, infrastructure and clean up. In the coming years your questions will be answered but you expecting those details today is akin to fans expecting the facilities to be built next year. Unrealistic and an excuse to complain and place the ownership group in a negative light.

I see so when the Flames are combative (that's your opinion BTW) that's a bad thing but when Nenshi does it years before there's even a pitch it's fine an dandy. You do realize Nenshi hasn't exactly played nice with the Flames so I would argue the Flames wouldn't have began in such a tone if the mayor didn't spout off to the newspapers his position long before an announcement.

You are the typical anti-funding taxpayer and that's fine as you are entitled but your spin is pretty transparent and you are going to have to do a little better to sway the fence sitters or pro-funding opinions as it's just retread contempt for the project.

Nenshi isn't asking the flames for any favours, the flames are asking for billions of dollars in infrastructure, land value and tax money.