Arena negotiation discussion. UPD: Flames release their proposal

[GGG]

Originally Posted by Ducay

CAN spend to the cap, which has nothing to do with profitability at that level. They might be taking lower returns short term to ice a competitive team in order to build following and desire for the new arena (spitballing) even if the revenues don't support it in the Dome.

Lets say they determine no arena will happen, they could then lower their spending to well below the cap to ice a team that they can afford long term within their budget.

Per Forbes they are the 10th most profitable team and are fan base though loyal is more fickle than Edmonton. So yes they CAN do that. We have no evidence that they will do that. And we have no evidence that not spending to the cap would generate the team more profit.

[Ducay]

Don't conflate ability to pay to cap max with ownership being willing to. Even if Flames make $0 revenues, the owners all have the ability to pay to cap max from their own pockets. Who knows what the future holds, an increasing cap, lower CAD, and a bunch of bad years could spell a very tough situation for profitability and Flames in Calgary.
Who knows though, my point is we have no insight into what owners are requiring for a return, regardless of the million other unknowns.

[Hot_Flatus]

Originally Posted by scotty2hotty

Why do the Flames need a week before they can share their proposal?

Obviously need to make a few 'modifications' from the official version in order to make it more palatable for the masses.

I'm expecting we see a proposal with numerous scratched out sections, likely written on a well soiled napkin that Ken King used to blow his nose.

[Hot_Flatus]

Originally Posted by Ducay

Don't conflate ability to pay to cap max with ownership being willing to. Even if Flames make $0 revenues, the owners all have the ability to pay to cap max from their own pockets. Who knows what the future holds, an increasing cap, lower CAD, and a bunch of bad years could spell a very tough situation for profitability and Flames in Calgary.
Who knows though, my point is we have no insight into what owners are requiring for a return, regardless of the million other unknowns.

There is also nothing to stop the owners for deciding the economics of the league are still better elsewhere 10 years after the city caves and decides to fund the arena. This in itself is why is would be bad practice to allow them to get away with not funding this venture substantially on their own dime.

[GGG]

Originally Posted by Ducay

Don't conflate ability to pay to cap max with ownership being willing to. Even if Flames make $0 revenues, the owners all have the ability to pay to cap max from their own pockets. Who knows what the future holds, an increasing cap, lower CAD, and a bunch of bad years could spell a very tough situation for profitability and Flames in Calgary.
Who knows though, my point is we have no insight into what owners are requiring for a return, regardless of the million other unknowns.

This doesn't change with or without a new arena though. The owners can choose to spend to the cap or not. We as fans get to choose to buy tickets. We have no other say in the matter regardless of how this is resolved.

Based on evidence available to us today the Flames are not in any danger of being unable to spend to the cap. Ken King is misrepresenting the situation in order to further his bid.

[EldrickOnIce]

Originally Posted by Hot_Flatus

There is also nothing to stop the owners for deciding the economics of the league are still better elsewhere 10 years after the city caves and decides to fund the arena. This in itself is why is would be bad practice to allow them to get away with not funding this venture substantially on their own dime.

They can't take it with them. The building remains a piece of local infrastructure.

[EldrickOnIce]

Originally Posted by GGG

This doesn't change with or without a new arena though. The owners can choose to spend to the cap or not. We as fans get to choose to buy tickets. We have no other say in the matter regardless of how this is resolved.

Based on evidence available to us today the Flames are not in any danger of being unable to spend to the cap. Ken King is misrepresenting the situation in order to further his bid.

No. Today they are not.
Tomorrow, who knows? Yeah it is maybe a scare tactic, but that doesn't mean it isn't accurate either. If all of your 'competitors' are improving their revenue streams and you are not, projections for the future don't look good.

It's a vicious cycle. More revenue = higher cap = need for more revenue... with the fan paying for it all. The interesting part, when it comes to the NHL, is that only the players ultimately reap the benefit. The cap after lockout was 39M. It is close to double that now. And what is the gain, except increasing player salaries?
It has to stop somewhere. It's not sustainable. Maybe it starts to stop here?

