Arena negotiation discussion. UPD: Flames release their proposal

[EldrickOnIce]

Nah. It's just more bluster without substance from poster, as usual.
Anyone who thinks BOG won't approve relocation of Flames due to lack of free arena money has their head in the sand.

[Flamenspiel]

Originally Posted by Strange Brew

No doubt Ferrtitta wants an NHL team and would buy one tomorrow if the price was right. But as others have said, hard to imagine the league being cool with the Flames moving.

For what it’s worth, I’ve been to dozens of game in the Toyota Centre and the Saddledome and I will take the dome everyday. But I’m an old guy and I don’t always think newer is better.

Its good that you mention that, i think a lot of people are being naive about the new arena. I'll agree as another "old guy" that new is not necessarily better, the shopping experience seems to improve in these newer arenas but not the sight lines, its like they are building a mall rather then an arena.

Also, as we have seen in Edmonton, the human waste facilities can also get worse to make way for more vending areas.

[Fuzz]

Just curious, who would get the money from the "naming rights". CSEC, or the city? Is it a significant amount?

[EldrickOnIce]

Originally Posted by Fuzz

Just curious, who would get the money from the "naming rights". CSEC, or the city? Is it a significant amount?

It was a significant amount in Toronto - Scotiabank paid 800M for 20 years.
40M a year AAV

[getbak]

In Edmonton, the Oilers get all the money from the naming rights deal. I couldn't find any information on the value of those rights other than when it was signed, the Oilers said that $1 million per year was "not even in the ballpark".

[troutman]

Originally Posted by EldrickOnIce

Nah. It's just more bluster without substance from poster, as usual.
Anyone who thinks BOG won't approve relocation of Flames due to lack of free arena money has their head in the sand.

The precedent the NHL has set is not to leave a market until every reasonable effort has been made to find a local buyer. I'm almost certain there would be buyers willing to purchase the team and keep it in Calgary.

[OldDutch]

Originally Posted by New Era

I doubt the contract would have anything in there specific to teams, or team count or existence of teams.

I would go back and read the contract (if it is even available). I am sure a billion dollar+ contract would be written up in a bit more detail than a paper napkin.

Again not saying it is written in there, just that you have no factual evidence it isn't and we are talking about 2 corp lawyer teams working this out.

[Strange Brew]

Originally Posted by GioforPM

I'm not disputing an actual sale would be hard to bet through the BOG. I was just commenting on the question about why the Flames would move to a place where (in the poster's view) they still wouldn't have control of revenue. The answer was (a) the present owners would cash out and (b) if it went to Houston, that owner already has the lion's share of revenue (though the City does get a piece of the pie).

Agreed. Houston is a very good situation for a potential NHL team and just requires some confidence in the market. The current prospective owner has that confidence and has deep pockets. And a state of the art arena sitting empty many nights. He’s also not stupid and I don’t believe he is going to pay half a billion for a team. But if there were no barriers to moving a team I’m sure he and Edwards could come to agreement relatively easily.

[EldrickOnIce]

Originally Posted by troutman

The precedent the NHL has set is not to leave a market until every reasonable effort has been made to find a local buyer. I'm almost certain there would be buyers willing to purchase the team and keep it in Calgary.

I will absolutely agree we are a long way from it happening.
However, the precedence has also been that municipalities would hand over big bags of free money to fund fancy new buildings.

Times are changing

[Tinordi]

Originally Posted by OldDutch

I would go back and read the contract (if it is even available). I am sure a billion dollar+ contract would be written up in a bit more detail than a paper napkin.

Again not saying it is written in there, just that you have no factual evidence it isn't and we are talking about 2 corp lawyer teams working this out.

It's bewilderingly naive to suggest that even the smallest details are not heavily deliberated on for a multi billion dollar deal.

Rogers needs to know the approximate value of the contract to them before they can agree on a deal with the NHL. To do this they will run a detailed financial model with sensitivities on the number of games they can air and the value of the advertising, merchandising, and other residuals. They will do this bed on a detailed breakdown of every team and the expected viewership and revenue.

You can be certain that if a team leaves Rogers franchise area or another fundamental decision that is in the League's have alters the financials then it automatically triggers a renegotiation.

People these are huge corporations committing significant money. They would have thought of this. It's one of the most basic manageable risks of the contract.

