Arena negotiation discussion. UPD: Flames release their proposal

[TheFlamesVan]

The tone in this thread needs to dial back about 4 notches.

To be fair, he didn't field questions very well. I feel like he hasn't been the same since CalgryNEXT was so negatively received. I have met him on a couple of occasions (B.CN.) and he is a very personable and nice guy. But I find he gets shaken by the media more easily now and gets his back up quickly. Doesn't come off well.

Outside your hate/love for King or Nenshi, or your disagreements on ticket tax, bottom line is the Flames want the City to kick in money, "for free". Not a loan. I think they are fine with 2/3rds of that plan. And maybe they are okay with the city paying less than 1/3rd even. But they are expecting something from the City as there have been precedents set.

[taco.vidal]

Originally Posted by TheFlamesVan

The tone in this thread needs to dial back about 4 notches.

To be fair, he didn't field questions very well. I feel like he hasn't been the same since CalgryNEXT was so negatively received. I have met him on a couple of occasions (B.CN.) and he is a very personable and nice guy. But I find he gets shaken by the media more easily now and gets his back up quickly. Doesn't come off well.

Outside your hate/love for King or Nenshi, or your disagreements on ticket tax, bottom line is the Flames want the City to kick in money, "for free". Not a loan. I think they are fine with 2/3rds of that plan. And maybe they are okay with the city paying less than 1/3rd even. But they are expecting something from the City as there have been precedents set.

No one is questioning whether King is a nice guy in private or a good guy in general. The discussion is about how he is doing is his job which is being the public face of the business side of the Flames.

[Makarov]

Originally Posted by TheFlamesVan

The tone in this thread needs to dial back about 4 notches.

To be fair, he didn't field questions very well. I feel like he hasn't been the same since CalgryNEXT was so negatively received. I have met him on a couple of occasions (B.CN.) and he is a very personable and nice guy. But I find he gets shaken by the media more easily now and gets his back up quickly. Doesn't come off well.

Outside your hate/love for King or Nenshi, or your disagreements on ticket tax, bottom line is the Flames want the City to kick in money, "for free". Not a loan. I think they are fine with 2/3rds of that plan. And maybe they are okay with the city paying less than 1/3rd even. But they are expecting something from the City as there have been precedents set.

And the City has offered to contribute $180 million in "free money". So where is the problem?

[John Doe]

Originally Posted by EldrickOnIce

Not sure how relevant the ticket 'tax' part is, it's an economics question.
There is a maximum a consumer will pay for any given product. They will not pay more. The Flames operate at that point, where the consumer will not pay more, and revenue is maximized.

There is no 'this is maximum ticket price and then we add a ticket tax in top' . This prices the product above the willingness to pay.

The ticket tax comes out of the Flames revenue. One cannot realistically argue otherwise.

So, if the Flame's tickets are priced at their revenue maximizing potential, then why would they want to spend any money at all on a new arena? Wouldn't any new cost downgrade their earning potential?

Or perhaps they know that they can sell more tickets at a higher price if their games are in a shiny new arena, which would mean that there is a potential to add a tax without taking money from the team.

[tkflames]

Originally Posted by Makarov

And the City has offered to contribute $180 million in "free money". So where is the problem?

Agree with this completely. I am aligned with Nenshi's argument that property tax is not a repayment scheme and instead a method of recovering ongoing costs associated to a facility of this size. Snow clearing, garbage disposal, extra transit and extra security are all real costs.

[Makarov]

Originally Posted by tkflames

Agree with this completely. I am aligned with Nenshi's argument that property tax is not a repayment scheme and instead a method of recovering ongoing costs associated to a facility of this size. Snow clearing, garbage disposal, extra transit and extra security are all real costs.

Absolutely. And of course, the Flames organization, like nearly all property owners in Calgary, are required by law to pay property taxes regardless of whether or not the City has generously contributed money to purchase and develop its property.

[Lanny_McDonald]

Originally Posted by Cali Panthers Fan

Gimme a break. My explanation is simple economics. Technical tax law explanations don't change economic reality. King is trying to make a bogus claim about "lost revenue" when they aren't technically losing any revenue because it wasn't there to begin with. It's 100% BS.

