Arena negotiation discussion. UPD: Flames release their proposal

[Lanny_McDonald]

Originally Posted by GioforPM

I sure don't mind the City spending some money on it, on a non-repaid basis. And I sure don't want them paying for the whole thing. If you get to that point, then you can actually have a negotiation.

That is one of the possible outcomes here. If it comes to that, the City is going to find itself in a very bad situation. It likely means the current team has left town. They will have to go out and find ownership inclined to bring a team to Calgary, and woo them. Any incoming team will be looking for a sweetheart deal they can't get elsewhere. The City will have to negotiate against the Edmonton deal for a lease number. That is going to put the City way behind the eight ball. I get the desire to pay as little as possible. Striking a deal now likely achieves that goal. The longer this goes, the more expensive it is going to get for the City. The devil you know...

[Textcritic]

Originally Posted by transplant99

Rightly or wrongly, they have the stance of...the Dome has sat where it is for 34 years now and nothing has popped up around it. What difference does putting up another arena 300 yards North do?

Or something similar and he even used the 300 yd reference in this presser.

Yeah, that's true. And honestly, King had me wondering in his presser if CalgaryNEXT might actually still be a practical starting point of this negotiation. Maybe CalgaryNEXT is not dead?

[442scotty]

I like the idea of a full blown, swing for the fences, west village.... the land has to be reclaimed eventually so why not get on with it... the province needs to chip in and front the clean up as they messed up by not going after the original landowners sooner . To me the area around the saddledome reminds me of owning an old house and every few years you put on an addition until it becomes a disjointed abomination.

CSE needs to spend some money and come up with a nicer looking vision than the bs they originally presented for NEXT omg. If they show us something that makes us go WOW! Then people will get onboard!

[calgaryblood]

Originally Posted by New Era

That is one of the possible outcomes here. If it comes to that, the City is going to find itself in a very bad situation. It likely means the current team has left town. They will have to go out and find ownership inclined to bring a team to Calgary, and woo them. Any incoming team will be looking for a sweetheart deal they can't get elsewhere. The City will have to negotiate against the Edmonton deal for a lease number. That is going to put the City way behind the eight ball. I get the desire to pay as little as possible. Striking a deal now likely achieves that goal. The longer this goes, the more expensive it is going to get for the City. The devil you know...

This is not a scenario we will need to worry about.

The Flames aren't going anywhere.

[Roughneck]

Originally Posted by Parallex

There is public money on the table. The Flames said no.

Seriously... For at least the past two years King has tried to push this as a partnership, That the Flames were looking for a Partner to build the arena with... well today we saw what Ken King (and by extension Murray Edwards and Co.) think "partners" are for. They came pitching an investment when really all they were looking for was a big blank cheque of billionaire begger welfare.

And not just direct public money, bu the desire for an LRT stop right there (huge for an entertainment district) and extending 17th Ave. Basically making the arena the centrepoint for the city's desire to extend 17th Ave's development towards the Stampede Grounds, and the East Village redevelopment, and also a manageable walking distance from the other two LRT lines.

West Village has major roads blocking it from everything and one LRT line by it. And no funding model in place for a CRL. And will cannibalize development dollars away from the East Village and Victoria Park.

[Flash Walken]

As far as ownership is concerned, there is no Plan B.

It's Ice District or relocation.

[Badgers Nose]

Is 'intellectual integrity' a KK thing?

[Caged Great]

Originally Posted by calf

Why?

Because the Flames are in a city that isn't overly large. It is not like other cities where there are multiple sources of revenue. MSG in NYC is used constantly. I'm sure the ACC in Toronto is also. With the new arena, there are only going to be so many dates that the building is occupied for sure. If Calgary had a second tenant like a basketball team like Toronto does, I don't think it would be necessary. The problem is that the new dome would be empty for a good enough portion of the year that it causes a bit of a problem. That's not due to anyone's fault. The city just isn't large enough yet to handle things like that yet.

I don't like seeing taxpayer dollars being wasted on any project, but at least with something like this, there will be impacts that are felt immediately. With there not being any large scale concerts coming to town, that will change immediately. That will have an impact on the economy right there.

[Locke]

Originally Posted by Bingo

I think this is spot on.

Using forbes data for operating income and making the following assumptions ...

1) Forbes operating income is for hockey only revenue and expenses
2) Operating income grows at 2.5% year per year
3) 10% discount rate used for NPV
4) Building at a cost of $600M 100% paid by CSEC

Investment NPV is a loss of $345M

So then you ask what is the non hockey income? Don't have that, but I'd have to assume it's less than hockey related income as a starting point. But if I make it equal to hockey related income then the NPV of the building investment improves to a loss of $145M, still doesn't make sense.

So really as you say, they can't really go it alone. The deal is dead if that's their option.

So you can get $200M covered by the city, and then risk that the market can handle the tax on the tickets (is a risk if people won't pay the hike), and you're left with a $200M investment.

$200M gets you a +NPV of 18M on hockey income, and $217M IF you assume non hockey related revenue is equal.

So in a sense they may have to get this or the building concept is dead.

But to suggest there is another market out there that would be better is foolish. The only way they move is if someone gifts them an arena and even at that they'd better have good data to make sure they get positive operating income from a non traditional market.

You also have to account for the appreciation in the value of the Franchise over time which will also increase substantially with a Lease or Agreement in place in a modern building.

[FlameyMcFlameFace]

how hasn't any media source uploaded a full video of this conference yet?

