Arena negotiation discussion. UPD: Flames release their proposal

[Dion]

Originally Posted by stamps

Currently a portion of your ticket price goes to the Saddledome Foundation ... and the Flames , along with every NHL , NFL , CFL and NBA team will and do maximize the price their market will pay for a ticket ... if it includes any kind of tax or surcharge it is factored into that maximum price ....

So you don't know - got it!

[Dion]

Originally Posted by FireGilbert

He also mentions the ticket tax is a Flames contribution. If it is money the team would be charging anyways and not an additional user fee doesn't that make it hockey related revenue? Could the NHLPA have a problem with this?

Depends on how it's marketed. Flames could specify that the additional tax on a ticket is going towards the building of a new arena and not the general revenue of the team.

[stamps]

I'm sure the NHLPA is aware and have no problem with a portion of the revenues going toward the cost of the buildings they play in that helps pay for their salaries ... the better the building the more money they can make ....

[stamps]

Originally Posted by Dion

So you don't know - got it!

I guess a business would charge less if they could .... got it ... that is how to be successful ... got it ... do not maximize your profit ... got it ...

[Dion]

Originally Posted by stamps

I guess a business would charge less if they could .... got it ... that is how to be successful ... got it ... do not maximize your profit ... got it ...

What does that have to do with you not knowing if there's a ticket surcharge hidden in the price?

[Snuffleupagus]

Originally Posted by stamps

I guess a business would charge less if they could .... got it ... that is how to be successful ... got it ... do not maximize your profit ... got it ...

I would be willing to bet large money ticket prices will be far beyond the 1/3 tax money that both party's talked about, in the end(30 odd years) this arena will be totally free for the owners

[stamps]

Originally Posted by Dion

What does that have to do with you not knowing if there's a ticket surcharge hidden in the price?

I don't , and your a fool if you do not think or comprehend a business will price its product or service to the maximum it can before its just too expensive ... that is how it works .. private businesses are run to provide a service and maximize a profit , if you cant wrap your mind around that you can't wrap your mind around that ... sorry ... its not really that complicated ...

[The Yen Man]

Originally Posted by Dion

Fans have yet to pay a ticket surcharge and we don't know if they would accept one on top of their ticket price. Yet some would call it lost revenue? You lost me.

If it's embedded in the price of the ticket, would you even notice? Seems like a pretty easy concept to grasp IMO. He's saying if Flames can charge $100 + a $5 ticket tax and people are willing to pay, then in theory, they could have charged $105 for the ticket before and made $105 instead of $100.

[Dion]

Originally Posted by stamps

I don't , and your a fool if you do not think or comprehend a business will price its product or service to the maximum it can before its just too expensive ... that is how it works .. private businesses are run to provide a service and maximize a profit , if you cant wrap your mind around that you can't wrap your mind around that ... sorry ... its not really that complicated ...

I never said a business couldn't maximise it's profits. They'd be a fool not to.

I also understand there is a price point where it becomes too expensive. It's something the Flames have struggled with for years.

So what is your beef with me? I don't understand.

[Dion]

Originally Posted by The Yen Man

If it's embedded in the price of the ticket, would you even notice? Seems like a pretty easy concept to grasp IMO. He's saying if Flames can charge $100 + a $5 ticket tax and people are willing to pay, then in theory, they could have charged $105 for the ticket before and made $105 instead of $100.

Clearly it was a concept I missed and had to reread to see the point being made

I will bow out of this argument.

[stamps]

Originally Posted by Dion

If you're charging the maximum already, wouldn't a hidden ticket tax put them at a price point fans couldn't afford?

If fans can't afford the tax then how is it lost revenue?

No worries buddy ... just keep going with that ..

[Cali Panthers Fan]

I don't understand why this ticket tax thing is so hard for some to understand, but I'll try and break it down.

1) The Flames are currently charging what they believe to be the balanced price point that maximizes revenue by having the most people attend every game, while maximizing individual ticket prices.

2) A ticket tax would be ON TOP of that already maximized ticket price.