Well, by your home state tax code, you're wrong. I would like an accountant who knows the Alberta tax code to clarify this. I have been away from Alberta for to long to say and would like some familiar to chime in.

[transplant99]

The emotion that some people are coming at this with is a bit over the top. Even for a somewhat emotional issue.

This is a business deal.....full stop. The point guy for the Flames is Ken King and he is merely taking his marching orders from his bosses. Yes he tripped up yesterday, no question, but the message was crystal clear. His bosses are not on board with the Vic Park idea and particularly at the cost the city wants them to bare. Agree with that or not, it doesn't matter, it's really all that has been said thus far by the Flames.

Remember what set all this off to begin with was the mayor rolling out his campaign video on Monday in which he states his vision for a VP entertainment district which included a new arena with the Flames included. I think that really PO'd the ownership when Nenshi was attaching their name to his campaign on a project they emphatically want no part of....at the price being offered. Hence the rebuttal on Tuesday, Nenshi holding his presser on Thursday and then another rebuttal by KK yesterday.

Past all that though, this will go on the back burner once the Flames have presented their offer publicly next week. The election will very much have an influence on how all of this gets back to an actual negotiation after Oct. 16. I think the Flames are fully expecting Nenshi to retain his position, but that there will be some new blood on council and a different set of ears for them to talk to.

I would also suggest that the CSEC have not given up on the idea of a multi-building complex as their legacy project to the city. WV might be a non-starter for the current council, but may be re-visited by a new group. Just a hunch on my part but I think CSEC sees a new stadium/field house as important as a new arena. Building both at once in the same spot makes all kinds of sense IF there is a place/deal that is palatable for all.

The one thing this week has done though is kick-started the process which had apparently come to a complete halt at the end of July. That is a win-win for everybody who has a stake in this thing. Emotionally, financially or otherwise.

[EldrickOnIce]

Originally Posted by Makarov

And the City has offered to contribute $180 million in "free money". So where is the problem?

Maybe I misunderstand then. I thought the city was contributing about 80M (infrastructure /'public good') and loaning the other 100, which is paid back. So it's not 180M 'free money'.

[Roughneck]

Re: ticket tax

The reason it is a separate item both in the city's breakdown of costs and the Flames CalgaryNEXT breakdown of costs (the only difference in where the credit goes for paying it) is because it needs to be separated from other contributions. The ticket tax is created to act as the basis for the loan to get that money, that can be tied to the projected attendance for all events, not just Flames games. Being a ticket tax and not just the added cost onto a ticket, it gets separated from HRR as well (a small drop in the bucket really, but ~$7M per year from Flames tickets is still something).

If the city owned the building and charged the Flames rent, they could still be the ones charging the ticket tax in which case it isn't "Flames revenue" even though they will claim it is because of their spin/blame the "tax" on the higher ticket prices.

If they really wanted it to just be considered their revenue they would have just said CalgaryNEXT was half funded by the money from the Flames owners, and not split between owners and the ticket tax, and just charge more for each ticket. There's a reason they didn't, so it is disingenuous at best for King to claim it is simply their money going towards arena funding.

[EldrickOnIce]

Originally Posted by John Doe

So, if the Flame's tickets are priced at their revenue maximizing potential, then why would they want to spend any money at all on a new arena? Wouldn't any new cost downgrade their earning potential?

Or perhaps they know that they can sell more tickets at a higher price if their games are in a shiny new arena, which would mean that there is a potential to add a tax without taking money from the team.

This is a good point, in that willingness to pay will definitely be higher in a shiny new building (revenue will definitely be increased), but the same economic principle still applies.

[Canehdianman]

Socialise the risk, privitize the profits.

[Roughneck]

Originally Posted by transplant99

This is a business deal.....full stop. The point guy for the Flames is Ken King and he is merely taking his marching orders from his bosses. Yes he tripped up yesterday, no question, but the message was crystal clear. His bosses are not on board with the Vic Park idea and particularly at the cost the city wants them to bare. Agree with that or not, it doesn't matter, it's really all that has been said thus far by the Flames.

They want CalgaryNEXT.

They want Edmonton's deal.

They want to make the money from the development around CalgaryNEXT.

And they want the city to pay for half of it.



On a side note, is the CalgaryNEXT website now gone?

