[News] Calgary, Alberta, & CSEC agree in principle to $1.223bn Event Centre + infrastructure

[Scroopy Noopers]

Originally Posted by csnarpy

Well they will own the building and I’m pretty sure they will have some say in the design.

Who gets the revenue?

[Fuzz]

It's kinda crazy just how good a deal CSEC gets. $17 million per year, escalating 1% over 35 years. That's $22.78 million in today's dollars, but in 35 years, that'll be roughly $37 million. So it gets cheaper in real dollars over time, and presumably we will be paying more than 1% borrowing costs, so taxpayers lose on that side, too.



CSEC would have to be utter morons to not accept this deal, which is a good indication it's not so good for the other side.

[Yeah_Baby]

With the sweetheart deal CSEC got I think they can afford to fire Darryl if the new GM wants to.

[Hemi-Cuda]

Originally Posted by Weitz

So what happens when Danielle smith loses and the arena is unfunded?

What a waste of our tax money.

We can only hope

[NewFan]

I hope the arena will be multi function that can be used other sports like basketball, volleyball, or wrestling and gymnastics.

[Scornfire]

Unbelievably egregious kowtowing to a private entity. Where do the rest of us line up for free money to exponentially grow the value of our businesses plzthx?

I'll move my company out to Calgary for a 95% subsidized 20,000 sq ft piece of real estate np

[PeteMoss]

Originally Posted by Cali Panthers Fan

I don't get most of you.

Okay, so money is being spent, taxpayer money. Guess what? That money has already been collected, so you aren't getting it back. What would you rather do with it?

There is a lot of cynicism in government and corporations, and I get that, but honestly, y'all aren't being cynical enough.

The reality is that if you want to keep Calgary relevant in the view of North America, you have to have a major event center, and realistically, it needs to keep a professional sports team. It's smoke and mirrors, but it gives the impression that you're better than maybe you really are. If you lose that, you fall into a bracket of lower end cities that cannot attract investors. It's dumb, but the places that touring artists are willing to go to and NOT willing to go to matter for public perception.

This is an investment in Calgary as an idea of a modern vibrant city. These groups all believe that this will not only maintain a franchise in Calgary, but it will help to develop a part of the city into a space that will support small business, hotels, and possibly even residential development. All of that takes a city from being slightly run-down where investors are wary of bothering to look at it all, into a place where people want to put their money because they see opportunity.

It's all a game folks. Create the impression that the city is thriving with public investment and private investments will come. The people benefit in the long run, and the public dollars end up being well spent.

The alternative is really grim. If you want examples, look at any number of crumbling cities across North America that do not invest public dollars into big projects.

In short, you all will be happy in the long run. Stop bitching and be thankful that anyone is still willing to spend money on this.

God, it's a miracle that the funding for the Olympics happened at all.

Terrible point. Before Vegas or Seattle built their arenas recently.. were they not relevant in North America? Having a new arena doesn't make a city anymore or less relevant in the eyes of anyone outside of the city.

[TheIronMaiden]

It sucks building the new arena has turned into such a political game.

[Yeah_Baby]

Originally Posted by Cali Panthers Fan

I don't get most of you.

Okay, so money is being spent, taxpayer money. Guess what? That money has already been collected, so you aren't getting it back. What would you rather do with it?

There is a lot of cynicism in government and corporations, and I get that, but honestly, y'all aren't being cynical enough.

The reality is that if you want to keep Calgary relevant in the view of North America, you have to have a major event center, and realistically, it needs to keep a professional sports team. It's smoke and mirrors, but it gives the impression that you're better than maybe you really are. If you lose that, you fall into a bracket of lower end cities that cannot attract investors. It's dumb, but the places that touring artists are willing to go to and NOT willing to go to matter for public perception.

This is an investment in Calgary as an idea of a modern vibrant city. These groups all believe that this will not only maintain a franchise in Calgary, but it will help to develop a part of the city into a space that will support small business, hotels, and possibly even residential development. All of that takes a city from being slightly run-down where investors are wary of bothering to look at it all, into a place where people want to put their money because they see opportunity.

It's all a game folks. Create the impression that the city is thriving with public investment and private investments will come. The people benefit in the long run, and the public dollars end up being well spent.

The alternative is really grim. If you want examples, look at any number of crumbling cities across North America that do not invest public dollars into big projects.

In short, you all will be happy in the long run. Stop bitching and be thankful that anyone is still willing to spend money on this.

God, it's a miracle that the funding for the Olympics happened at all.

I mean, I'd rather the Province of Alberta kick money into the housing crisis in Alberta, or work towards establishing a more steady pipeline or fund for all municipalities so they can effectively budget long-term projects instead of one off projects to buy votes.

