Arena negotiation discussion. UPD: Flames release their proposal

[Tiger]

If the flames say the ticket tax comes out of their revenue. Doesn't the CRL just come out of the city revenue if that argument is legit

[Lanny_McDonald]

Originally Posted by topfiverecords

You had every right to have an official say on how your property tax dollars were spent in the time you were paying them, just like I do now.

I'm sure you're a really nice fellow too, but no one is saying you don't have a right to say how your taxes are being spent. NO ONE.

Originally Posted by topfiverecords

That's not 100% true. It won't be $5/year for 30 years. Taxes would need to cover the $275M outlay much faster.

Nope. The city is sitting on almost $2B of reserves. They can use that to back any sort of financing deal required to secure construction costs. No extra tax dollars required, and not even impacting reserves.

[Tyler]

City releases their rebuttal:

https://www.scribd.com/document/3595...ring-proposals

[GGG]

Time for a Poll--

I support the City plan
I support the Flames plan
The economics of an arena don't make sense at this time so they should continue to play in the Saddledome

Or

Which plan is more fair

A) the flames
B) the city

Or if my choices were limited to the Flames plan or the flames moving I would
a) let the flames move
B) support the Flames plan.

[longsuffering]

Originally Posted by New Era

Yup, I said I would support a rule of thirds model. Not specific dollars, just the model. This is also a viable model, based on one implemented up the road. There are various models that could work. In relation to the poll you posted, I picked that particular option. Doesn't mean its the only option I think can work. I guess that's what makes me different? I'm not completely sold on any single solution for anything. There are many ways to skin the same cat. I wish more people would look at the issue that way.

Actually you said a bit more than that. You said the City capping their investment at 1/3 of the building cost was a fair deal for all.

Originally Posted by New Era

4. 33% cash funding of the building design and construction costs with no mechanism in place for repayment of those monies.

The city will ultimately own the building. The Flames are putting up 66% upfront for a building that won't be theirs. Consider that as long term rent. The Flames will also be on the hook for operational expenses and improvements over the life of the building. It really think this is a fair deal for all.

Now you suggest the Flames limiting their contribution to nothing but a prepayment of rent for 35 years with the City picking all other direct or indirect costs is a fair deal.

Applying the Flames funding logic to the Flames proposal, the City is providing 100% of funding the building because the Flames only pay rent. Yet, despite not providing any real capital, the Flames ownership receive 100% of the revenue and profits derived from the building.

So what's the deal? Obviously you're not prepared to stand on your own principal. The Flames ask is double what you earlier said was a fair deal!

I can't help but think you're trolling this forum in a sense, playing some kind of weird devils advocate role because you enjoy the argument and the attention.

Either that or we just need to understand that you don't necessarily believe in what you're posting. What does that say?

[Roughneck]

Originally Posted by Tiger

If the flames say the ticket tax comes out of their revenue. Doesn't the CRL just come out of the city revenue if that argument is legit

And as the building owner, the Flames 'prepayment of rent' is also city revenue.

So the Flames proposal has the city paying for at least100% of the arena, for no return on investment. Using Ken King math.

[GGG]

Originally Posted by Tyler

City releases their rebuttal:

https://www.scribd.com/document/3595...ring-proposals

That's pretty Dishonest of the Flames. Take the ticket tax out of the info graphic they release and call the Edmonton ticket tax public money. Just blatant lying about their proposal.

[opendoor]

Originally Posted by Tyler

City releases their rebuttal:

https://www.scribd.com/document/3595...ring-proposals

So only $100M in cash from the Flames. They want the ticket tax (financed by the city) to cover the rest. What a terrible proposal.

[Lanny_McDonald]

Originally Posted by Tyler

City releases their rebuttal:

https://www.scribd.com/document/3595...ring-proposals

Interesting details in there that the Flames did not release about their cash contribution. That turns the tide somewhat. The Flames need to step up more in that regard and secure a greater deal of the financing itself. I don't like the expectation of the City having to carry the ticket tax, although that is the only way it could be done, since the Flames can't impose a tax. I don't like the City slushing in all the stuff in regards to the Saddledome, as its their building and they should pay for costs associated with its destruction or repurposing. Little bits that are important and need to be addressed.

[Cappy]

Originally Posted by Tiger

If the flames say the ticket tax comes out of their revenue. Doesn't the CRL just come out of the city revenue if that argument is legit

Yes. CRL isn't free money. It's not even really new money. It's tax money that most likely would've been collected in some other area of the city

[sureLoss]

May have already been posted, but city's response to the Flames releasing their proposal



source: https://www.scribd.com/document/3595...ring-proposals

[tkflames]

Originally Posted by calgaryblood

Nothing would be more awesome than Nenshi coming out and announcing a private arena deal that the city will run and profit from and do it for way less than $600 million. And then announce they aren't going to renew the Flames lease.