[Makarov]

Originally Posted by EldrickOnIce

Maybe I misunderstand then. I thought the city was contributing about 80M (infrastructure /'public good') and loaning the other 100, which is paid back. So it's not 180M 'free money'.

I think that you did misunderstand. The City is proposing to contribute:

(1) $150 million in infrastructure (the value of which is not included in the $185 million "direct" contribution figure);
(2) $185 million in direct financial contribution ($130 million in cold hard cash, $30 million in land, and $25 million cost of Saddledome demolition [Flames insisting on such demolition to, presumably, create a venue monopoly].)

The Flames will own the property and will receive all revenue.

The City would of course receive property tax revenue from the Flames. However, that has nothing to do with arena funding. Even if the Flames organization built the arena entirely without any financial support from the City, it would be required by law to pay property tax.

https://www.metronews.ca/news/calgar...y-offered.html

[transplant99]

Originally Posted by Roughneck

They want CalgaryNEXT.

They want Edmonton's deal.

They want to make the money from the development around CalgaryNEXT.

And they want the city to pay for half of it.



On a side note, is the CalgaryNEXT website now gone?

Yeah...they want all kinds of things. That's how negotiations work.

Not sure of your point.

[Roughneck]

Originally Posted by transplant99

Yeah...they want all kinds of things. That's how negotiations work.

Not sure of your point.

I was agreeing with you.

[EldrickOnIce]

Originally Posted by Cali Panthers Fan

You pay for your airline tickets, and included in that is an airport improvement tax that all users of the airport are forced to pay. The airline doesn't cry foul that they're losing revenue because without an airport they don't have a place to house their flights which create their revenue in the first place. It's a way to get users of the facility to contribute to a proper and modern airport without having the airlines foot the bill. It seems really straightforward to me.

The point is that flights are pretty much the same price regardless of which airport they are flying out of. They throw the airport tax on top of their business model and ask consumers to pay the extra.

Airline tickets are a perfect example. I'm willing to pay $199 to fly to Vancouver for the weekend. It makes no difference to me if there is improvement tax, surcharge tax or excise tax included or not included at any point in time. The bottom line is the price that I, as a consumer, pay. I will not say, 'well the flight is only $199, and the rest is improvement tax so I'll pay $225 total' - my willing to pay is less than $200, so the improvement tax comes out of the price the airline could otherwise charge me without it. At $225 I choose not to purchase the product.

[sureLoss]

Originally Posted by EldrickOnIce

Airline tickets are a perfect example. I'm willing to pay $199 to fly to Vancouver for the weekend. It makes no difference to me if there is improvement tax, surcharge tax or excise tax included or not included at any point in time. The bottom line is the price that I, as a consumer, pay. I will not say, 'well the flight is only $199, and the rest is improvement tax so I'll pay $225 total' - my willing to pay is less than $200, so the improvement tax comes out of the price the airline could otherwise charge me without it. At $225 I choose not to purchase the product.

Agreed.

I don't get Cali's point. The average consumer isn't going to care about what the ticket tax pays for.

They are going to look at the bottom line of the total price of a ticket and then decide whether to buy a ticket.

[EldrickOnIce]

Originally Posted by Makarov

I think that you did misunderstand. The City is proposing to contribute:

(1) $150 million in infrastructure (the value of which is not included in the $185 million "direct" contribution figure);
(2) $185 million in direct financial contribution ($130 million in cold hard case, $30 million in land, and $25 million cost of Saddledome demolition)

The Flames will own the property and will receive all revenue.

The City would of course receive property tax revenue from the Flames. However, that has nothing to do with arena funding. Even if the Flames organization built the arena entirely without any financial support from the City, it would be required by law to pay property tax.

https://www.metronews.ca/news/calgar...y-offered.html

Well then...
Assuming accurate, this will only play out worse as time goes on (for the Flames).

[Schraderbrau]

Based on the presented proposal the city showed yesterday I have two thoughts:

1. It's a realistic that that has lots of negotiation potential.
2. After seeing that proposal I feel good thinking this deal will get done once all the posturing is done.

It's unfortunate how quickly this has escalated in the public, but from what I have seen I have no doubt they get this figured out. I look forward to all the conversations in the "we have a new rink thread" and "no more 20 minute bathroom lines" threads.