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Old 12-05-2017, 10:58 AM   #21
Erick Estrada
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Pro sports is weird. In what other business would you pay over $400 million for a business that turns an operating profit of $5 million unless it's in start up mode.
It's a hobby for these guys and a means to get into an exclusive club of 31 members. You can understand why owners aren't thrilled about having to spend their millions on new facilities when most of them are not really making any money off the product. They are essentially providing an entertainment service for a city that's the least profitable of all their business endeavors. I understand that many if not all of them could afford to build their own business but at the same time these guys didn't get rich sinking their personal income in bad business endeavors and they are human like everyone else so if the guy next door to you gets a tax break you will want the same break.
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Old 12-05-2017, 12:03 PM   #22
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Oh I agree for valuation sakes. I'm just making sure people look at the big picture, and that a money losing hockey team isn't the end of the world if there are tangible benefits elsewhere.
You're talking about looking at two different pictures.

Also, from the article behind the chart of numbers:
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Originally Posted by Forbes
Here's how Kurt Badenhausen, Christina Settimi and I put the numbers together, and what they mean: Every team was sent a questionnaire, looking for confirmation on ownership, price paid for team, various stadium information, among other information. Sports bankers were hammered with questions on past and potential deals. Publicly available information, such as leases, credit rating documents and financial statements of arenas were gathered and scrutinized. Lots of phone calls to media rights analysts for the skinny on TV deals.


Revenues and operating income (earnings before interest, taxes, depreciation and amortization) are for the 2016-17 season and net of revenue sharing and arena debt service. Our income statements include revenue team owners get from non-NHL events at their arena, but do not include the expansion fee from the Knights that was divvied out to the other 30 teams in the league. We use revenue multiples to calculate our team values (equity plus net debt) based on the economics of each team’s current arena deal. If a team has definite new arena, media deal or sponsorship agreement kicks in subsequent to the 2016-17 season, we estimate its impact on the enterprise value.

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Old 12-05-2017, 12:52 PM   #23
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Look at the bottom 4-5 teams on this list. They are bleeding money and are simply a drain on the rest of the ownership group. The league would be completely bonkers to ship off the 19th rated franchise to a new, mediocre market before dealing with those teams.

CSEC is still making money or at worst breaking even in a bad year. Further reinforcement not to cave until the deal improves unlike the Edmonton's of the world.
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Old 12-05-2017, 01:12 PM   #24
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Would it be possible to apply the City of Calgary's arena deal to the Edmonton numbers?
Well, if the City get's it's investment on a CSEC owned arena (185M) recouped in property taxes then that would be roughly 6M per year (over 30 years) so reduce that 21M to 15M then reduce by an additional 2M (differential on ticket taxes 185M vs. 125M) per year so... 13M vs. 21M. Unless I'm misunderstanding something.

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Old 12-05-2017, 01:26 PM   #25
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Well, if the City get's it's investment on a CSEC owned arena (185M) recouped in property taxes then that would be roughly 6M per year (over 30 years) so reduce that 21M to 15M then reduce by an additional 2M (differential on ticket taxes 185M vs. 125M) per year so... 13M vs. 21M. Unless I'm misunderstanding something.
Plus I would assume there would be an effect on the Flames side of the equation as they retire the debt on their side.

Also if I remember right Katz gets all of the revenue streams on his building, whereas under the deal in Calgary the Flames wouldn't get those revenue streams.

So I can kind of see why the Flames are saying that the city deal is a no go. And I get why the City says the Oilers style deal is a no go.

At some point these parties are going to have to actually meet in the middle somewhere.
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Old 12-05-2017, 01:32 PM   #26
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Also if I remember right Katz gets all of the revenue streams on his building, whereas under the deal in Calgary the Flames wouldn't get those revenue streams.
That's incorrect. Under the city's proposal the Flames would get 100% of the revenue.

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Old 12-05-2017, 01:47 PM   #27
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Originally Posted by Hot_Flatus View Post
Look at the bottom 4-5 teams on this list. They are bleeding money and are simply a drain on the rest of the ownership group. The league would be completely bonkers to ship off the 19th rated franchise to a new, mediocre market before dealing with those teams.

CSEC is still making money or at worst breaking even in a bad year. Further reinforcement not to cave until the deal improves unlike the Edmonton's of the world.
I don't understand. You think the NHL is salivating over the $5M profit in the 19th market?

That is a rounding error on any TV deal.

Flames can sit around in their 35 year old building and more or less break even as the building ages further for as long as owners want to play. That's Ken King paraphrased. They can sell whenever they feel they have had enough.

Eventually the city will need a new arena (with or without Flames in town) and they will figure out how costly it is, and how important it is to have an anchor tennant.
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Old 12-05-2017, 02:47 PM   #28
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I don't understand. You think the NHL is salivating over the $5M profit in the 19th market?

That is a rounding error on any TV deal.

Flames can sit around in their 35 year old building and more or less break even as the building ages further for as long as owners want to play. That's Ken King paraphrased. They can sell whenever they feel they have had enough.