[Erick Estrada]

Tinordi, the NHL is already 4 years into the deal and if it ever gets to the point of the Flames moving the NHL will be past the halfway mark of the deal. There's no way it stands in the way of any Canadian team moving. I don't know why you continue to bring that up because I'm sure team movement was addressed in the contract and no league would sign a deal that limits what owners can do with their teams. It's a non-factor but chances are the Flames aren't going anywhere anyway.

[Hot_Flatus]

Originally Posted by Fuzz

I share your views in the rest of this post, but come on man, that is some serious

Is it though? Last week Stoney trail was shut down in multiple places as crews fixed overpasses that were visibly crumbling apart.....keep in mind these are bridges that are lightly used and barely 10 years old. Pair that with the fact that many post millenium communities have one access point, roads that dead end or simply go nowhere because they have yet to be completed and you have a catastrophe waiting to happen.

Also consider that many of these areas also have been promised schools, improved transit (which is almost non existent) and recreational facilities for years only to see it scrapped again and again for something else and it's a pretty tough pill to swallow when you hear a segment of the fanbase sympathizing with CSEC and its millionaire pitty party sounding off about not getting a fair shake.

[CorbeauNoir]

Originally Posted by EldrickOnIce

I will absolutely agree we are a long way from it happening.
However, the precedence has also been that municipalities would hand over big bags of free money to fund fancy new buildings.

Times are changing

As is Calgary's economic outlook. We're under multiple levels of government hellbent on turning us into the new Rust Belt and the private sector is responding by simply packing up and leaving for places that are easier to deal with. The NHL is only going to get more and more expensive to participate in and Calgary's corporate support is trending in the opposite direction with the only 'plan' being put on offer is hoping and praying that Amazon is going to make a decision that makes little logistical sense for them and park HQ2 here. Where are the deep pockets going to come from in the long term that will compete with a bid from a US market?

[DiracSpike]

Originally Posted by powderjunkie

$5.2 Billion. That number will very likely be a mighty big impediment to moving the Flames.

It's possible that the Rogers execs and lawyers are so stupid that they didn't consider this possibility, but I wouldn't bet on it. Even if not explicitly considered in the contract (consequences of a team leaving Canada), it could be a way from them to get out of the deal altogether, as you can damn sure bet the contract specifies the properties involved (7 specific Canadian teams x 82+ games, etc.).

This contract was for exclusive NHL broadcasting rights in Canada, not just limited to Canadian teams, that's why sportsnet shows other NHL games not Canadian teams. There's no proof of any kind of renegotiation clause, especially for a team that has maybe 5% of the market share of Canadian hockey fans.

[EldrickOnIce]

I'd guess the Flames would be at least 5 years from even the consideration of moving, which will include potential Olympic bid and new civic government.
So yeah, 10 of the 12 years (at minimum) of the TV deal completed and not the tiniest consideration in any part of the process.
This is only my opinion.

[EldrickOnIce]

Originally Posted by CorbeauNoir

As is Calgary's economic outlook. We're under multiple levels of government hellbent on turning us into the new Rust Belt and the private sector is responding by simply packing up and leaving for places that are easier to deal with. The NHL is only going to get more and more expensive to participate in and Calgary's corporate support is trending in the opposite direction with the only 'plan' being put on offer is hoping and praying that Amazon is going to make a decision that makes little logistical sense for them and park HQ2 here. Where are the deep pockets going to come from in the long term that will compete with a bid from a US market?

There may be no deep pockets anywhere. This wouldn't surprise me at all. But then this is what silences any 'threat' of relocation, not the NHL BOG. They will be on board, ceteris paribas.
This is only my opinion.

[Flash Walken]

The value of the contract is predicated on the number of broadcast events available to Rogers. Like with ANY television property, the value is in the number of times you can air the product. This is a foundational aspect of north american rights contracts for sports, it's how broadcasters determine the value of the contract.

For example, NBC has a deal with the NHL that grants them 100 regular season broadcasts, as well as exclusivity for playoff coverage. NBC pays about 200 million per season to the NHL for those 100 games, and uses the games figure to determine their per game revenue potential.

If you remove a Canadian franchise you need to make up those lost games with other teams. Short of extending the season to 100+ games, the available broadcasts in Canada won't be a reachable target. If the Flames were to leave in year 7 of the deal, Rogers would be out roughly 350(!) broadcast events at the national level. Considering Rogers is also the REGIONAL rights holder, both broadcast and radio, for the Flames through the 2020 season, there would likely be a significant penalty for voiding that contract as well.

