[News] Flames suing insurers for $125 million in COVID related losses

[Dan403]

Originally Posted by Cecil Terwilliger

Flames win this lawsuit and insurance companies raise premiums for the rest of their customers to recoup losses.

...maybe they can afford a new rink.

[undercoverbrother]

Originally Posted by Jason14h

'Insurance' isn't a company. Just because one company has a large insurance policy with the Flames has almost zero impact on the overall industry.

It isn't like when a natural disaster strikes and impacts every insurance company

Why would you see premiums go up at all...And if so go to any other insurer

The named defendants are Westport Insurance Corp., Royal and Sun Alliance Insurance Company of Canada, Liberty Mutual Insurance Company, Aviva Insurance Company of Canada, Northbridge General Insurance Corp., and Special Program Group Canada Inc., operating as Can-Sure Underwriting.

It's not just one insurer, RSA (which is now a part of Intact) & Aviva are big writers in Canada. Northbridge is also a big player.

[PeteMoss]

Originally Posted by Cleveland Steam Whistle

People who's sole focus would be greed, don't invest their money in small market Canadian NHL clubs......because they are crappy investments. The Calgary Flames are a drain on our ownership groups wealth growth potential, they are in it for other reasons.

Is this true?

Forbes (which yes - not exactly scientific) has the Flames value growing 66% in the last 5 years.

When they get a new arena - they'll likely be within kicking distance of a $1 billion valuation.

[Locke]

They better pay up or there may be an 'accidental' fire in the Saddledome this summer...

[calgarywinning]

Originally Posted by Strange Brew

Losses are losses whether covered by the business owner or insurance.

As you point, the one fundamental truth is the end consumer will always end up paying.

No, the reason people are calling out insurance is they never have a loss. Ever. At the consumers expense.

If a business has a loss it ceases to exist.

Unless you are a monopolistic oligarch global eco friendly company.

[IamNotKenKing]

Originally Posted by undercoverbrother

I'm gonna agree.

I posted a question about lawyering on this site and received multiple response and follow ups.

No all Lawyer's are Scrum.

I think (hope?) you have a couple of typos here...

[undercoverbrother]

Originally Posted by IamNotKenKing

I think (hope?) you have a couple of typos here...

fixed

It's my attention to detail that set me apart...............I blame the boring call I was on.

[Jason14h]

Originally Posted by undercoverbrother

It's not just one insurer, RSA (which is now a part of Intact) & Aviva are big writers in Canada. Northbridge is also a big player.

Yes but thats just because whoever took the main policy most likely sold off parts to diversify their risk.

The point is 150 million will have zero effect on the premiums for me or you.

[Cleveland Steam Whistle]

Originally Posted by PeteMoss

Is this true?

Forbes (which yes - not exactly scientific) has the Flames value growing 66% in the last 5 years.

When they get a new arena - they'll likely be within kicking distance of a $1 billion valuation.

As far as return on investment yes it’s true. Flames ownership group would be far better off putting their money in a generic fund that just tries to mirror the market and they’d get a much better return on investment.

A $1billion dollars evaluation after the rink is built… after building a close to $700M dollar rink? On a business who’s on ice cost are close to $100M a year (players salaries, coaches, etc)…. it’s not a revenue growth engine for them. If the Flames were a public traded company, it would not be a growth stock and we’d be foolish to invest in it.

I’m not trying to say the owners are selfless people who do this all out of goodness of their hearts, I’m sure they get something out of it (ego, fun, who knows) but owning the Flames is not a strong business investment, especially when the clock comes up on the required capital investments (new rink) to keep the business going. The NHL in small market Canadian cities requires multiple parties who want to make it work for reasons other than direct return on investment, because the ROI isn’t there.

[OptimalTates]

Originally Posted by Cleveland Steam Whistle

A $1billion dollars evaluation after the rink is built… after building* a close to $700M dollar rink?

You mean after being given the keys to the tax-funded building and then told don't worry about the cleanup as the taxpayers got'em?

The Flame owners aren't charity cases, they aren't doing anyone a favour without getting what's theirs. Between revenue, which includes massive TV deals and the increase in valuation of the team, there is certainly worse investments out there for them.

[powderjunkie]

Originally Posted by IamNotKenKing

I think (hope?) you have a couple of typos here...

[jaydub74]

Originally Posted by Hockeyguy15

I have no sympathy for insurance companies. Best of luck to the Flames.

I would like to agree with this statement but if the Flames are successful, the impact of such a claim will impact all of us, the dollars to pay the Flames will have to come from somewhere. That somewhere is our premiums.

We should actually be hoping the Flames lose this battle.

[Cleveland Steam Whistle]

Originally Posted by OptimalTates

You mean after being given the keys to the tax-funded building and then told don't worry about the cleanup as the taxpayers got'em?

