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Old 09-13-2017, 04:04 PM   #201
Lord Carnage
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Yeah, but it's the City that gets the borrowed money and is obligated to repay. Sure it is designed to be repaid through ticket surcharges but if the Flames fold in 5 years the City is on the hook for this amount regardless if the building sits empty or not. Risk of borrowing is on the City so that's why I count it on them. At least that's the way the Edmonton deal worked, surcharges went to the City to repay the loans.

I don't think that's fair... assuming there is a new building, I have to honestly believe we can agree the Flames aren't folding.

As I thought I understood it, the Flames are taking the loan, with the city co-signing to get a better rate (maybe from the province?).

So the Flames are taking the loan (guaranteed by the city), but it is being repaid by the ticket holders.

I also don't think that's where the city and the Flames are stuck.

I'm my assumptions above are correct, the Flames want the city's 1/3 to be a contribution being repaid by Victoria Park's higher property taxes. The City wants the Flames to repay them the 1/3, and I guess they assume the increased property taxes will go towards offsetting the interest on the loan they take out for their 1/3.

If I'm wrong, can someone please clarify?
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Old 09-13-2017, 04:07 PM   #202
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We don't have the details yet on either offer the nature of 1/3,1/3,1/3 is up in the air.
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Old 09-13-2017, 04:10 PM   #203
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I was going off the Edmonton deal since that is what is being used as a comparable where the city borrowed the money for the surcharge. If the deal on the table here is a cosigned amount then it is a much better deal.
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Old 09-13-2017, 04:15 PM   #204
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The part that doesn't square with me is the ownership & operation of the building. CSEC wants to operate the place (& collect profits) from all events but wants the city to take the liability of ownership right? If CSEC just wants Calgary's 1/3 share without repayment then they should give up all non-Flames event related income.
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Old 09-13-2017, 04:17 PM   #205
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I can understand why the Flames don't like this deal at all but I don't see the city (at least with Nenshi around) changing their mind on this.

Sounds like the city will have to develop infrastructure around the facility as well, who knows how much that will cost. Does the counter proposal from the city include these costs? That could account for the extra $100m the Flames aren't accounting for.

I don't mind the 1/3, 1/3, 1/3 model at all. That is a better split for us Calgarians. Getting some sort of profit back from the new arena to the city will likely need to happen. Maybe it is 30% of arena profits annually until the loan is replayed? No matter the revenue. The $200m could be paid off in 20 years and not 30 based on how smart the CSEC is at filling the building and managing their business. Should the property tax be included as part of repayment, I think it should be. That could be the little lee-way the city can give the CSEC and is a small piece of the pie IMO.
This deal would be great for Calgary but that's why I don't think it'll be good enough
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Old 09-13-2017, 04:25 PM   #206
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The part that doesn't square with me is the ownership & operation of the building. CSEC wants to operate the place (& collect profits) from all events but wants the city to take the liability of ownership right? If CSEC just wants Calgary's 1/3 share without repayment then they should give up all non-Flames event related income.
The flames don't want to own it because they don't want to pay property tax. This needs to be included in any city contribution.
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Old 09-13-2017, 04:25 PM   #207
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Today King said some things that take the bite, a little bit, out of his words.

Here is one thing he was quoted as saying: "[Some people ask], why don't you do the [private-funding] deal that was done in Toronto? Why don't you do the deal that was done in Montreal? If we had five million people, or four million people, we would do those deals," he said.

I think that's a reasonable statement. But there's flip side to this, which is, those teams revenues are greater than the Flames, but not by as large of a margin as I would have guessed. According to Forbes:

Montreal Revenue: $202M
Toronto Revenue: $186M
Vancouver Revenue: $146M
Calgary Revenue: $121M
Edmonton Revenue: $117M
Winnipeg Revenue: $112M

Now that doesn't include the revenue from other events, which I'm sure are very lucrative in Toronto, Montreal and Vancouver, however the multiples of extra millions of people in Toronto and the Montreal greater area do not appear to translate into multiples of revenue. I'm also assuming this counts all Hockey Related Revenue including TV rights payments etc. In that regard Toronto seems low.

Here's the CBC article: http://www.cbc.ca/news/canada/calgar...tics-1.4287118
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Old 09-13-2017, 04:26 PM   #208
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Looking forward to the Negotiation history to be shown.

It can't be that cut and dry
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Old 09-13-2017, 04:40 PM   #209
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Looking forward to the Negotiation history to be shown.