3) As per #1, an increase of ticket prices of...let's say 10%...across the board without naming it a ticket tax would not necessarily maximize revenue for the Flames anymore. Why? Because increasing ticket prices would give some people pause on how to spend their entertainment dollars, some potential customers would simply not attend games anymore, thus lowering potential revenue or demand for tickets. So any increase in ticket prices by the Flames without an understanding from fans that it is specifically to help pay for a new arena may not end up as Flames revenue because those fans would not buy the ticket at the new price.

4) However, as per #2, fans being told that the extra price they are now paying for tickets is directly going to fund a new arena, then it becomes a LOT more palatable to the consumer of those services, and they make different choices based on that information. People don't have a problem contributing a small amount of money to a piece of infrastructure that they will be using directly: See airport improvement taxes.


No Mr. King, a ticket tax is NOT Flames revenue because fans wouldn't be willing to pay for higher ticket prices in order to make owners richer, but they would be happy to pay a tax that helps to build a new arena that they can enjoy. It's not hard to figure out.

[Lanny_McDonald]

Originally Posted by Cali Panthers Fan

I don't understand why this ticket tax thing is so hard for some to understand, but I'll try and break it down.

I'm not sure your explanation is accurate. I'd like an accountant or tax lawyer who is familiar with Alberta tax code to chime in and comment.

From my understanding, the ticket tax is essentially a user fee. A tax directly on a specific consumer choice. Kind of like the luxury tax that some states used to have on vehicles and other high end items. It affects only those consumers who buy products within that classification. The difference being every ticket has this tax applied to it. To the revenue aspect, for the dealer, the revenue is considered to be part of the gross business revenue, but not of its net revenues. So in this context, this is Flames revenue because the transaction is directly related to their enterprise and collected as a result of this transaction. It is part of Flames gross revenue and part of their business. It is also not hockey related revenue, because it is a direct tax, which is not considered to be part of hockey related revenues, agreed to in the CBA.

Is there a tax lawyer in the house to go through this?

[Cali Panthers Fan]

Originally Posted by New Era

I'm not sure your explanation is accurate. I'd like an accountant or tax lawyer who is familiar with Alberta tax code to chime in and comment.

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.

[TheFlamesVan]

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.

I didn't hear him say it was lost revenue... he was simply describing that they are the backing for all money envolved.

[firebug]

What you are all arguing about is referred to as price elasticity and tax incidence.

Here is a quick reference so you all can move on to something else:

https://en.wikipedia.org/wiki/Price_..._tax_incidence

https://en.wikipedia.org/wiki/Tax_incidence

In practice, demand is likely to be only relatively elastic or relatively inelastic, that is, somewhere between the extreme cases of perfect elasticity or inelasticity. More generally, then, the higher the elasticity of demand compared to PES, the heavier the burden on producers; conversely, the more inelastic the demand compared to PES, the heavier the burden on consumers. The general principle is that the party (i.e., consumers or producers) that has fewer opportunities to avoid the tax by switching to alternatives will bear the greater proportion of the tax burden.

After that, in my opinion, hockey tickets would be relatively inelastic and therefore the larger portion of the 'ticket-tax' burden would be borne by the consumer... I'd call it 2/3's paid by consumer and 1/3 paid by the producer in foregone revenue.

[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.

[Cali Panthers Fan]

Originally Posted by TheFlamesVan

I didn't hear him say it was lost revenue... he was simply describing that they are the backing for all money envolved.

He said the Flames were paying the ticket tax, indicating it came out of their revenues.

He said that the Flames were paying 120% of the cost. I can't even fathom how he got to that number. He assumes that we are stupid enough to let emotional attachment to the team override our rational brains. For some it seems to be working. The rest of us, not so much.

[Cali Panthers Fan]

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 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.

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.

[Tiger]

They should have done a ticket tax a decade ago... by the time they actually start the project the flames would have had all the money. Plus if they actually built it in 2012 to 2014 instead of taking forever for a project there likely would have been much easier to get money. Flames took forever to make a plan and are now complaining their building is too old.

They definitely lost the pr battle