I think you can make a case that CSEC and the City making a deal makes sense, it's the GoA dollars that don't.


But hey, I'm also stoked about a new building so *shrugs*

Originally Posted by TheIronMaiden

It sucks building the new arena has turned into such a political game.

*astronaut cocks gun*
Always has been

[Loyal and True]

Originally Posted by liamenator

...
CSEC's play worked, and they make out like bandits here. I am happy there will be a new rink, but the last deal was so much better for the city.

The way I see it, previous City leaders (edit - including Gondek) blew it. Scored a few political points in the short term but eventually the city needs the event centre and is fortunate to receive $750 million from tenant over 35 years. Would have saved a lot of money if they hadn't played "chicken" with this file.

On the other hand, provincial money for the expanded scope is saving grace for the current city leaders so they can save face.

[Frequitude]

Maybe it was covered earlier, but an important note is that CSEC's $356M contribution is a discounted number which actually totals to about $750M gross. So they aren't paying $40M up front then the remaining $316M over 35 years. They're paying $40M up front then the remaining $710M over 35 years.

https://www.calgary.ca/content/dam/w...tre-Update.pdf


I know that still won't please CSEC detractors, myself included, but CSEC does deserve the benefit of seeing it through this lens.

And I'm actually shocked that CSEC isn't boasting the $750M number front and centre. That's what they did last time (advertised the undiscounted contribution) and its usually what team owners try to do in these arena deals.

[Fuzz]

Originally Posted by Frequitude

Maybe it was covered earlier, but an important note is that CSEC's $356M contribution is a discounted number which actually totals to about $750M gross. So they aren't paying $40M up front then the remaining $316M over 35 years. They're paying $40M up front then the remaining $710M over 35 years.

https://www.calgary.ca/content/dam/w...tre-Update.pdf


I know that still won't please CSEC detractors, myself included, but CSEC does deserve the benefit of seeing it through this lens.

And I'm actually shocked that CSEC isn't boasting the $750M number front and centre. That's what they did last time (advertised the undiscounted contribution) and its usually what team owners try to do in these arena deals.

Did you miss my post where I pointed this out? You see it as a positive due to the final dollar amount, but the 1% increase over 35 years doesn't capture much inflation, or the borrowing costs the city takes on. This is basically their rent payment. I'd love my rent to be guaranteed to go up 1% ever year, becuase it would mean my rent was drastically cheaper after 35 years.

[Bend it like Bourgeois]

Originally Posted by Fuzz

Did you miss my post where I pointed this out? You see it as a positive due to the final dollar amount, but the 1% increase over 35 years doesn't capture much inflation, or the borrowing costs the city takes on. This is basically their rent payment. I'd love my rent to be guaranteed to go up 1% ever year, becuase it would mean my rent was drastically cheaper after 35 years.

Your post missed the math that had already been done for you. That he just showed you. It accounts for what you are saying

[topfiverecords]

Originally Posted by Fuzz

https://calgary.ctvnews.ca/calgary-a...rict-1.6370698


Not to nitpick of details, but how does a parkade cost $235.4 million, and what is the public benefit of that? This fancy repurposable parkade with 503 spots cost $80 million:


https://www.cbc.ca/news/canada/calga...cmlc-1.6041589


Is this new one encased in gold?

Adding 7 amounts is hard for the city, so there's no way to double check their numbers.

[Lanny_McDonald]

Originally Posted by Hot_Flatus

People don't like it because important social and programmatic issues are falling by the wayside

Important social and programmatic issues come through actual legislation and proper appropriation. This is money earmarked for infrastructure and would not be spent on "programmatic" issues.

Originally Posted by Strange Brew

Or some simply abhor the idea of money going to aid private enterprise.

Except they don't. That's the problem here. I get people being against corporate socialism, but if you make those claims be very consistent in your approach to the issue. If you're going to be upset about this, then be equally as pissed about the tax breaks the city doles out to attract new businesses or get buildings constructed. Never hear a word on that, and it is equally egregious.

[BrownDrake]

The city did just fine with this negotiation, if you don't want a team here then no amount of tax payer dollars would make it pass the smell test. The city has no leverage in this situation, there are plenty of cities that are in better shape an larger markets that can make a better offer. It was important for the city to make this more than just about an arena and they did that which will make some of the initial detractors happy.


We will have a new facility which is required to maintain Calgary in the NHL, I'm happy for that. Hopefully this development will pay off over the long term monetarily but there is also a community component that is often overlooked, parks and libraries are not investments either. Taxes will go up and not everyone will be happy welcome to life.