Even if moving Calgary doesn't void the contract outright, it does open it up to litigation, financial penalty and/or revocation based on a variety of different thresholds. The best case scenario for the league in a situation where the Flames leave Canada is by paying Rogers compensation for lost revenue opportunity by limiting the amount of broadcast events per season the broadcaster has access to.

Basically, the first calculation for determining the value of the contract is how many games will they broadcast. It's the framework the entire television broadcasting industry is built on. AMC doesn't pick up Breaking Bad for a season, they pick up Breaking Bad for a specific number of episodes.

Maybe Rogers is the most incompetent broadcaster in the history of broadcasting, or maybe this is a standard TV deal for a major sport in North America. I dunno.

[Fuzz]

Originally Posted by Hot_Flatus

Is it though? Last week Stoney trail was shut down in multiple places as crews fixed overpasses that were visibly crumbling apart.....keep in mind these are bridges that are lightly used and barely 10 years old. Pair that with the fact that many post millenium communities have one access point, roads that dead end or simply go nowhere because they have yet to be completed and you have a catastrophe waiting to happen.

Also consider that many of these areas also have been promised schools, improved transit (which is almost non existent) and recreational facilities for years only to see it scrapped again and again for something else and it's a pretty tough pill to swallow when you hear a segment of the fanbase sympathizing with CSEC and its millionaire pitty party sounding off about not getting a fair shake.

I invite you to travel anywhere else in the world. We have fantastic infrastructure, particularly for a city growing as fast as we are. It will never be perfect. And I'm not suggesting an arena is a priority over it, just that it's a little extreme to describe it as borderline catastrophic. It's not even close. You want bad water infrastructure? Check out Flint, Michigan. Crumbling Freeways? See Montreal, or numerous US cities were bridges collapse with alarming frequency. Bad traffic? Pretty much anywhere else in the world.

[powderjunkie]

Originally Posted by New Era

If there was even a clause in the contract for Canadian content, which I don't believe there would be one, the new owners could very easily pay what ever penalty to get out of said portion of the contract.

Is $35M a year very easy to pay out?

Let's ballpark break down the 5.2B/12 yrs:

Leafs 1.7
Habs 1.0
Leaving 2.5B between the other 5 teams. Fair to assume that Vancouver's share is a little higher, and Winnipeg/Ottawa are a little lower, but Calgary would likely value between $400-500Million over the 12 years...so we're talking about at least $35M/yr in national rights alone.

Originally Posted by Erick Estrada

Tinordi, the NHL is already 4 years into the deal and if it ever gets to the point of the Flames moving the NHL will be past the halfway mark of the deal. There's no way it stands in the way of any Canadian team moving. I don't know why you continue to bring that up because I'm sure team movement was addressed in the contract and no league would sign a deal that limits what owners can do with their teams. It's a non-factor but chances are the Flames aren't going anywhere anyway.

Even if it's in the last year of the deal, it would still be foregoing substantial revenue from many different streams for the foreseeable future (including future national and regional broadcast rights) to move to a worse market.

The deal doesn't limit what they can do, but smart business sense does.

If broadcast rights were valued in the 90's as they are now, it's unlikely the Jets nor Nordiques ever move.

Originally Posted by EldrickOnIce

I'd guess the Flames would be at least 5 years from even the consideration of moving, which will include potential Olympic bid and new civic government.
So yeah, 10 of the 12 years (at minimum) of the TV deal completed and not the tiniest consideration in any part of the process.
This is only my opinion.

What about the next deal? A smaller [hockey] market American team is basically valueless for NBC's national deal (and regional deals pale in comparison to Canadian ones).

[EldrickOnIce]

Originally Posted by powderjunkie

I think there

What about the next deal? A smaller [hockey] market American team is basically valueless for NBC's national deal (and regional deals pale in comparison to Canadian ones).

I think there is no question one less Canadian team would affect the next deal in Canada and one more team in the states won't make any difference there.
But to speculate on deals 8 years down the road is not very valuable. So many things are likely to change between now and then.
My premise suggesting the BOG agrees to relocation is based on the idea that this sends a message that no market is safe if the municipality won't show up with the money for buildings. Anything that might happen between today and then that changes that changes their approval, potentially.