Arena negotiation discussion. UPD: Flames release their proposal

[Weitz]

are the flames losing out on revenue due to GST too? Seems like such a dumb argument to me.

[corporatejay]

Originally Posted by Weitz

are the flames losing out on revenue due to GST too? Seems like such a dumb argument to me.

ummm yes.


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[Loyal and True]

1/3 via Ticket Tax is revenue sharing where City gets portion of revenue from flames/hitmen/roughnecks (and other) customers. This is CSEC contribution and the owners can justify this based on their expected net return overall.

1/3 CSEC cash contribution is not a donation. It is an investment and owners can justify this based on their expected net return overall.

1/3 City Contribution should be partially recovered from all the other businesses in the district (Cowboys Casino and many more) who should pay a levy (above normal property tax) and then perhaps a lesser amount from other downtown hospitality businesses who benefit from the activity.

The city should be budgeting some contribution (without a return on this portion) because every Canadian city of this size needs an arena (every 35 years or so) even if there is no NHL/NBA team. It might be more of a civic facility without all the luxury boxes but it would be necessary nonetheless. The cost to construct and carry it is significant. It would be on city land. There would be no benefit to charge property tax to itself. There would be rent/revenue but without a major league tenant it would not break even because the operating costs are significant.

[SebC]

Originally Posted by GGG

I would love to see to opinion polls on the "repayment" and the ticket tax as an extension of who is winning the perception battlr.

1) The ticket tax is
a) a Flames contribution
B) a users of the Arena contribution

This is a weird question. Assuming the owners aren't looking at the team as a toy, and are looking to make money, there's only two important groups of people: arena users (loosely, i.e. Flames / Flames fans), and the general public (i.e, the city, government, province, fed etc.) As such, this poll misses the important question because either answer acknowleges that the ticket tax is a user fee (which of course it is), and doesn't tell us how many don't believe it is.

Yeah, there's a nuance that non-Flames event users also pay the ticket tax... however, there's no real difference between "the Flames" and "users of the arena" when it comes to the portion of the ticket tax that would be paid on Flames/Hitmen/Roughnecks games.

[Bingo]

Originally Posted by Weitz

are the flames losing out on revenue due to GST too? Seems like such a dumb argument to me.

Seriously?

I think it will be a big factor in Edmonton as well.

If you have a guaranteed add on of 7% on top of your ticket price then it's 7% less than you can charge overall.

But yeah if a family of 5 can afford $25 for pizza for dinner, but the GST of $1.25 makes it out of reach then you buy Delisicio instead.

Actually a better example is Rider games. They tacked a $12 on to every ticket in the building. If Rider fan has paid between $20 and $25 for 10 years and now it's $37 he may just take a pass.

It's a risk for sure.

[Flame On]

Originally Posted by Bingo

I think another way to put it is ...

the ticket tax comes with an assumption that the Flames either a) haven't or b) won't max out the ticket price including the tax when the building is ready to go. If they raise all ticket prices by 40% and then tack on a 7% tax (like Edmonton) they may hit that ceiling.

If they do then the tax is completely coming out of their bottom line. If they haven't, then it comes out of the fans pockets completely.

Either way it's the team's risk to bare going forward.

Everyone gives the City credit, for lost opportunity with loan dollars etc. but in turn doesn't apply that to the Flames. With a ticket tax (which frankly they should just label a user tax) they have lost opportunities to charge what they want.
Honestly the shrill hyperbole of a response like ynwa03's is an example of your earlier post about how this brings out the worst.
It also isn't even genuine to suggest that all the ticket tax will come from citizens, plenty of events and folks from out of town will contribute to concerts and hell even games, look when the Oilers come to town. They're all going to be contributing with a tax.

[getbak]

Originally Posted by Flame On

It also isn't even genuine to suggest that all the ticket tax will come from citizens, plenty of events and folks from out of town will contribute to concerts and hell even games, look when the Oilers come to town. They're all going to be contributing with a tax.

I've got it!

Implement a $50 per person Stupid Fan tax.

If you wear an Oilers/Canucks/Jets/Leafs/Habs/Sens/Ducks jersey to a game, you have to pay an extra $50 just to be allowed in the building. $100 if the team whose jersey you're wearing isn't playing in the game. $200 if you're wearing a Riders jersey to a hockey game.

[Flame On]

Originally Posted by getbak

I've got it!

Implement a $50 per person Stupid Fan tax.

If you wear an Oilers/Canucks/Jets/Leafs/Habs/Sens/Ducks jersey to a game, you have to pay an extra $50 just to be allowed in the building. $100 if the team whose jersey you're wearing isn't playing in the game. $200 if you're wearing a Riders jersey to a hockey game.

$500 if you're wearing a colour other than red in playoffs.

[Lanny_McDonald]

Originally Posted by Weitz

are the flames losing out on revenue due to GST too? Seems like such a dumb argument to me.

Aren't you an Oiler fan? Your team has the city cover 83% of its building costs. The last people that should be injecting themselves into this discussion are Oiler fans.

[EldrickOnIce]

Originally Posted by Weitz

are the flames losing out on revenue due to GST too? Seems like such a dumb argument to me.

