Arena negotiation discussion. UPD: Flames release their proposal

[calf]

Originally Posted by edslunch

I couldn’t read through all the posts this morning. Is there one that explains how the Flames end up paying 120%?

The Flames are saying:
1) we put up $370M out of a $500M arena (their 1/3 + the ticket tax 1/3)
2) We pay $240M in property taxes over 35 years
3) $370 + $240 = $610M, divided by $500M = 120%

I personally think (as well as others) that this is an incomplete telling of the story and how the funding/economics of the proposal end up working out.

[PeteMoss]

Originally Posted by EldrickOnIce

That's not my understanding, but obviously open to interpretation. Which doesn't mean they didn't bungle it, like they have most things. And that is right - if the will of the majority is something different than current council brings, one should vote accordingly. It's obvious that the public is overwhelmingly on side with current council on this, so vote accordingly there too.
But I don't understand where they threaten anything. They said they are closing negotiations, and repeated that today. That they will not spend that amount money for an arena. That they will continue to operate out if the Saddledome as long as it is feasible.

Of course if no new arena is built the Flames will eventually leave. This isn't a threat, it is common sense.

Interpretation is subjective. When KK says we won't threaten to move, we will just go if they can't get the arena deal they want... I see that as simply stating an obvious eventuality.

So it's over, unless an Olympic bid somehow saves it. And I'm really happy it's done.

Why would you believe anything out of Ken King's mouth about this project? Barnes thread shows all of the nonsense he's said about this for years and years.

They are hoping for change in Mayor at this election. If that doesn't happen, they'll either wait for an Olympics decision or come back to the table and negotiate.

[Mazrim]

Have the Flames ever said what kind of boost in revenues they could expect from a modern arena over the Saddledome? It seems like that would be a pretty valuable thing to estimate if they're going to get antsy over rent or property taxes.

Also, how many new jobs would the new arena create over the Saddledome? Not counting construction of the arena, but let's say 10 years after the new arena is open. I would assume many of the same staff they have today would switch over to the new arena, and the new arena would have less seats overall since there's more luxury boxes. To me, this means there wouldn't exactly be a big jump in head count for CSEC. Basically, when they talk about direct and indirect job growth, I can't really see a case where the direct job growth is a bargaining chip here.

[nik-]

I'm willing to bet the Flames suddenly find the desire to revisit the negotiations when this election shows them that they've grossly overestimated their value and influence.

[bob-loblaw]

A few random thoughts...

If I had an employee that has been working on something for over ten years and this is the result of it, he'd be canned. He wouldn't have made it to ten years.

On the other hand, if the owners really think this is the best starting point to negotiations then shame on them because it's not that great. They obviously aren't too serious about getting an arena built. They're probably selling the team or moving it anyways and the arena talk is a convenient way out for them to save face and blame the city to salvage their reputations.

Can the city put a ticket tax on events starting now and direct the funds to a new facility? Could the Flames even stop them from doing that?

Based on the other thread with eleven years of arena talk by the Flames, they've really done nothing other than slap together a poor presentation about CalgaryNEXT.

That was a great explanation of the CRL, and the Bow definitely contributes to the tax base of the entire area. I know that there's different deals with developers, but what did the city do financially to help the development of the Bow? Obviously a much different scenario than an arena but I don't know the answer.

[GGG]

I think this is a fair break down of the current positions

Flames Offer

Flames 285 cash
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

Flames 285 City 535 million
private 35% / Public 65%

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.

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.

[Cube Inmate]

Originally Posted by calf

The Flames are saying:
1) we put up $370M out of a $500M arena (their 1/3 + the ticket tax 1/3)
2) We pay $240M in property taxes over 35 years
3) $370 + $240 = $610M, divided by $500M = 120%

Embarrassing. That's all I can say.

If this were still a legitimate argument over who really bears the burden of a ticket tax (is it forgone Flames revenue, or a user contribution above the ticket's market value?) I could stomach it. But that property tax claim above is just ... so... so far beyond "good faith" negotiating that I don't even want a "reasonable compromise" solution anymore. I want the owners to completely bend over, or F off.

[Peanut]

Originally Posted by EldrickOnIce

That's not my understanding, but obviously open to interpretation. Which doesn't mean they didn't bungle it, like they have most things. And that is right - if the will of the majority is something different than current council brings, one should vote accordingly. It's obvious that the public is overwhelmingly on side with current council on this, so vote accordingly there too.
But I don't understand where they threaten anything. They said they are closing negotiations, and repeated that today. That they will not spend that amount money for an arena. That they will continue to operate out if the Saddledome as long as it is feasible.

Of course if no new arena is built the Flames will eventually leave. This isn't a threat, it is common sense.