The Flame owners aren't charity cases, they aren't doing anyone a favour without getting what's theirs. Between revenue, which includes massive TV deals and the increase in valuation of the team, there is certainly worse investments out there for them.

My point is the same, regardless of where the money comes from, tax payers, the owners, some other source, combination. Your comment proves my point.

If it costs $700M to build the rink...........and after you are done that investment, on top of all the other expenses (we know they spend close to $80M on player salaries alone) and your evaluation is $1B dollars...........that's hardly anything to get excited about. 70% of your evaluation on that is tied to the land and the rink you built (and an increasing land evaluation likely........not much there left in the evaluation tied to a growing business).

I'm not saying they are charity cases, but as a direct investment, the Flames are a bad one. It's why it requires (in all small Canadian markets btw) a multitude of interested parties to get big Capital Projects for new arena's built. Leave it to the owners alone to front the build, it's just not going to be manageable, it makes the poor returns on investments prior to having to shell out $700M on a rink (BTW, the last Forbes evaluation on the Flames was $680M.......so the new rink literally costs more than the Flames are worth in their mind) not worth it. Ask the city and the tax payer to do it all, well that certainly doesn't make sense either. So you need them all to come together to make it work.

If the Flames were a money making machine, things like the arena deal wouldn't take so long to come together.....when there is good money to be made, #### gets done. When return on investment sucks, but people want it for other reasons, the process slows down, and things get messy. It's that simple.

[lazypucker]

Aren't the insurance policies have force majeure, act-of-god type of exceptions? Isn't COVID one of these exceptions?

[Enoch Root]

Originally Posted by jaydub74

I would like to agree with this statement but if the Flames are successful, the impact of such a claim will impact all of us, the dollars to pay the Flames will have to come from somewhere. That somewhere is our premiums.

We should actually be hoping the Flames lose this battle.

A $150M payout will not affect premiums across the board. Not even a rounding error

[Enoch Root]

Originally Posted by lazypucker

Aren't the insurance policies have force majeure, act-of-god type of exceptions? Isn't COVID one of these exceptions?

it depends on the actual wording in the given policy

and it also depends on what's being insured - what is an act-of-God exemption in one instance is the actual purpose of the insurance in another

this is why these things are contested - there are eventualities that are black and white, but there are eventualities which are not, because you cannot cover every possible eventuality in the wording of a policy. So they are contested

[Cecil Terwilliger]

Originally Posted by Enoch Root

A $150M payout will not affect premiums across the board. Not even a rounding error

Yeah well my insurance guy called and said my premiums are going up by $150M next year.

You think that’s a coincidence?

[Enoch Root]

Originally Posted by Cecil Terwilliger

Yeah well my insurance guy called and said my premiums are going up by $150M next year.

You think that’s a coincidence?

No, he thinks you are a mark

[The Cobra]

Originally Posted by lazypucker

Aren't the insurance policies have force majeure, act-of-god type of exceptions? Isn't COVID one of these exceptions?

Generally COVID is not force majeure, although it might cause force majeure. For example, in a construction contract, COVID might cause a shortage of labor or materials which would likely be force majeure.

[OptimalTates]

Originally Posted by Cleveland Steam Whistle

My point is the same, regardless of where the money comes from, tax payers, the owners, some other source, combination. Your comment proves my point.

If it costs $700M to build the rink...........and after you are done that investment, on top of all the other expenses (we know they spend close to $80M on player salaries alone) and your evaluation is $1B dollars...........that's hardly anything to get excited about. 70% of your evaluation on that is tied to the land and the rink you built (and an increasing land evaluation likely...

No. This is not how this works.

The Forbes evaluation accounts for stadiums, giving the Flames a modicum value for obviously reasons.

225M for being an NHL team (revenue sharing)
275M for the market (getting a team in Calgary)
100M for brand (being able to sell merchandise and the like)
35M for stadium (an old decrepit arena)

If the Flames were to put in 300M today for a 700M arena and have tax payers pay the rest, the evaluation would increase probably much higher than 300M because getting a city to agree to put in 400M itself has a lot of value. This would depend on the exact deal of course.

But that doesn't mean much because we're talking about a team with an old arena having a 650M+ evaluation. A team that was bought in 1980 for 16M. Roughly 10% increase a year, not quite the ~12% the S&P Index (though using the historical percentages it would have a valuation of 525M).

But it's not a stock, it's business. The years the team makes the playoffs, they can make a lot of money. During the dark years, the team obviously was losing money - which is why the rich owners threatened to move. The same way they make their little threats around the arena deal. Because they are not charities.

Ironically, Lemieux is probably closest to an owner doing charity work and he made millions upon millions in doing so.