It can't be that cut and dry
Why would you think negotiations would be "shown". A negotiation that ends up being publicized wouldn't end up with very frank conversations.
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Old 09-13-2017, 04:45 PM   #210
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Why would you think negotiations would be "shown". A negotiation that ends up being publicized wouldn't end up with very frank conversations.
The city just voted to disclose the negotiations is I think what he is referring to.
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Old 09-13-2017, 04:53 PM   #211
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Sorry - just looking for clarification on where we are now (things change so quickly)

You said it was 1/3 owners, 1/3 fans, and 1/3 City (debating who floats the financing of the fan's percentage)...

I thought it was 1/3 owners, 1/3 fans, 1/3 City, but the debate was the City wanted to be repaid their 1/3... the fan component was what the ticket tax was repaying, no?

Like I said, maybe I missed something.
No, you got it.

The thing is: The Owners get their share paid back through profits.

The fans pay for access but they've also paid through taxes.

The City pays through citizen's taxes.

The issue is that the City wants that money back through profits just like CSEC gets.

I know? Crazy right? Who pays back loans? Chumps and the weak.
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Old 09-13-2017, 04:56 PM   #212
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Why would you think negotiations would be "shown". A negotiation that ends up being publicized wouldn't end up with very frank conversations.
https://en.wikipedia.org/wiki/Barbar...of_RJR_Nabisco

A great book describing one of the largest deals ever made.
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Old 09-13-2017, 05:01 PM   #213
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Originally Posted by Kjesse View Post
Today King said some things that take the bite, a little bit, out of his words.

Here is one thing he was quoted as saying: "[Some people ask], why don't you do the [private-funding] deal that was done in Toronto? Why don't you do the deal that was done in Montreal? If we had five million people, or four million people, we would do those deals," he said.

I think that's a reasonable statement. But there's flip side to this, which is, those teams revenues are greater than the Flames, but not by as large of a margin as I would have guessed. According to Forbes:

Montreal Revenue: $202M
Toronto Revenue: $186M
Vancouver Revenue: $146M
Calgary Revenue: $121M
Edmonton Revenue: $117M
Winnipeg Revenue: $112M

Now that doesn't include the revenue from other events, which I'm sure are very lucrative in Toronto, Montreal and Vancouver, however the multiples of extra millions of people in Toronto and the Montreal greater area do not appear to translate into multiples of revenue. I'm also assuming this counts all Hockey Related Revenue including TV rights payments etc. In that regard Toronto seems low.

Here's the CBC article: http://www.cbc.ca/news/canada/calgar...tics-1.4287118
Revenue is one thing to look at, but in fairness you need to also look at their operating income at the end of the day for 2016.

Montreal Operating income - $76.9M (EBITDA) or 38% or revenues (was 23% in 2007)
Toronto Operating income - $68M (EBITDA) or 36.5% of revenues (was 38% in 2007)

Calgary Operating income - $18M (EBITDA) or 14.9% of revenues (was -1% in 2007)

So essentially Montreal and Toronto have 3-4 times the income of Calgary, and walking away with a large chunk of profit year over year which is why they were probably privately funded deals.

I believe that the thought process is that an arena as old as the Saddledome has most likely maximized as much revenue and profit as it can, so by building a new arena they can open up avenues of new revenues that arenas since the late 90's have started doing (more luxury boxes, restaurants in arena etc) so instead of making 14 cents on the dollar, they can make 25-30 cents.
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Old 09-13-2017, 05:05 PM   #214
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Quote:
Originally Posted by Kjesse View Post
Today King said some things that take the bite, a little bit, out of his words.

Here is one thing he was quoted as saying: "[Some people ask], why don't you do the [private-funding] deal that was done in Toronto? Why don't you do the deal that was done in Montreal? If we had five million people, or four million people, we would do those deals," he said.

I think that's a reasonable statement. But there's flip side to this, which is, those teams revenues are greater than the Flames, but not by as large of a margin as I would have guessed. According to Forbes:

Montreal Revenue: $202M
Toronto Revenue: $186M
Vancouver Revenue: $146M
Calgary Revenue: $121M
Edmonton Revenue: $117M
Winnipeg Revenue: $112M

Now that doesn't include the revenue from other events, which I'm sure are very lucrative in Toronto, Montreal and Vancouver, however the multiples of extra millions of people in Toronto and the Montreal greater area do not appear to translate into multiples of revenue. I'm also assuming this counts all Hockey Related Revenue including TV rights payments etc. In that regard Toronto seems low.

