Arena negotiation discussion. UPD: Flames release their proposal

[Parallex]

Originally Posted by Calgary4LIfe

I believe the only way that you can look at the ticket tax portion as NOT being paid by CSEC is if you feel that CSEC isn't inclined to price their tickets to the maximum amount that the market would purchase them at.

Okay, but then you have to consider the NHL players as being a party paying much of it. Since (presumably) the ticket tax won't be considered HRR and the foregone ticket price (in it's absence) would.

Frankly... I feel the party that fronts the money that will actually pay for the actual construction of the new Arena is the one paying that portion of the ultimate charge. The ticket tax revenue stream then becomes a benefit derived from that investment.

[ynwa03]

Originally Posted by corporatejay

He's right. If the market for a ticket to the flames game is $110. Whether all of that revenue goes to the flames or 100 goes to the flames or 10 goes to a tax, the market is set.

I mean, technically the flames "contribution" is from general revenue anyway so that's also contributed by the fans.

Yeah, except this argument of it being Flames revenue is completely hypothetical and abstract. There is no magic maximum number. The market dictates these things and the market is not the same as it was yesterday and won't be the same tomorrow as it is today.

This argument is the definition of an accounting trick. The real money is coming out of the consumers pocket. The hypothetical, non-existent money, in the hypothetical economic scenario that does not exist , or is impossible to define, is coming out of the Flames metaphorical pocket.

[Kerplunk]

I look at it from the other side...since it is a tax, at no time is it considered revenue for CSEC; they are collecting and remitting it to the appropriate agent (probably the city) at the times denoted by the contract. They can, and probably will, set whatever price point they want, and the tax gets tacked on top.

[GGG]

The correct statement is that the contribution of the ticket tax is the Flames opportunity cost. They lose the potential to maximize their revenue by an amount equal to the ticket tax. The cities land contribution is also an opportunity cost for the city if they continue to own the land.

Also the Flames paying property tax is not repayment. It's paying taxes

For simplicity of discussion it is easier to consider the opportunity cost of any item as a contribution and any tax abatement also contributions. It just makes the assumptions much easier.

So paying taxes is not a Flames contribution or repayment
Paying the ticket tax is a Flames contribution
CRLs aren't free money and are city contributions
Land use is a city contribution

[Tron_fdc]

So does that mean once the ticket tax portion is collected (paid off?) they will lower ticket prices to reflect the removal of the tax?

HAHAHAHAHAHAHAHAHAHAHAHAHA

[jammies]

It's quite simple, a $100 ticket will cost $130 + $10 ticket tax in the new arena, and that is the Flames losing out on revenue. How could anyone argue?

[Parallex]

Originally Posted by GGG

So paying taxes is not a Flames contribution or repayment
Paying the ticket tax is a Flames contribution
CRLs aren't free money and are city contributions
Land use is a city contribution

"Paying the ticket tax is a Flames contribution"... less the amount that would go into HRR.

I don't really think of it as a Flames "contribution" (unless CS&E are the ones fronting it) I more think of it more as just a Fee paid to an investor.

[RM14]

How about they just retroactively apply $10 for every ticket sold since the lockout and see how much they come up with.

[GGG]

I would love to see to opinion polls on the "repayment" and the ticket tax as an extension of who is winning the perception battlr.

1) The ticket tax is
a) a Flames contribution
B) a users of the Arena contribution

2) The flames Paying property taxes on the arena is
a) a Flames contribution
b) not a Flames contribution

I don't know how to word the second question as not to bias the answer. The above seems biased to the Flames the alternative is

2) The city not requiring the payment of property taxes is
A) a city contribution
B) not a city contribution

I think choice A out performs in both polls.

[GGG]

Originally Posted by Parallex

"Paying the ticket tax is a Flames contribution"... less the amount that would go into HRR.

I don't really think of it as a Flames "contribution" (unless CS&E are the ones fronting it) I more think of it more as just a Fee paid to an investor.

No because the structure without the city would be Calgary Arena Corp charges a $12 fee on every ticket sold to the arena as an operations and maintenance fee. The Calgary Flames would never collect that money however CSEC would.

[corporatejay]

Originally Posted by GGG

I would love to see to opinion polls on the "repayment" and the ticket tax as an extension of who is winning the perception battlr.

1) The ticket tax is
a) a Flames contribution
B) a users of the Arena contribution

2) The flames Paying property taxes on the arena is
a) a Flames contribution
b) not a Flames contribution

I don't know how to word the second question as not to bias the answer. The above seems biased to the Flames the alternative is

2) The city not requiring the payment of property taxes is
A) a city contribution
B) not a city contribution

I think choice A out performs in both polls.

