5 Things: Don’t give in

1) You want how much?

So CalgaryNEXT (or whatever they’re going to end up calling it) was unveiled yesterday with a handy pie chart of the costs and how the tab would be picked up.

In the end, the Flames seem to commit $200 million to the project, which conveniently includes a new rink and stadium for their various sports properties, out of a total $890 million cost. That’s less than 22.5 percent of the bill, and it’s a bilious initial proposal. A lot of transparent talk immediately followed from media cronies — Calgary’s answer to David Staples and his laughable 18-month campaign to get the city of Edmonton to pass the cost of Darryl Katz’s new rink onto the taxpayers — who said things like “this is about More Than Just The Flames” and “what is the city of Calgary without an NHL team?” 

(The latter included a revolting “You wouldn’t rob a little boy with cancer of the team he loves, WOULD YOU?” plea. On Day 1 of what is likely to be a long ordeal. That’s overplaying your hand as much as it is cloying and morally reprehensible.)

The immediate reaction outside the pages of the local papers, though, was thankfully one of incredulity and anger. How could a team ask for $690 million from a city with an economy based on a commodity that, well, isn’t doing so hot these days, with the Canadian dollar at its weakest point in years? These are reasonable questions to ask, and to its credit the mayor’s office seemed more than happy to be among those asking them.

2) A convenient omission

This is especially concerning, though, because the initial CalgaryNEXT — so named because, you see, this is the future of the city!!!! — presentation those numbers are only the cost of putting up the requisite buildings in the proposed area. Not of cleaning up the creosote contamination or altering and/or building more infrastructure to get more people to the new arena district. Those costs could add another 50 percent or so to the total bill, if my understanding is correct. 

Who’s putting their credit card down with that check? It’s obviously not clear, but given the initial ask from the franchise, it’s a good guess that the party holding the bag there will have a name that rhymes with “waxlayers.” It seems to me that $500 million or more is a lot of money to leave out of an estimate, but if this is the dressed-up, palatable version of the first offer on the table, then holy hell this could end up being bad for the city.

3) Here’s a good rule of thumb

Now, it’s important to note here that not all of that cost is going to come from taxpayers by and large. What I mean by that is a pretty big chunk is going to come in the form of a tax tacked onto the price of every ticket at the new rink. As “ways to pay for stadiums in this day and age” go, that is, I think, the least objectionable way to do things.

That’s because you’re only being taxed for using the facilities as much as you actually do so. And usually, the additional cost is pretty low; most I’ve seen are in the neighborhood of $2. So even if you’re a season ticket holder for the Flames, Stampeders, and Hitmen, you’re only paying $172 per year on top of the already-considerable cost of your investment. Assuming $50 for a Flames game, $30 for the Stamps, and $20 for the Hitmen ($3,040 not counting playoffs, preseason, etc.) that ticket tax would add about 5.7 percent to the total. If you can spend that much on tickets, the extra $172 isn’t going to make or break your decision. This is also true of people spending $50 per game; the $2 increase ain’t a big deal.

But again, this all assumes that there isn’t something gross about the average person paying for something that makes billionaires money. Murray Edwards, apart from being a key driver behind two NHL lockouts in the last decade, is worth billions of dollars, and if this was such a great investment, why aren’t he and his business partners digging between the couch cushions to scrape together the $1.something billion this proposed project (MORE THAN A BILLION DOLLARS!) themselves so they don’t have to cut the City of Calgary in on any of the revenues?

Oh yeah, it’s because most of these types of deals don’t cut their cities in on them, so why should Calgary be any different? Right right right. If you hear the details of the Edmonton arena deal — they don’t even get revenues from things like naming rights, non-hockey events, etc. — it seems like there’s shockingly little return on investment for the city. Which doesn’t (and to some extent shouldn’t) be of any concern at all to the billionaire plutocrats behind these schemes.