[Lanny_McDonald]

Originally Posted by calgaryblood

This is not a scenario we will need to worry about.

The Flames aren't going anywhere.

Closing your eyes does not make the guy with the gun to your head go away. Transplant understands the business pretty well for some good reasons, and if he believes this is a possible outcome, this is something to be concerned about. The City needs to be wary about playing a game of Russian roulette with a semi-automatic pistol.

[ynwa03]

Originally Posted by New Era

That is one of the possible outcomes here. If it comes to that, the City is going to find itself in a very bad situation. It likely means the current team has left town. They will have to go out and find ownership inclined to bring a team to Calgary, and woo them. Any incoming team will be looking for a sweetheart deal they can't get elsewhere. The City will have to negotiate against the Edmonton deal for a lease number. That is going to put the City way behind the eight ball. I get the desire to pay as little as possible. Striking a deal now likely achieves that goal. The longer this goes, the more expensive it is going to get for the City. The devil you know...

What makes you say that. Calgary is not a bad market. In fact, there are a number of terrible hockey markets that have a team, who's owners would stand to make (more) money in Calgary. Why would the city need to bend over backwards for them.

[East Coast Flame]

Originally Posted by Flash Walken

Check out Lucas Meyer (@meyer_lucas): https://twitter.com/meyer_lucas?s=09

Haha, I went to school with Lucas. He's a beauty. Good for him.

[Textcritic]

Originally Posted by Bingo

...So in a sense they may have to get this or the building concept is dead.

But to suggest there is another market out there that would be better is foolish. The only way they move is if someone gifts them an arena and even at that they'd better have good data to make sure they get positive operating income from a non traditional market.

Yeah, I would tend to agree. But I think that Calgary and the Flames might be one of the first dominoes in a market correction for all of NA professional sports. The Edmonton deal was the result of a perfect storm of factors that simply WILL NOT be repeated in Calgary. Unlike in Calgary, the threat to move the Oilers out of Edmonton was a lot more credible, and as mentioned unlike in Edmonton the appetite for downtown development in Calgary is no where nearly as acute.

The Flames appear to me to be stuck—they aren't getting the free money that they want, but they are also not practically able to relocate to a new market.

[Bingo]

Originally Posted by Locke

You also have to account for the appreciation in the value of the Franchise over time which will also increase substantially with a Lease or Agreement in place in a modern building.

It's a variable for sure, but an unknown one.

Forbes has the Flames value going down by 6% between 2015 and 2016 which says a lot given the market. You're right that a new building helps the value, but when the cost is already 50% more than the team's value it's still a pretty ominous investment.

That and sports in general almost seems to be on the edge of a cliff doesn't it?

streaming coming in tv going out, less people at NFL openers last week, attendance down last year. Starting to wonder if we may see a huge roll back coming in the whole industry.

Either way the days of increasing franchise value may be on the outs.

[CaptainCrunch]

Originally Posted by New Era

That is one of the possible outcomes here. If it comes to that, the City is going to find itself in a very bad situation. It likely means the current team has left town. They will have to go out and find ownership inclined to bring a team to Calgary, and woo them. Any incoming team will be looking for a sweetheart deal they can't get elsewhere. The City will have to negotiate against the Edmonton deal for a lease number. That is going to put the City way behind the eight ball. I get the desire to pay as little as possible. Striking a deal now likely achieves that goal. The longer this goes, the more expensive it is going to get for the City. The devil you know...

Bettman will ensure that the biggest condition to any new team moving to Calgary is a pre-existing modern NHL building either in place or under construction.

If the Flames leave, (and I doubt it happens) there won't be a second NHL team in Calgary.

[GioforPM]

Originally Posted by Parallex

There is public money on the table. The Flames said no.

Seriously... For at least the past two years King has tried to push this as a partnership, That the Flames were looking for a Partner to build the arena with... well today we saw what Ken King (and by extension Murray Edwards and Co.) think "partners" are for. They came pitching an investment when really all they were looking for was a big blank cheque of billionaire begger welfare.

Depending on whether its to be repaid or not. I am still unclear on that. But if it is not, or even if a portion of it is not, fine. I'm not talking about the offer and counter-offer. I'm talking about the position of some posters.

[Flash Walken]

If I was a private developer I would be hammering the city hall phone lines trying to get the same deal the city has on the table to the flames.

[ssjshmo]

Originally Posted by calgaryblood

Wonder what the reason was for not releasing their proposal.

All the napkins were used up before the presser started

[topfiverecords]

Originally Posted by Caged Great

It's all a dance. The Flames come off as whiners, the city is trying to contribute as minimally as possible.

The City does need to kick in some that won't be repaid, 50-80 million or so, maybe slightly more.

The Flames need to stop whinging and not expect 1/3 - 1/2 of the costs to be paid by the city.

As topfiverecords said, the ticket tax will only be a short term thing and will likely be paid back in 8-10 years on the less optimistic side of things. Then that revenue from then on goes to the team as they won't cut the costs of tickets.

Both sides are coming off poorly as we want everything or we're going to stamp our feet. Both sides have legitimate reasons for why they want to do things in the manner they do and there is a middle ground like in any negotiation.

The Flames as it sits with the Dome are probably leaving about 4-5 million dollars on the table each season. If there are more suites, they can charge more for them. Each suite I believe is in the 150K range per season although I'm not sure on the exact figures. I'm guessing off the top of my head there are 25 or so suites to go around the dome, so if they add all of those extra ones, then it'll jump their revenue significantly.

Would thank, but out of thanks for the day already.