Arena negotiation discussion. UPD: Flames release their proposal

[Table 5]

At the very least, it seems like they agree on 2/3 items. I just don't see how that last third is such an insurmountable mountain that there can't be a solution reached.

I don't see justification for yesterdays hissy fit.

[Bunk]

Originally Posted by transplant99

One plays much better to the electorate than the other is my guess.

Im so confused on this stuff, but from what i understand it appears that the city EVENTUALLY wants the entire thing paid for by the CSEC.

Which is fine, but just say it as such.

Well, they haven't actually released any details yet. They might say 1/3 is a public financing deal - paid through a commercially assessed arena and surrounding district, or in lieu of a property tax paying building, pay the City rent. They currently pay the City rent for the Saddledome, I believe, but have big tax abatement based on the 1995 renovation deal. In that case it wouldn't be much different in operating costs as they have in their current deal.

[CorsiHockeyLeague]

Originally Posted by Bunk

It all depends on the source of the repayment. If it's a district's property tax earmarked to repayment (CRL) it's very much a public contribution, because its citizens tax dollars being earmarked. That's how the East Village worked, but no one would argue that's not a "publicly funded" or maybe more accurately "publicly financed" deal. There's opportunity cost to such an earmarking, financing, debt capacity.

This shouldn't be overlooked. Things are never as simple as the ballpark numbers we're estimating here. For the same reason, it's extremely difficult to actually value the city's contribution to the project.

That having been said, even if you do sell the city a bit short, I just really don't understand why there would be a hard stop to negotiations. Clearly, there's something to work with here, convergence doesn't seem at all impossible. It just looks like transparent posturing on the part of the Flames.

[Backlunds_socks]

Originally Posted by Flame On

I'm so dumb on these things.
If the flames are offering 1/3, and through a ticket tax another 1/3 and will get a loan from the city of 1/3, but have to pay it back, how is that not the Flames paying all the amount and the city eventually having paid nothing?

Because you can invest money and make money on that money. So the city is willing to experience opportunity losses - or lost money on future investments. For CSEC they get an interest and application cost free loan while keeping their capital free for investment or gaining opportunity.

On top of all that CSEC will make money on the Cities loan.

[Locke]

Originally Posted by Bring_Back_Shantz

Are you saying that the city saying it's offer to pay 1/3 is disingenuous because the city wants to recoup it's cost?

Because if that's the case then you need to apply the same logic to the Flames.
They are going to recoup their costs too right? So they aren't paying anywhere near 2/3 or even 90%.

If the criteria for "Paying" is that you don't get any of your money back, then neither side is being very genuine with what they are proposing to pay.

Correct. Its a loan, not a donation.

Of course every side wants their money back through the revenue of the asset they are intending to build. If they didnt they wouldnt build it.

Saying the City's contribution to the cost of initial construction isnt worth paying back is almost equivalent to saying that the Flames shouldnt charge for tickets to pay their initial investment back.

[Weitz]

Originally Posted by Firebot

The city isn't paying 1/3 of the costs if the city is treating it as a loan. That's like saying the bank is paying 80% of the cost of your house.

Call a spade a spade.

Then what are the flames paying? They will be making money. Do they not pay anything either then?

[Leeman4Gilmour]

Originally Posted by Flame On

I'm so dumb on these things.
If the flames are offering 1/3, and through a ticket tax another 1/3 and will get a loan from the city of 1/3, but have to pay it back, how is that not the Flames paying all the amount and the city eventually having paid nothing?

I think it's been mentioned, but if the cash for the 1/3 ticket tax is coming from the city as well, that means the city is fronting 2/3. Sure, they city gets it back, but it saves the CSEC owners $150Million in interest (using Corsi's math). And these guys have that money, but now they can invest it in something else making $150milllion (probably more) on the money they didn't have to front. That's a net gain of $300million. But, the Flames op costs will be higher than they were planning likely. Anywho, like others have said, this wasn't a hill to die on so there must have been another motivation. Bingo's thoughts could have been bang on. Just a manoeuver to accelerate the deal.

[nfotiu]

Out of curiosity, did Edmonton have this ticket tax scheme too? How much did it end up adding per ticket? I'm guessing the Flames would want to raise ticket prices in a new arena, since making more money is kind of the point. It seems prices are pretty high in Calgary as it is. There's got to be a point where it just prices too many people out.