4) You’re not going to die

The reason cities are so anxious to bend over backwards to give money they don’t have to pro sports franchise owners — as with recently bankrupt Detroit giving hundreds of millions to billionaire Red Wings owner Mike Ilitch — is that, as the Sun’s goons were so quick to remind Calgarians this week, cities have a lot of civic pride wrapped up in their sports teams. And that’s their prerogative, of course. It only makes sense that they would. But owners know this, and aim to exploit it by any means necessary to save as much money as possible on building these sometimes-billion-dollar monuments to excess.

They will threaten to move teams, for instance, saying, “Hey look what happened with Atlanta and Winnipeg,” as though that’s any sort of reasonable comparison. Katz showing up in Seattle like, “Oh, hmm what’s going on down here?” was a ploy so transparent as to be non-existent; there was never any threat of the Oilers going anywhere. But if it milked $25 million more out of Edmonton’s city council, then the cost of the plane ticket and hotel room was very worth it. Likewise, in the coming months I would urge Flames fans to keep in mind that there is no market more attractive to Flames ownership than Calgary. Seattle isn’t going to build your team an arena, and neither is any other boogeyman relocation city. Kansas City? Portland? Yeah right.

And another thing owners often do, as we saw in Edmonton, is try to tie these arena demands into “revitalization projects” that ostensibly benefit the whole entire city and the economy does great wow aren’t you so lucky we came up with this idea?!?!?! That’s because, despite numerous independent studies that show the positive economic impact of “stadium districts” are negligible or non-existent, people continue to buy team-funded lies on the subject. Okay, a bunch of new restaurants and bars within walking distance of the rink? Great, but what about the ones near the old one? Again, if it’s such a great idea, why wouldn’t the Flames’ parent company invest in all this itself?

The lesson here, and one that must be repeated over and over and over until the speaker’s throat is hoarse and the listener’s ears are bleeding, is a simple one: “Don’t give billionaires money.”

5) Reasonable models

I should say here that I don’t have a dog in this fight. I live in Boston, on the opposite side of the continent and in a whole different country. But the thing about Massachusetts is that it does indeed offer a few decent models for how you can build stadiums without breaking the goddamn bank for them.

Massachusetts is, of course, famously ultra-liberal and pretty good at telling corporations to go stick it. Residents of Boston, for instance, recently bullied a hard-charging mayor’s office into dropping the Olympic bid for the 2024 games because, hey, the U.S. Olympic Committee wanted taxpayers to pick up the tab on a bunch of stuff. This is, of course, the Olympic business model, and that also extends to North American pro sports franchises, because it works.

Anyway, because of that whole moral objection to taxpayers paying for billionaires’ business centers, the state of Massachusetts and various cities around the state have occasionally run into upset sports owners multiple times in the last two decades.

It wasn’t so long ago that Red Sox owners wanted to build a new park somewhere in the city, and the city of Boston wouldn’t Play Ball (haha that’s a good one). No help on getting land, no help on stadium costs. So they privately paid for a bunch of improvements to the existing Fenway — which opened the day the Titanic sank! — and while the park still has its problems, it’s not a bad place to watch a ballgame. (One phase of the Red Sox ownership group’s plan involved building a “Sports Megaplex” that would have also housed the New England Patriots, and seems awful similar to CalgaryNEXT.) Until the Sox started to really suck the last few years, the park was sold out every night, and the team has made money hand over fist despite the restraints of an ancient facility.

Speaking of the Pats, owner Robert Kraft was likewise looking for a new stadium in the late ’90s and early 2000s, and at one point even threatened to move the team to Hartford, Connecticut, where he hoped to get a city-funded stadium built. Everyone balked, and Kraft ended up paying for Gillette Stadium privately, then eventually building a little shopping district of his own on adjacent land he already owned. It has worked out pretty damn well for Kraft.

