Arena negotiation discussion. UPD: Flames release their proposal

[Krovikan]

Somehow the Flames thought they would take Kings disaster of a press conference and release a presentation just as arrogant.

They start off by talking about CRL, doing a horrible job at defining it and try to make it seem like the city gets both property tax and CRL.

They then choose to ignore their revenue increase from the comparison and put out a balance sheet that pretends they get nothing and City gets everything.

Then they put out the project timeline, which minimizes the Flames failed to put together a real proposal for 8 years, making it seem like the City has been stalling the process for 10 years. When the first presentation to the City was April 2015, 1.5 years ago.

Then they tell you to read the graph just incase the minimizing didn't work.

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[GordonBlue]

Originally Posted by Roughneck

So the city can keep the Saddledome operation as a part of this proposal, and use it to potentially compete with acts and events in the new arena?

no way the saddledome will be left for the city to compete with the flames for concerts and events. there will be some sort of non compete agreement where the new arena gets dibs.

besides, if you're a major touring act, would you go to the shiny new arena with all the bells and whistles, or the crappy old one that can't support your equipment and probably has ratty backstage facilities?

[Blarg]

I was told there would be architectural rendering of the new building. I guess the Flames lied and they don't actually have one?

[You Need a Thneed]

Yup, the Flames’ proposal has the Flames putting ZERO money into the arena, except for the financing costs.

The Flames also keep going on about a building that the city owns - however, let’s put it this way: The City proposal had the Flames owning the arena, and the Flames proposal has the city owning the arena. It’s completely obvious that both sides see building ownership as a negative.

Considering the lower overall cost for the project in the Flames’ proposal, I’m also guessing that the the land cost and the Saddledome demolition cost would be costs on top of the $225 million from the city. Overall that would make the city’s contribution more than $100 million more than it was under the city’s offer + there would be no method to pay the city back anything.

Again, this can all be summarized by saying that the Flames appear to think that their portion of the contribution is a gift to the city. It’s absurd.

[calgaryblood]

Originally Posted by Blarg

I was told there would be architectural rendering of the new building. I guess the Flames lied and they don't actually have one?

MS paint is currently under maintenance.

[kermitology]

If you call a ticket tax an opportunity cost to the Flames in that the Flames are not able to price their tickets higher and maximize revenues, then the city land contribution has to be considered an opportunity cost as well. That land could be sold to someone.

Typically CRL would be used to fund infrastructure upgrades in the CRL area, would it not? Not to subsidize an anchor tenant.

[Tyler]

What a freakin' joke the Flames are

[calgaryblood]

Really no surprise the Flames aren't interested in paying taxes as apparently Murray and the Flames are above paying taxes and will do whatever it takes to avoid paying taxes.

[Roughneck]

Originally Posted by GordonBlue

no way the saddledome will be left for the city to compete with the flames for concerts and events. there will be some sort of non compete agreement where the new arena gets dibs.

Which rightfully puts it's decommissioning and demolition back into the cost of the city for a new arena. The city is expected to get rid of an asset for a new one.

besides, if you're a major touring act, would you go to the shiny new arena with all the bells and whistles, or the crappy old one that can't support your equipment and probably has ratty backstage facilities?

Depends on the act. Northlands still had events this year, even though it is a run-down toilet. Stampede could use it as well for events and acts as well. Without hockey the operating costs would be a lot lower anyway, so it wouldn't need many events to work.

But it comes back to if it is expected it wouldn't compete with any potential event, then dealing with it is indeed a cost to the city worth taking into consideration.

[ikaris]

Originally Posted by New Era

You mean the land the City already owns? And what other costs? I thought the City wanted this site because they already had all the infrastructure costs and improvements on the plan and with funds to move forward on those improvements? You fell for the old slush as many costs into our proposal move by the City. Christ, someone even asked why the raising of the Saddledome costs were not included in the Flames proposal. Because it is an unrelated cost to the project or one that is the responsibility of the City. That was one of the things from the City's proposal that was out there. They included a whole bunch of stuff irrelevant to the actual discussion, let alone the project. What exact costs are you referring to?

Saddledome demolition costs are very relevant because CSEC is demanding it to occur.

No comment on rent being a public contribution?

[stone hands]

I really want to know who at the flames thinks any of this is good for them

They took a week to rebut the city's proposal of events and came up with this?

Anyone who's not a blind homer reading that has to be put off at the very least, and offended at the worst

[GGG]

It's so awesome that the Ticket tax was removed from the proposal. As right as the flames were on the ticket tax being a Flames contribution they couldn't sell it to the public that way after Ken Kings disaster. The final deal will have a ticket tax just to avoid HRR.