Every business is.
Any negative externality artificially reduces profit maximization for the firm.

Taxes create deadweight loss because they prevent people from buying a product that costs more after taxing than it would before the tax was applied. Deadweight loss is the loss of something good economically that occurs because of the tax imposed.

Read more: Do all taxes create deadweight loss? | Investopedia http://www.investopedia.com/ask/answ...#ixzz4tB4is98i
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Ticket tax is a second externality with the only difference being that it does not result in a deadweight loss. I think

Might be econ 301,or something

[taxbuster]

Originally Posted by Bingo

Seriously?

I think it will be a big factor in Edmonton as well.

If you have a guaranteed add on of 7% on top of your ticket price then it's 7% less than you can charge overall.

But yeah if a family of 5 can afford $25 for pizza for dinner, but the GST of $1.25 makes it out of reach then you buy Delisicio instead.

Actually a better example is Rider games. They tacked a $12 on to every ticket in the building. If Rider fan has paid between $20 and $25 for 10 years and now it's $37 he may just take a pass.

It's a risk for sure.

First GST is 5%.

Second, I seriously doubt that anyone considering going to a Flames game is dissuaded by the GST charged. If you've got the funds to pay for a game, you've got the funds to pay the GST.

Only when one gets into bigger money (say purchasing a new car or especially a new house) does GST significantly affect a purchasing decision for the vast majority of people.

As well, fans relate quite differently to "suffering" through a GST hit than they do the same amount charged by already affluent ownership group perceived as "gouging". (Not saying they do this - just about the perception by the public.)

---

The same perception gap applies to the ownership group's approach to this whole mess. They have screwed up the perception of themselves. Instead of making an open and honest offer to the City, they have hamstrung themselves by threatening to move three times, twice prior to any serious discussions, while demanding countless millions from considerably less wealthy people (taxpayers, via the City).

A softer approach likely would have worked MUCH better - and the details could have been quietly hammered out in a professional manner.

[Wormius]

Why is a ticket tax even being floated? The Flames simply need to pay back x-amount to the City. Let the Flames figure that out if they find a ticket tax so abhorrent.

[taxbuster]

Originally Posted by Wormius

Why is a ticket tax even being floated? The Flames simply need to pay back x-amount to the City. Let the Flames figure that out if they find a ticket tax so abhorrent.

Because if the Flames charge something in lieu of the ticket tax, it would count as Hockey Related Revenue and the NHLPA/players get 50% of that. A ticket tax is not HRR and would not require a split to the players.

[Wormius]

Originally Posted by taxbuster

Because if the Flames charge something in lieu of the ticket tax, it would count as Hockey Related Revenue and the NHLPA/players get 50% of that. A ticket tax is not HRR and would not require a split to the players.

What about the non-NHL revenue? Concerts, Hitmen, Stampeders, etc?

[GGG]

Originally Posted by Wormius

What about the non-hockey revenue? Concerts, Hitmen, Stampeders, etc?

Part of any Arena deal is an agreement that th flames are the operator of the arena and derive all revenues from said Arena. In the current Saddledome agreement this is quite a large yearly subsidy for the Flames from the city.



So really the ticket tax limits the rent they can charge to users of the facility. The revenue from the other enterprises and the Arena itself would be earned by a separate company from the Calgary Flames.

I suspect that CESC owns the stamps, hitmen, flames and Arena operations as wholly owned but independant subsidiaries

[Weitz]

Originally Posted by New Era

Aren't you an Oiler fan? Your team has the city cover 83% of its building costs. The last people that should be injecting themselves into this discussion are Oiler fans.

I live and pay taxes in this city. Don't you live in the USA?

[Passe La Puck]

Originally Posted by corporatejay

ummm yes.


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Because the price of goods went down to compensate for the GST when it came out?

[Lanny_McDonald]

Originally Posted by Weitz

I live and pay taxes in this city. Don't you live in the USA?

Yeah, I do. But I paid taxes in Calgary for 30+ years. I probably paid for your education.

My point stands. You really want to complain about the Flames and the deal they are demanding when your team bent over the city of Edmonton to the tune of 83% of construction costs? Seriously? You want to whine about the deal the Flames are suggesting?

[Weitz]

Originally Posted by New Era

Yeah, I do. But I paid taxes in Calgary for 30+ years. I probably paid for your education.

My point stands. You really want to complain about the Flames and the deal they are demanding when your team bent over the city of Edmonton to the tune of 83% of construction costs? Seriously? You want to whine about the deal the Flames are suggesting?

I don't care about the Edmonton deal. I've never paid taxes in that city.

When it comes to tax money for an arena I don't think it matters what team you cheer for if you live in the city. I don't mind tax dollars going to a new stadium but I just want the deal to be good for the city not just for flames. I don't care about the terrible deal Edmonton got for theirs.

[Lanny_McDonald]

Originally Posted by Weitz

I don't care about the Edmonton deal. I've never paid taxes in that city.

When it comes to tax money for an arena I don't think it matters what team you cheer for if you live in the city. I don't mind tax dollars going to a new stadium but I just want the deal to be good for the city not just for flames. I don't care about the terrible deal Edmonton got for theirs.

But you should, as it is the baseline and sets a precedence.