Here's the CBC article: http://www.cbc.ca/news/canada/calgar...tics-1.4287118
The Forbes list also has operating income which is earnings before interest, taxes and depreciation.

If their numbers are right it's pretty easy to do some math on net present value of building their own arenas.

So NPV at 10% for a 35 year building life (I had operating income rise by 2.5% per year)

Montreal - $307M
Toronto - $209M

Every other team has a losing investment.

Vancouver - ($216M)
Calgary - ($345M)
Edmonton - ($375M)
Winnipeg - ($418M)
Ottawa - ($476M)

Very simple analysis but it works.

If you bump that cost down to $200M Calgary moves into the +$18M category, not a big investment gain but a bump.

Clearly franchise values raising makes being in business worthwhile however, assuming the values continue to rise, or at least maintain their value.
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Old 09-13-2017, 05:09 PM   #215
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I could see why CSEC would want to not have to pay back the city's loan. Calgary gets benefits from the arena (Olympics especially), so they should contribute in the funding for it without CSEC having to contribute even more than they have. Technically, all the costs would be on CSEC.

But the city is not going to be just putting money towards the arena. They'll also need to chip in for the more than likely renovation of McMahon Stadium, which CSEC will seek next. And best believe CSEC does not want to invest all that much money into that since they're going to do that for the arena already. And then there's also the fieldhouse that needs to get funded and built sooner, rather than later.

If the city chips in ~200M for the arena, 50% for McMahon renovation (which based on city's CalgaryNEXT response report to be in the range of 80-100M) +200M for the fieldhouse. So the city may have to drop down $450M in major recreation/entertainment venues in the next few years. That's a lot of coin to put down. So I can see why the city wants to get $200M back over time.

So if it's as simple as that, then it's just a matter of how the city can get it's money back for the arena contribution, unless an alternative can be presented that pleases both the city and CSEC.

It'll be nice to finally start seeing some actual numbers. Means we're getting closer to having the dots and lines inked, and construction can finally begin.
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Old 09-13-2017, 06:10 PM   #216
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So if I'm reading this right, they agree on 1/3, 1/3, 1/3? And they agree on two of those thirds being CSEC contribution and ticket tax (perhaps with some fight on interest rate which skews it really being 1/3 but let's call that noise for now)? And they agree that the last third is from the city but they disagree on how the city would recoup it...CSEC saying CRL and the City saying from CSEC via revenue sharing or an arena lease?

If that's the case I side with CSEC here. The City's stance doesn't actually involve much public money going in at the end of the day other than basically interest. Lots up front (2/3) but little to none at the end of the day. CSEC's stance on the other hand actually has public property tax money going in with the argument being that that incremental tax wouldn't exist without the arena so it's kind of a wash.

Again, assuming I have that right...
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Old 09-13-2017, 06:22 PM   #217
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What about the costs of the Saddle Dome if the Flames do get a new building?
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Old 09-13-2017, 06:29 PM   #218
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The 1/3 1/3 1/3 model doesn't involve the 200m already put aside by the city for a fieldhouse, correct? So if the city and CSEC can agree on how the city is paid back their 1/3, we are extremely close to a new arena and fieldhouse?

Has the city given any commitment to a major renovation or rebuild of McMahon? Why not give the city the repayment they want through an arena lease if they in turn contribute towards the McMahon project or tell CSEC they are fine without the arena lease or profit sharing if they rebuild/major renovation of McMahon which then increases taxes in the area of the stadium and arena further benefiting the city at almost 2x the arena only model.
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Old 09-13-2017, 06:32 PM   #219
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No money has been budgeted for the fieldhouse. Everyone agrees it needs to be built. No one has come up with the money to build it.
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Old 09-13-2017, 06:32 PM   #220
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So if I'm reading this right, they agree on 1/3, 1/3, 1/3? And they agree on two of those thirds being CSEC contribution and ticket tax (perhaps with some fight on interest rate which skews it really being 1/3 but let's call that noise for now)? And they agree that the last third is from the city but they disagree on how the city would recoup it...CSEC saying CRL and the City saying from CSEC via revenue sharing or an arena lease?

If that's the case I side with CSEC here. The City's stance doesn't actually involve much public money going in at the end of the day other than basically interest. Lots up front (2/3) but little to none at the end of the day. CSEC's stance on the other hand actually has public property tax money going in with the argument being that that incremental tax wouldn't exist without the arena so it's kind of a wash.

Again, assuming I have that right...
I like 1/3 each, with the arena being one by the flames and paying property tax into the levy to repay the cities third, along with taxes from new development in vic park.
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