Interpretation is subjective. When KK says we won't threaten to move, we will just go if they can't get the arena deal they want... I see that as simply stating an obvious eventuality.

So it's over, unless an Olympic bid somehow saves it. And I'm really happy it's done.

Did they not specifically tell people (at the charity golf tourney) that if they were unhappy with the current status of the arena negotiation, they needed to vote accordingly? At the same time announcing they were walking away from the table?

I dunno. That announcement tone to me wasn't "well, both sides have given it their all and it's just completely uneconomic for both sides. We'll continue to play at the Dome and we thank the City for their time and effort in this process". They specifically used the word "consequences" and told us all to vote for a new mayor... the OR ELSE was implied I guess. But I'm not sure what else Bettman meant by "consequences" if it wasn't threatening to relocate. And that's what lots of people seem to be taking issue with. Or else what? What is the consequence? Where are they going to go instead and how realistic is that threat? Where is the better market with the better arena with the better TV deal?

Like it doesn't suddenly become economically viable for the City to give them an Edmonton-style deal if Nenshi vacates the mayors office.

[CroFlames]

Originally Posted by firebug

I think that is the issue and it is one that the League Owners and NHLPA need to figure out.

If the only way your business model is successful is to rely on holding civic taxpayers hostage for money - it needs to be fixed.

Effectively they are admitting that there are not enough people who care about their sport to pay all their bills - so lets force the people who don't care to pay for it too.

All true. But every league, and almost every single club in every league have had their arenas and stadiums subsidized by their city or county.

Is Calgary going to be the only municipality that stands up to the 31 NHL owners and says no?

The province of Quebec built an NHL ready arena completely paid for by the taxpayer. The fact that those taxpayers are in Alberta is another story.

[Table 5]

A part of me is almost curious to see the consequences of one of the most stable and relatively prosperous NHL markets moving because neither side feels hockey is financially viable. Would other cities needing new arenas follow? Would it lead to any sort of meaningful change in terms of how the NHL does business? Or would absolutely nothing change?

[Flash Walken]

Originally Posted by Mazrim

Have the Flames ever said what kind of boost in revenues they could expect from a modern arena over the Saddledome? It seems like that would be a pretty valuable thing to estimate if they're going to get antsy over rent or property taxes.

Also, how many new jobs would the new arena create over the Saddledome? Not counting construction of the arena, but let's say 10 years after the new arena is open. I would assume many of the same staff they have today would switch over to the new arena, and the new arena would have less seats overall since there's more luxury boxes. To me, this means there wouldn't exactly be a big jump in head count for CSEC. Basically, when they talk about direct and indirect job growth, I can't really see a case where the direct job growth is a bargaining chip here.

Nenshi mentioned in his press conference that he had seen the flames revenue projections and that a ~5 million property tax bill would be a small amount in comparison. He could not divulge what those numbers were due to privacy concerns, but, the Flames have obviously submitted something to that effect to the city who in response think paying property tax is more than equitable of those revenue projections are accurate.

He also called the Flames arena deal one of the best if not the best rental agreements in the NHL.

[Joborule]

The 'benefits' of trying to piss people off PR wise by saying they're not negotiating anymore (which is rich considering how badly they've botched this up for the past decade, and have only just started actual negotiating), is that it's impossible for anything to be done now until after the election. So they can play up the emotional appeal to get people talking about an arena, and try to get the public to apply pressure to the next council.

The thing is, most people are siding with the city here over the Flames. So there probably isn't gonna be pressure on council to reach back out the Flames and plea to start negotiating again.

With Seatle's recent announcement, it does open the door wide open for Flames to play the relocation card. With the way King is talking, he's setting the foundations to start being 'seen' with Seattle personnel's and contemplating relocating to there. Once that occurs, the 'appeal through emotions' definitely is prevalent. A variable that was considered of little importance becomes significant.

[TheKurgan]

I am starting to think CSEC scrapped their new arena plans on purpose. Nenshi’s "Victoria Park redevelopment" campaign launch and (I believe) the strong desire for the City to make an Winter Olympics bid have moved a new arena from a "nice to have" to a "need to have".

A few different people have mention that two arenas (SaddleDome and a New Arena) are a requirement for the Winter Olympics now. So if Calgary wants to make a bid they have to get funding for a new arena somewhere. If the Flames back away from an arena deal the Province/Federal government will likely have to kick in the money to make any potential Olympic bid work.

Maybe the Flames are hoping that Calgary will get a new Federal/Provincial funded Olympic arena they can lease without having to put up a dime. Just my 2 cents...