And in the mid-90s, the old Boston Garden was in sorry shape. Here too, Jeremy Jacobs — the NHL’s Charles Montgomery Burns to Murray Edwards’ Aristotle Amadopolis — ran into plenty of municipal and state government-related problems, until Delaware North (Jacobs’ company) was able to secure loans to pay for the building himself. Jacobs is likewise doing just fine with how everything went.

Another example: I am from a city called Lowell, Massachusetts, where a municipal renaissance occurred in the mid-1990s that included the construction of two municipally funded sports venues: Tsongas Center, nee-Arena, a 6,500-seat hockey venue that housed an AHL franchise and the local college hockey team (UMass Lowell), and LeLacheur Park, a 5,000-seat baseball stadium that’s home to a short-season Single-A Red Sox affiliate and UMass Lowell’s baseball team as well.

These obviously do not carry the cost of a CalgaryNEXT, but they are instructive in a way. The city and University paid a combined $35 million or so (in 1998 dollars, so more like $52.5 million today) for the two buildings. But the city and school owned the buildings, not the teams that inhabit them. You can bet that wouldn’t happen with CalgaryNEXT, which, yes is a project that’s going to be at least 20 times larger, but bear with me.

Even then, with the pro teams not owning the facilities, things didn’t always work out. The AHL team’s lease was, shall was say, extremely favorable to it. They got a huge amount of revenues from every event held there, to the point where the city was losing a lot of money every year. And then the AHL team (originally affiliated with/owned by the Islanders, then the Islanders and Kings, then the Carolina Hurricanes, then both the Hurricanes and Flames, then both the Hurricanes and Avalanche, then the Devils; it was a weird 12 years) basically started making a bunch of noise about how if they didn’t get a better deal they’d leave. So the city said, “Good riddance, we’re losing a ton of money anyway,” sold the entire arena to the university for $1 (in addition to a land swap), and washed its hands of the whole affair. UMass Lowell likewise couldn’t strike a lease deal with the AHL team — which then moved to Albany, New York — and has since turned the arena into a money-maker.

Again, all these deals are in many ways different from CalgaryNEXT, due to their size, the eras in which they happened, and so on. But they do show that, if things are done correctly between city and franchise (essentially a private business in which locals feel invested for reasons that do not on their surface make sense or, as it concerns costs, matter), everyone does well at the end of the day.

Calgary doesn’t need to pay $790 million-plus to reap the benefits of CalgaryNEXT. The Flames’ ownership would like the city to pay that much anyway, but that’s only because they feel like they can push taxpayers around by threatening to leave, and pointing to Edmonton’s ridiculous arena deal, and saying, “Well they got this!” a lot. (The province also set a bad precedent for the people of Calgary here.)

This initial gambit by the team is garbage, and most people seem to recognize that even in saying that they need a new football stadium and rink. These two ideas are not necessarily connected in such a way that they are inseparable, no matter how much you’ll be told they are.

I will once again advocate: Don’t give billionaires a penny of your money. But given that this is unrealistic in the current climate, please understand you have more bargaining power than you’re going be told you do. Wield it with every ounce of strength you can muster. You can have a new arena for your beloved team without paying for almost all of it. Don’t listen to the people who stand to profit from your loyalty.

    • The GREAT Walter White

      All or near train lines BUT far far away from your corporate clients and sponsors who primarily work downtown…you know this so called corporate clients that pay ridiculous dollars for those extravagant executive suites…..like it or not the primary success factor is the hockey rink that entertains NHL fans…the ones that pay the big $$$$$$ !!! Think business thats what will make this project work!

    • slapshot444

      I’ve often thought the firestone area would be perfect. However there is soil contamination there as well, how much I’m not sure. I was with a company that looked at building on that land several years ago and the re mediation costs made it a non starter
      If the feds or province could cover that charge, the Firestone area has LRT , parking space and roads, two big mother roads already built( deerfoot and memorial), to your question… 14 acres I’ve to take.