[topfiverecords]

Let's not forget that recouping 1/30th each year of the $200 million the City provides without interest is a massive inflationary loss over the 30 years.

[theg69]

Originally Posted by Table 5

At the very least, it seems like they agree on 2/3 items. I just don't see how that last third is such an insurmountable mountain that there can't be a solution reached.

I don't get the justification for yesterdays hissy fit.

It's all about timing. It was a perfect opportunity for KK to come out with this news - during a Flames Foundation event that is geared towards the community on the same day that Seattle releases news regarding an arena deal.

It's all part of the negotiations to see if they can get significant concessions from the city.

Edmontonians quickly forget that Katz did his "city tours" and made threats about moving during their negotiations. They were also lucky that they had a mayor in Stephen Mandel who was prepared to bend over backwards to make an arena deal happen.

[dissentowner]

Originally Posted by Table 5

At the very least, it seems like they agree on 2/3 items. I just don't see how that last third is such an insurmountable mountain that there can't be a solution reached.

I don't see justification for yesterdays hissy fit.

It is Ken King, since when does he need justification to say something stupid?

[bob-loblaw]

If I never attend a Flames game, what would it cost me as a taxpayer?

The city has an operating budget of $3.5 billion/year right now. From what I can tell, 20% of the budget is received in the form of residential property taxes ($700 million). So, if assuming that the only money used to repay the city's involvement comes from property taxes, what's my added expense to float a new arena.

These are really simplified calculations, but hypothetically if the total investment and carrying costs is $400 million over 25 years, that means $16 million per year needs to be raised from property taxes. $16m/$700m (with no inflation) is about a 2.3% increase over that time frame. For me, that's about $40/year and I'm paying $1,000 over 25 years.

Is having a new arena worth that amount to individual taxpayers? It seems reasonable. $40 per year is definitely a lot cheaper than having to travel some place to watch NHL hockey or attend a concert that won't come here.

[Backlunds_socks]

Originally Posted by Firebot

The city isn't paying 1/3 of the costs if the city is treating it as a loan. That's like saying the bank is paying 80% of the cost of your house.

Call a spade a spade.

No the spade in this case is not a spade. The loan is tax free and gives CSEC a method to generate cash flow.

[longsuffering]

Originally Posted by Flame On

I'm so dumb on these things.
If the flames are offering 1/3, and through a ticket tax another 1/3 and will get a loan from the city of 1/3, but have to pay it back, how is that not the Flames paying all the amount and the city eventually having paid nothing?

Because the Flames will recoup their investment through a revenue sharing mechanism with the City. The City is not claiming all profits from the building!

If all goes well, at the end of the useful life of the new building, both the Flames and the City will have recouped their initial 1/3 investments.

[Bunk]

Originally Posted by theg69

It's all about timing. It was a perfect opportunity for KK to come out with this news - during a Flames Foundation event that is geared towards the community on the same day that Seattle releases news regarding an arena deal.

It's all part of the negotiations to see if they can get significant concessions from the city.

That bit didn't actually favour the Flames' argument since that one is a privately financed deal.

[transplant99]

Originally Posted by dissentowner

It is Ken King, since when does he need justification to say something stupid?

Hate to break it to you but anything and everything he said yesterday, and before this, about arena deals are not his words.

He is merely speaking for his bosses.

So feel that way if you like, but it is his bosses you consider stupid.

[theg69]

Originally Posted by Bunk

That bit didn't actually favour the Flames' argument since that one is a privately financed deal.

It doesn't - but it essentially gives them a location to threaten to relocate to when the arena is built.

[Backlunds_socks]

Originally Posted by longsuffering

Because the Flames will recoup their investment through a revenue sharing mechanism with the City. The City is not claiming all profits from the building!

If all goes well, at the end of the useful life of the new building, both the Flames and the City will have recouped their initial 1/3 investments.

The City won't because $x today is worth way more then $x 35 years down the road.

[Locke]

Take the same 1/9 ratio used for the City to the Flames' investment and multiply it over 35 years using the Flames earnings and thats going to be a really pitiful fraction too.

[EldrickOnIce]

Originally Posted by Weitz

Then what are the flames paying? They will be making money. Do they not pay anything either then?

Of course there is only one answer to whom is actually paying the entire shot:
The people of Calgary and fans of the Flames