[pylon]

Originally Posted by ResAlien

I'm almost convinced that the Flames are intentionally botching the PR side of this in order to tick the fanbase off so much that we're glad when they say they're leaving. Almost.

On the other hand it could be they're utterly tonedeaf and incompetent. That may be an option too.

After the interview King did on the radio this morning, I am actually convinced the team is as good as gone. Once you hit a point in a negotiation where you publicly declare "We're done, it's over, nothing will salvage it, on to current business." There really is no salvaging it. If the City buckles to the Flames demand there will be outrage from those against the arena. If the Flames buckle to the City, Ken King and Co. look like buffoons. Nobody looks good in this anymore.

Unfortunately I believe Edwards just wants to cash out of Calgary altogether. And I believe there are numerous reasons for this, not just tax implications. There may be a personal element why he wants to be nowhere near Canada right now. And I kinda understand them if the rumours are true.

Everyone on every side of this are idiots. As much as I agree with some of Nenshi's arguments, he is going to be the reason, and his little purple legacy will be replaced as the guy who lost the Flames. If he hadn't been such a dismissive egotistical asshat at the beginning of this, when NEXT was proposed, they may have had a chance. Yes NEXT was silly, but the way Nenshi demeaned and basically mocked in in public started things out so sour, nothing was ever gonna happen. But hey, at least Nenshi got some headlines and made himself the center of attention, at the cost of a NHL franchise.

[nik-]

lol @ little purple legacy.

[calgarygeologist]

Originally Posted by TheKurgan

I am starting to think CSEC scrapped their new arena plans on purpose. Nenshi’s "Victoria Park redevelopment" campaign launch and (I believe) the strong desire for the City to make an Winter Olympics bid have moved a new arena from a "nice to have" to a "need to have".

A few different people have mention that two arenas (SaddleDome and a New Arena) are a requirement for the Winter Olympics now. So if Calgary wants to make a bid they have to get funding for a new arena somewhere. If the Flames back away from an arena deal the Province/Federal government will likely have to kick in the money to make any potential Olympic bid work.

Maybe the Flames are hoping that Calgary will get a new Federal/Provincial funded Olympic arena they can lease without having to put up a dime. Just my 2 cents...

Would CSEC really want to go that route though where they would have to enter into a lease where the terms would be highly beneficial to the City? If the City gets funding from the governments and builds the rink they will have the upper hand.

[Toonage]

Edwards won't (can't) move the team so he and the owners if they really do want out will have to sell, which means new owners to hammer out a deal for a new building and if the NHL works with the Flames like they did with the Coyotes they will exhaust ownership options before agreeing to a move.

[firebug]

Originally Posted by CroFlames

All true. But every league, and almost every single club in every league have had their arenas and stadiums subsidized by their city or county.

Is Calgary going to be the only municipality that stands up to the 31 NHL owners and says no?

The province of Quebec built an NHL ready arena completely paid for by the taxpayer. The fact that those taxpayers are in Alberta is another story.

I certainly hope they are the 1st... and that others will follow.

I'm actually not opposed to a civic contribution as i do see a 'public good' in having a franchise... but i agree with the economists who've studied this in that it is fairly minor.

[Flash Walken]

Originally Posted by pylon

After the interview King did on the radio this morning, I am actually convinced the team is as good as gone. Once you hit a point in a negotiation where you publicly declare "We're done, it's over, nothing will salvage it, on to current business." There really is no salvaging it. If the City buckles to the Flames demand there will be outrage from those against the arena. If the Flames buckle to the City, Ken King and Co. look like buffoons. Nobody looks good in this anymore.

Unfortunately I believe Edwards just wants to cash out of Calgary altogether. And I believe there are numerous reasons for this, not just tax implications. There may be a personal element why he wants to be nowhere near Canada right now. And I kinda understand them if the rumours are true.

Everyone on every side of this are idiots. As much as I agree with some of Nenshi's arguments, he is going to be the reason, and his little purple legacy will be replaced as the guy who lost the Flames. If he hadn't been such a dismissive egotistical asshat at the beginning of this, when NEXT was proposed, they may have had a chance. Yes NEXT was silly, but the way Nenshi demeaned and basically mocked in in public started things out so sour, nothing was ever gonna happen. But hey, at least Nenshi got some headlines and made himself the center of attention, at the cost of a NHL franchise.

lol

[CliffFletcher]

People realize Nenshi isn't exactly the one crunching numbers and putting together proposals for the City, right? He's just the public face of the City when it comes to negotiation. Bureaucrats put together costs and viability, the entire council votes on the proposals, and Nenshi addresses them in the media.

The only way Nenshi factors in the negotiations is that he's secure enough in his popularity that the City's case can be presented without fretting about public opinion.