[Backlunds_socks]

Originally Posted by Ducay

Don't conflate ability to pay to cap max with ownership being willing to. Even if Flames make $0 revenues, the owners all have the ability to pay to cap max from their own pockets. Who knows what the future holds, an increasing cap, lower CAD, and a bunch of bad years could spell a very tough situation for profitability and Flames in Calgary.
Who knows though, my point is we have no insight into what owners are requiring for a return, regardless of the million other unknowns.

Any years here will be better then any available territory on the states.

[Lanny_McDonald]

Originally Posted by Strange Brew

He is talking about growth in revenues compared to today. In other words, if Flames are able to spend to the cap today and remain competitive, other teams revenues should not grow at a faster pace just because their arena is newer.

And he's wrong. As Eldrick pointed out, the initial gap continues to grow. This is no different than the income gap between the haves and the have-nots. If you make $100,000, but the guy you're trying to compare yourself makes $200,000, then a 5% increase is dramatically different. Sure, you get a 5% bump, but the other guy's 5% bump is actually 10% compared to your real world salary. Even though you both got a 5% increase, the gap continues to grow.

There are many posters on here with incredibly strong opinions and personally, I don't mind seeing the passion come through. But some civility wouldn't hurt and maybe everyone should take the time to read and understand someone else's take even if you don't agree. Just my two cents.

Where was I uncivil? In suggesting that he didn't understand the basis of a very obvious claim he was making, and that if you can't see the obviousness of that situation, then all the explanation in the world is not going to help? That isn't being uncivil, it was being accurate, as GGG proved when he doubled down immediately afterwards by denying the existence of this problem. If you want to see true incivility maybe review some of things said to IamnotKenKing or Manhattanboy. They have been silenced by obnoxious comments and incivility towards them. As a result we - this board - has lost a good source of information from someone inside the walls. That is a shame IMO.

[bizaro86]

Originally Posted by Hot_Flatus

There is also nothing to stop the owners for deciding the economics of the league are still better elsewhere 10 years after the city caves and decides to fund the arena. This in itself is why is would be bad practice to allow them to get away with not funding this venture substantially on their own dime.

IMO one thing the city needs to get out of any negotiation is a "no moving the team for 30+ years clause." Maybe write it that the Flames have to pay the city back for 100% of their arena contribution if they move.

[GioforPM]

Originally Posted by Makarov

Where the fata is Rockyview going to find $300 million? And even if it did, why the fata would it give it to the Flames?

Well, Rockyview is run very badly, and never saw a development it didn't like.

[Flamenspiel]

Originally Posted by New Era

As Eldrick pointed out, the initial gap continues to grow. This is no different than the income gap between the haves and the have-nots.

The thing is you are arguing against yourself, the more you say that the Flames need a new arena to make more money, the more it makes me think they should pay for it. Yes they will make more money, and its just like a regular business expanding to increase productivity.

Its no different from Arsenal's move away from Highbury, the Flames really only have to suck it up for 5-7 years until the money is payed back. Arsenal took about 15 years to pay it back.

[Lanny_McDonald]

Originally Posted by bizaro86

IMO one thing the city needs to get out of any negotiation is a "no moving the team for 30+ years clause." Maybe write it that the Flames have to pay the city back for 100% of their arena contribution if they move.

Completely agree. Make this issue go away for 30 years, so we can just enjoy hockey... until the next lockout.

[Lanny_McDonald]

Originally Posted by Flamenspiel

The thing is you are arguing against yourself, the more you say that the Flames need a new arena to make more money, the more it makes me think they should pay for it. Yes they will make more money, and its just like a regular business expanding to increase productivity.

You aren't paying attention. One of the teams that will jump them in revenue generation did so on the back of a new arena and a sweetheart of an arena deal. Public funding is a requirement for building arenas and stadiums in Canada, especially in the smaller cities. Private funding has proven to be a failure for anyone who tries it, with one exception. The only privately funded arena in Canada that has not gone bust and forced a sale of the team is the ACC. Toronto is kind of in a unique situation, having a population five to eight times the population of Calgary, and also having a naming rights deal that paid for the construction cost of the arena many times over. Think on that. The naming rights paid for three Air Canada Centres, with change left over. And the Flames have to find a way to compete with revenue opportunities like that?