So to try to equalize these bids we need to assign some values to things. The flames are rent free/property tax free, the flames getting the arena management contract, and the flames maintaining the arena. Let's put this at 7 million per year increasing at the rate of inflation even though that basically just covers taxes and leaves nothing for the arena management contract. And we are missing the opportunity costs for the city land, and the demolition of the dome to be complete.

Flames 285
City 235 cash. (Note a CRL is not free money as development from elsewhere is reduced)
25 Saddledome demolition
30 million Land
245 million operating subsidy / opportunity cost

So Flames 285 City 535 million
private 35% / Public 75%



The city offer
Flames 370 million
City. 185 million

66% private / 33% public

Do nothing assume Saddledome lasts 35 years

City Subsidy to the Flames 6 million per year
210 million 100% public

So basically the Flames are asking the city for an addition 310 million in subsidies over the next 35 years while they are currently making 18 million per season plus external revenues. Since there is no business case for building a new arena and there is no business case for moving no arena should be built at this time until the maintenance costs on the Saddledome become prohibitive.

One thing the flames are right on is that the current city offer is to effectively continue the current rate that the Flames are subsidized at and are putting up no new money.

[PeteMoss]

Originally Posted by stone hands

I really want to know who at the flames thinks any of this is good for them

They took a week to rebut the city's proposal of events and came up with this?

Anyone who's not a blind homer reading that has to be put off at the very least, and offended at the worst

They are hoping people only look at the graphs (which I'm sure most will).

[DJones]

As poorly as the Flames have handled this, they are right. It's simply not economical to fund an arena privately in Calgary.

I just can't see them offering any more.

[GGG]

Originally Posted by DJones

As poorly as the Flames have handled this, they are right. It's simply not economical to fund an arena privately in Calgary.

I just can't see them offering any more.

Here is where I disagree with you. The flames first offer likely has a break even NPV using a 15% discount rate. There is likely room to adjust the expected profits downward towards a 10% rate or lower if the city starts to absorb risks. Bingos number he ran are interesting and I am interested to see where it comes out if you assume that the project as proposed would be break even at 15% NPV then how much the Flames could contribute if the break even was only at 10% NPV.

You also never present your opening offer as your final offer.

[Lil Pedro]

Hey Ken, I really appreciate you going on the FAN this morning to tell us that you're not interested in talking about the arena; thats exactly what fans want to hear. Honestly, if I could half-a** a major project for 10 years straight and get paid a hefty 6 figure salary I would.

This guy is an absolute joke; no way we are getting an arena in this city with this moron spearheading it.

[Reneeee]

October 16th can't come quick enough. Flush out all the aldermen that would not support an NHL club in this city. At this point it will likely cost us any opportunity of having Amazon as a business partner.

With a city and it's one pro sports team bickering it really does look childish by both parties and any savvy business would avoid us at all costs.

This really does have the potential to ruin this city for years to come, ask Winnipeg. People moved, businesses moved, and only now are people returning due to the return of the Jets. Without a pro sports team our city will be undesirable to many money making vetures.

Rant over

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[calf]

Originally Posted by New Era

What piece if the pie are you referring to?

What the Flames make when the arena is open.

There are two parts really to a capital investment like this. The up front cost/funding, then the payback or earnings to recover that investment once open.

The Flames have what both sides put in, how the city gets their money back by property taxes paid by the Flames. But thats where it stops and they make it look like they are out $600 million. They will be making money from games and concerts, which offsets what they pay in property taxes (or should). They don't need to include that number, it is private, but should at least acknowledge it is a factor that exists in the project's economics.

I want a new arena, and am ok with public dollars going into it. But I can't get on board when what the Flames are presenting has logical flaws and obviously misleading or incorrect statements attached to them.

[GGG]

^^^^^^^^^^^
Studies do not show any negative outcomes from teams moving.

Also per Nenshi this offer was rejected by everyone. Which means it might have been the only vote everyone agreed on all year

[Canehdianman]

Originally Posted by Reneeee

October 16th can't come quick enough. Flush out all the aldermen that would not support an NHL club in this city. At this point it will likely cost us any opportunity of having Amazon as a business partner.

With a city and it's one pro sports team bickering it really does look childish by both parties and any savvy business would avoid us at all costs.

This really does have the potential to ruin this city for years to come, ask Winnipeg. People moved, businesses moved, and only now are people returning due to the return of the Jets. Without a pro sports team our city will be undesirable to many money making vetures.

Rant over

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I'm happy to let you know that my vote should effectively cancel yours out because I'm not voting for any candidate that feels that taxpayer dollars should fund stadiums for billionaire owners. The Flames aren't going anywhere.