[topfiverecords]

Originally Posted by Aarongavey

The Flames are spending 40 million on the construction of an arena and other amenities. The taxpayer is spending nearly 1.2 billion on the construction of an arena and other amenities. For the construction phase that is the most accurate way to describe it.

Incorrect.

[powderjunkie]

Originally Posted by Strange Brew

That’s interesting. For all those people that looked at this and concluded it is either a good deal or bad deal for taxpayers, I’m guessing they had their mind made up in advance.

This is fair, but it's pretty hard to imagine the reality of the actual final deal works out better for taxpayers than what is now presented. It's in all parties' interest to present this as favourably as possible (ie. exaggerate CSEC contribution, minimize public funds)...

Originally Posted by liamenator

Most observers and policymakers seem not to grasp just how massively franchise values have jumped in recent years. If I were in the room, I would have hammered this point over and over: with this deal, the Flames' franchise valuation is going to jump at least $350 million, maybe more. The city doesn't see any of that value (nor should it). It feeds entirely to the owners in terms of net worth, borrowing and purchasing power, etc. In this sense, it's fair to expect CSEC to contribute at least half the upfront/financing costs in order to achieve that outcome, or to at least provide clearer and more robust pathways for the city to access some of the revenue generated by the new facility over the next 35 years.

CSEC's play worked, and they make out like bandits here. I am happy there will be a new rink, but the last deal was so much better for the city.

Just curious why you think the bolded? It's a pretty standard business arrangement to sell shares in a corporation in exchange for investment. It would only be a paper transaction unless/until the club is ever sold, and would make a ton of sense for the city for the next time the extortion game comes around.

Originally Posted by Loyal and True

The way I see it, previous City leaders (edit - including Gondek) blew it. Scored a few political points in the short term but eventually the city needs the event centre and is fortunate to receive $750 million from tenant over 35 years. Would have saved a lot of money if they hadn't played "chicken" with this file.

On the other hand, provincial money for the expanded scope is saving grace for the current city leaders so they can save face.

Presuming you mean the red herrings when the deal fell apart, why do you believe CSEC wouldn't simply keep demanding more and more and more if the city bent entirely on those items?

[Frequitude]

Originally Posted by Fuzz

Did you miss my post where I pointed this out? You see it as a positive due to the final dollar amount, but the 1% increase over 35 years doesn't capture much inflation, or the borrowing costs the city takes on. This is basically their rent payment. I'd love my rent to be guaranteed to go up 1% ever year, becuase it would mean my rent was drastically cheaper after 35 years.

I did. There's been almost 1000 posts in 18 hours...

I see "$750M over 35 years" simply as a positive relative to "$356M over 35 years", not as "OMG we totally got a good deal from CSEC" (hence the disclaimer that I'm still a detractor.

The 1%/yr increase is a red herring. Would it make you happier if it was $10M/yr increasing by 4.7% per year, simply because the 4.7 is a bigger number than 1.0? Because they have the exact same present value at a 5% discount rate...

All that really matters is to me is:
-total up front from CSEC
-total gross over 35 years
-discount rate (i.e. implied interest rate) to calculate the present value of their contribution

In this case, CSEC is getting an absurdly smoking deal that I don't like. They're basically only putting $40M into a $1.2B project.

The remaining $17M/yr should just be viewed as rent because they won't own the building so should be paying rent like anyone else who lives somewhere they don't own. And they'll make way more than an extra $17M/yr anyway.

We got bent over by a billionaire. But we were always going to. Everyone does.

[Strange Brew]

Originally Posted by IamNotKenKing

I disagree with this in a local sense.
I am going to spend my Flames and concert money on the Flames and concerts. If they were not here, I am not spending that same money elsewhere in the city on other events. I know that. I spend it on larger items out of province, or I just don't spend it.

So, without a new arena and Flames or concerts being here, my disposable income is simply not being spent here. I doubt I am the only one.

There is some truth to what you are saying. This is an investment that generates some stimulus for the local economy, IMO that's undeniable.

But you have to admit that some of the money spent on Flames would still get spent locally. There is no way that 100% of that money either never gets spent, or all of it gets spent outside of Calgary or Alberta. That's a huge exaggeration.

And then spending it on the Flames certainly does not return it all to the local economy. The players and owners certainly don't spend most of their money locally. And once this deal is inked, the Flames franchise value will increase by several hundred million $'s. When Edwards eventually cashes out, absolutely none of that money stays here.

So if you believe this is a good economic choice for these levels of government, you have to believe this represents a better return that investing or stimulating other businesses.