[Oil Stain]

Originally Posted by New Era

And he's wrong. As Eldrick pointed out, the initial gap continues to grow. This is no different than the income gap between the haves and the have-nots. If you make $100,000, but the guy you're trying to compare yourself makes $200,000, then a 5% increase is dramatically different. Sure, you get a 5% bump, but the other guy's 5% bump is actually 10% compared to your real world salary. Even though you both got a 5% increase, the gap continues to grow.

Yeah, but in this scenario, the Flames are the guy making $200,000.

They have higher operating income than 2/3rds of the league.

Do you think the Flames need to be top 5 in revenue in order to compete?

[GGG]

Originally Posted by New Era

And he's wrong. As Eldrick pointed out, the initial gap continues to grow. This is no different than the income gap between the haves and the have-nots. If you make $100,000, but the guy you're trying to compare yourself makes $200,000, then a 5% increase is dramatically different. Sure, you get a 5% bump, but the other guy's 5% bump is actually 10% compared to your real world salary. Even though you both got a 5% increase, the gap continues to grow.

You still haven't explained how the Flames will be unable to keep up with Cap growth though. Which was the original claim I am arguing against. They currently are in the middle of revenues and that won't change as the teams below them save Edmonton are already operating in new arenas. And as long as the relative position of their revenue doesn't change they don't get capped out.

Effectively they are in the centre of the revenue bell curve so as you increase the standard deviation of revenues the flames remain in the middle. So the Flames ability to spend to the cap remains constant.

[Flamenspiel]

Originally Posted by New Era

You aren't paying attention. One of the teams that will jump them in revenue generation did so on the back of a new arena and a sweetheart of an arena deal. Public funding is a requirement for building arenas and stadiums in Canada, especially in the smaller cities. Private funding has proven to be a failure for anyone who tries it, with one exception. The only privately funded arena in Canada that has not gone bust and forced a sale of the team is the ACC. Toronto is kind of in a unique situation, having a population five to eight times the population of Calgary, and also having a naming rights deal that paid for the construction cost of the arena many times over. Think on that. The naming rights paid for three Air Canada Centres, with change left over. And the Flames have to find a way to compete with revenue opportunities like that?

I don't buy that for a second. If you actually bothered looking at the detail, Gillette sold the team in Montreal but it had nothing to do with the Bell Centre(very lucrative indeed) and Montreal's population(1.7 vs 1.4) is not that much more then Calgary. Indeed, Gillette bought the Canadiens for 185 and sold them for around 600 million, it worked out great for him and payed off in spades, again the Bell centre is an argument for a private investment actually paying off.

Edmonton is really the exception here and it was always a government town reliant on taxes.

[longsuffering]

Complete speculation on my part, but I'll float a prediction of what the Flames proposal might look like based on some media reports.

City portion - 52% ($286 million)
Flames direct portion - 20% ($120 million)
Ticket Tax - 28% ($154 million) - Considered by Flames to be part of their contribution. ALTHOUGH IT IS NOT

Obviously, there would be zero money flowing back to the City from their investment by way of taxes or revenue sharing. Although I expect that CSEC will ultimately agree to some form of rent.

[EldrickOnIce]

Originally Posted by Flamenspiel

I don't buy that for a second. If you actually bothered looking at the detail, Gillette sold the team in Montreal but it had nothing to do with the Bell Centre(very lucrative indeed) and Montreal's population(1.7 vs 1.4) is not that much more then Calgary. Indeed, Gillette bought the Canadiens for 185 and sold them for around 600 million, it worked out great for him and payed off in spades, again the Bell centre is an argument for a private investment actually paying off.

Edmonton is really the exception here and it was always a government town reliant on taxes.

Montreal population exceeds 4M

[EldrickOnIce]

Since last CBA, Flames revenue as percentage of league revenue is at its lowest 3 years since the lockout, dropping in 2015-16 to less than 3% of league revenue.

Average post lockout/ pre latest CBA?
Somewhere around average 3.3-3.4% of NHL revenues.

Any idea why this should be the case?

Please feel free to correct my math. It could be off some. I lost the NHL link
https://www.statista.com/statistics/...es-since-2006/