I thought about this today....in two different scenarios:
1) the scenario you describe with a 100% public arena.
2) Would the Flames accept a deal where in exchange for $185M, they would receive $7M per year + 7% of every ticket sold+ revenue assuming a 2.5% annual increase in ticket price and current concession sales +2.5% annualized growth. In exchange they pay the same rent as the saddledome now, the city gets all added revenues for ticket prices above 9.5% and concession prices above the 2.5% annualized growth for their $370M contribution. Lease contract would be signed for 35 years.

I would be all for the city taking that deal...so I doubt the Flames would go for it. This tells me everything I need to know about whether or not this is a fair deal.

[Blarg]

Originally Posted by morgin

The Flames would have to be paying in the neighborhood of 30 Million a year in base rent over a lengthy term and all operating costs to cause any development company to consider that deal I would imagine. Then there’s the issue of whether they are even have enough financial strength as an entity to interest anyone - might need guarantees from the owners for any default if for instance the league shuts down or drastically changes in the next 30 years. It’s an extremely risky development, which is why no one wants to do it.

After thinking about my bad calculations, I just realized that Edmonton is seriously undercharging the Oilers in rent! Maybe the City should just build a new arena, and charge the market rate to the Flames!

[longsuffering]

Originally Posted by calgaryblood

Nothing would be more awesome than Nenshi coming out and announcing a private arena deal that the city will run and profit from and do it for way less than $600 million. And then announce they aren't going to renew the Flames lease.

As the Flames have rejected the City's funding proposal and as a result will likely have to move the team in the future, perhaps the City should request the opportunity to negotiate with team owners operating in unprofitable markets.

Who is to say that their aren't other team owners ready to jump at the opportunity to move into one of the top markets in the NHL and provide more favourable terms on sharing building costs than the Flames are offering.

Before anyone loses their #### over this, of course this would never happen. The NHL is a cartel and would never allow it.

[Cappy]

I had a good conversation today with a work colleague. We were discussing what incremental property tax was as it didn't clearly say. We both figured that it was the "new" property taxes in the CRL zone which we then dismissed as an outrageous proposition for the flames to include in their propaganda.

It turns out we were right

[rage2]

Originally Posted by Blarg

Just curious, are any of the recent office towers built in dt Calgary financed by the city? I was just checking the Bow, and it looks like it was 100% privately financed by a REIT and exclusively leased by Encana.
Why can't the Flames do something similar?

Because at the end of the lease term the Bow would be worth $1B while the arena would be worth $0.

[mikeecho]

Originally Posted by Senator Clay Davis

So basically the Flames are praying for Bill Smith to become mayor is their plan. Best of luck.

Judging from all the Bill Smith info I'm seeing being posted, shared, etc... by my friends who work at CSEC, I would say so.

[longsuffering]

Originally Posted by Tyler

City releases their rebuttal:

https://www.scribd.com/document/3595...ring-proposals

And CSEC is 'pwned' again by the City. How amateur and embarrassing.


And it didn't even take the City a 4 days to come up with a rebuttal!

[Tron_fdc]

Originally Posted by New Era

I'm sure you're a really nice fellow too, but no one is saying you don't have a right to say how your taxes are being spent. NO ONE.



Nope. The city is sitting on almost $2B of reserves. They can use that to back any sort of financing deal required to secure construction costs. No extra tax dollars required, and not even impacting reserves.

When you looked up their long term reserves did you miss the long term liability portion?

[tkflames]

Originally Posted by sureLoss

May have already been posted, but city's response to the Flames releasing their proposal



source: https://www.scribd.com/document/3595...ring-proposals

Distance apart = $40M city contribution + $55M city land and saddle dome demolition + $7M/yrx35 years (est. Taxes)= $340M

Great work by the city on this info graphic! The flames would have been better off issuing a bar graph showing comparative bars showing how much more they are offering than the oilers. Any other argument is just making them look worse.

The only way I see this deal happening with these parties is if they both move $170M. City would need to contribute 95M and come down to $4.85M/year of taxes for 35 years and flames/fans need to come up with an extra $170M in the form of rent, up front cost or additional ticket tax.

I don't see either of these happening so either a 3rd party or a creative idea like a "ticketmaster replacement revenue stream" will likely be required.