Guys, where do you think the flames are going to come up with their $185 million? It's from team revenue, which they derived from the fans. It's the same thing, they are just short circuiting it to get away from HHR and effectively "pre-borrowing" it.

$130 ticket ($120+10) the day before the ticket tax is repaid will be $130 ticket (130+0) the day after.

[Roughneck]

Originally Posted by corporatejay

Guys, where do you think the flames are going to come up with their $185 million? It's from team revenue, which they derived from the fans. It's the same thing, they are just short circuiting it to get away from HHR and effectively "pre-borrowing" it.

$130 ticket ($120+10) the day before the ticket tax is repaid will be $130 ticket (130+0) the day after.

Nah, it will go to $140 a ticket ($120 + $20 arena improvement fee).

"Ticket prices have stayed the same throughout this process, that is our commitment to the fans!"

[Rollin22x]

Originally Posted by GGG

I would love to see to opinion polls on the "repayment" and the ticket tax as an extension of who is winning the perception battlr.

1) The ticket tax is
a) a Flames contribution
B) a users of the Arena contribution
C) a vehicle for government to recoup tax payer dollars


2) The flames Paying property taxes on the arena is
a) a Flames contribution
b) not a Flames contribution
c) something every other property owner pays, so should the Flames if they assume ownership

I don't know how to word the second question as not to bias the answer. The above seems biased to the Flames the alternative is

2) The city not requiring the payment of property taxes is
A) a city contribution
B) not a city contribution

I think choice A out performs in both polls.

You may need to add the potential for the Flames to rent the arena and the possibility of the city acquiring an ownership stake.

[mikeecho]

I know it's been referenced in this thread before, but look no further than airlines and how they handle the various airport improvement fees (AIF). They don't see that as their cash contribution to each airports maintenance because they were prevented from charging that much more for a ticket. They see it as a fee they collect on behalf of the airport to improve the facility.

[corporatejay]

Originally Posted by mikeecho

I know it's been referenced in this thread before, but look no further than airlines and how they handle the various airport improvement fees (AIF). They don't see that as their cash contribution to each airports maintenance because they were prevented from charging that much more for a ticket. They see it as a fee they collect on behalf of the airport to improve the facility.

You don't think if that fee didn't exist they would lower their prices? How's that fuel surcharge fee working out even though oil is at $50 a barrel?

[GGG]

Originally Posted by mikeecho

I know it's been referenced in this thread before, but look no further than airlines and how they handle the various airport improvement fees (AIF). They don't see that as their cash contribution to each airports maintenance because they were prevented from charging that much more for a ticket. They see it as a fee they collect on behalf of the airport to improve the facility.

Competition in airports keep pricing down so the maximum price an airline can charge is the cost another airline can make a profit at. Therefore the AIF is not an opportunity cost to the airline.

There is no competition for the flames that is also paying the fee so the opportunity cost is the Flames.

If an airline has a monopoly on a particular route then the AIF does limit the amount they can charge and therefore it's an opportunity cost to the airline.

[EldrickOnIce]

Originally Posted by Tron_fdc

So does that mean once the ticket tax portion is collected (paid off?) they will lower ticket prices to reflect the removal of the tax?

HAHAHAHAHAHAHAHAHAHAHAHAHA

Originally Posted by RM14

How about they just retroactively apply $10 for every ticket sold since the lockout and see how much they come up with.

These justify calling the tax a Flames contribution. I expect you can see this?

[Bingo]

If the Flames front the tax and then collect it back with a 7% tax rate, they are certainly the ones at risk should they bump up against the top of their market. I don't see much debate in that.

If the city fronts the money then they are out time value of money, and the Flames are still at risk that the repayment that they plan to come out of the ticket tax will bump up against their market max and take away revenue.

The first is all CSEC the second more complicated depending on loan terms.

[Barnes]

I really wish Ken King would turn in his homework so we can get on with this. Shouldn't take this long.

[GGG]

I think one interesting thing that hasn't come up is the current annual subsidy of the Flames.

The city has effectively gifted the Entertainment business in the city to the Flames. If it auctioned off the Arena Management contract what is the value of that deal? I think one of the repayment misconceptions comes from people not realizing theflames currently receive a 5 million to 10 million dollar subsidy from the city in the terms of minimal rent and the right to host events.