Eventually the city will need a new arena (with or without Flames in town) and they will figure out how costly it is, and how important it is to have an anchor tennant.
Excellent post. In the nutshell, that's what so many people simply can't comprehend. With the exception of the top five teams in hockey super-markets, most NHL team owners don't NEED to own their franchises. They do it for various personal reasons including, yes, vanity. In case of the Calgary Flames, the owner group always wanted to have and preserve NHL hockey in Calgary even when it didn't make any financial sense to do so. This is a well-known fact and not a made-up PR item. When they are told, in essence, that it has a zero net value to Calgarians, they understandably get a little pissed.
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Old 12-05-2017, 03:09 PM   #29
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Eventually the city will need a new arena (with or without Flames in town) and they will figure out how costly it is, and how important it is to have an anchor tennant.
Why? You really think it will become a major political issue that some music acts skip Calgary?
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Old 12-05-2017, 04:30 PM   #30
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Why? You really think it will become a major political issue that some music acts skip Calgary?
Yeah, that's one of many things that the "It'll eventually need to be replaced anyways" crowd constantly neglects to mention... sure the Saddledome will eventually need to be replaced but once you remove CSEC profit margins from the equation "eventually" transforms into 'whenever the Saddledome becomes structurally unsound' or 'whenever it's more fiscally sound to replace rather then maintain' I imagine both of those dates are decades away.

Even setting that aside if you adjust your thinking to the "with or without Flames in town" you can realize that not having to accommodate an NHL team can dramatically reduce the price on the complex... I mean MTS place 'only' cost $133.5M and it's an NHL arena (albeit a borderline one).
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Old 12-05-2017, 04:33 PM   #31
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Thank goodness there's finally a thread where the new Flames arena and it's negotiation status can be discussed.
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Old 12-05-2017, 05:00 PM   #32
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So the flames are about 9 or so on the list of teams to move?
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Old 12-05-2017, 06:43 PM   #33
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Why? You really think it will become a major political issue that some music acts skip Calgary?
You got it. A few music acts is gonna make all the difference...

... or it could be a given that every 45 years you need a new entertainment centre.

Pretty significant majority of calgarians polled said the arena is getting old.

Even Nenshi was selling Victoria Park arena plan leading up to election.
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Old 12-05-2017, 06:56 PM   #34
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Yeah, that's one of many things that the "It'll eventually need to be replaced anyways" crowd constantly neglects to mention... sure the Saddledome will eventually need to be replaced but once you remove CSEC profit margins from the equation "eventually" transforms into 'whenever the Saddledome becomes structurally unsound' or 'whenever it's more fiscally sound to replace rather then maintain' I imagine both of those dates are decades away.

Even setting that aside if you adjust your thinking to the "with or without Flames in town" you can realize that not having to accommodate an NHL team can dramatically reduce the price on the complex... I mean MTS place 'only' cost $133.5M and it's an NHL arena (albeit a borderline one).

I'd give the arena a maximum 10 years more. I think that's pushing it for a city like Calgary.

MTS built in 2003/2004 and it would cost at least 200MM to build today. It was built 7 yrs after Jets left and operated 7 years without an NHL team.
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Old 12-05-2017, 07:00 PM   #35
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So eight teams are "losing" money. Colorado, Tampa, and Anaheim are probably still making money but for tax purposes they are losing money.

I thought those three cities plus Columbus had a decent fanbase.

Get rid of Florida and Arizona and this league looks pretty healthy.
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Old 12-05-2017, 08:59 PM   #36
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gotta admit, Calgary is worse than I thought it was for revenues and net income. But I do wonder then, why the reluctance to open their books to assist their own negotiation?
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Old 12-05-2017, 09:18 PM   #37
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The reality is that I don’t think anyone would believe the owners n matter what they said.

If they said they were making $5,most of us would think it is $10.

If they were losing $15,we would likely think it was break even.
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Old 12-07-2017, 05:01 AM   #38
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So eight teams are "losing" money. Colorado, Tampa, and Anaheim are probably still making money but for tax purposes they are losing money.
Forbes does not consult the IRS or CRA in coming up with these numbers. So no, the numbers are not rigged to avoid taxation. They may be incorrect for other reasons, but that particular bias is not in question.
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Old 12-07-2017, 06:21 AM   #39
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The key item missing from these lists is profit made from the Arena Management side of the business. I'm not sure if the Arena maintenance costs side of the business is included either.

This is why a team can continually lose money and still be profitable in a market.

For example the Garth Brooks concerts which had very low ticket prices say revenue of $80 per ticket x 15000 people x 7 shows is 8.4 million in additional revenue. Stampede has about the same number of concerts as well for another 8-10 million in revenue.

So in a given year the concert revenue for the Saddledome will make up somewhere between 20% and 50% of the revenue of the Flames Entertainment corp. Breaking even on the Flames and having the lucrative arena business is a win for ownership.

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