  • nikkomsgb

    For a person with “no dog in this fight” I think you have a decidedly subjective way of portraying yourself as an objective outside voice.

    You complain about the Sun and other media outlets and their hyperbole, yet look at your article. You seem to want to pour gas on a fire, by misstating facts and continuing with the tired narrative of billionaires getting richer off taxpayers.

    Your numbers also don’t make sense. You wrongly assume that the ticket tax will be fronted by the city, when Ken King said it may be or it may come from conventional financing. You neglect that the CRL is a municipal tool designed precisely for just such a cause (cleaning up the west end) and is paid back in full via higher segregated property tax.

    The $200 million for the fieldhouse is fair game and the merits of spending it are absolutely up for all the debate one wants.

    On the contamination, as Ryan Lambert mentions, the cleanup is the responsibility of the province. They made a bad deal and foolishly indemnified The Canada Creosote Company, so one way or another they are going to have to deal with it.

    The team has never threatened to leave, nor have they even implied that they would go that route. This is a team with much deeper community roots than Katz in Edmonton. Everything about this team is Calgary to it’s core.

    Finally, maybe you aren’t familiar with the Saddledome. It’s a dump. As a flames season ticket holder I feel as though I can speak on it’s awfulness with authority.

  • Train#97

    Is this the right time to build? The economy is in the tank . The dollar is in the tank . How will people accept all the taxpayer dollars going to millionaire owners, when so many people have lost jobs and are having a tough time right now.

    Calgary needs the buildings though. They have a 60 year old football stadium which is the oldest in the league After next year The Saddledome is the oldest building in the NHL.
    It is also the only major city in Canada without a field house. So do they build, and at what cost?

    • Train#97

      They have to, and by the time it’s completed the Saddledome and McMahon will be too old.

      As long as the Flames pony up the money and take the risk, and revenue is shared, it’s a done deal.

    • Subversive

      Poor economic times are the best time to build due to the boost it gives to the economy and the lower costs of building at these times, particularly in a market that gets as hot as Calgary does. In good times, this project could easily cost twice as much.

      With respect to the original article, the CalgaryNEXT group were quite clear that the facilities WOULD be owned by the city. And, as others have stated, nobody has threatened to leave. McMahon stadium is on land owned by the University of Calgary, which has ongoing needs for expansion and has stated that it intends to use this valuable land for other purposes, forcing the Stamps, the U of C Dinos, and others that use McMahon (a stadium thrown together in under 3 months 60 years ago, so not a very user-friendly venue) to find a new venue regardless of what happens with the CalgaryNEXT proposal. The included field house is one of the city’s top unfunded infrastructure needs, and the city has already been looking at committing $200 million to its construction, albeit at a different site. The contribution of the ticket tax should not be included in taxpayers’ liability for the project, because it is paid by people who choose to enjoy the use of the facilities. I suppose you think owners should pay to build these facilities and should have no way to recoup the costs of building them. Finally, the cost of the site clean-up will be much less now than if the contamination is simply left to spread even further from the original creosote pits, and it’s time we stopped ignoring this pile of toxic waste in the middle of the city, right next to the river, and if CalgaryNEXT provides the impetus for us to do what we should have done years ago, so be it! Next time, finish your research before posting, Ryan!

  • Train#97

    Just read this:
    When asked about public financing for private sports arenas an overwhelming majority of economists, who rarely see eye-to-eye on much, agree it’s a bad deal for a city.

    “Virtually nothing is even remotely close to the kind of uniformity of agreement that economists have with respect to stadium subsidies,” said Dennis Coates, a sports economist at the University of Maryland-Baltimore County. “If what you’re expecting is income creation, job creation, tax revenue growth, then you’re not going to be successful. It’s not a good use of public money.”

    • nikkomsgb

      The problem with opinions like this is that they are geared towards a similar, but still fairly different issue.

      When a sports owner says build me a new arena or I am leaving and there isn’t much else attached, it is definitely a raw deal. Even Edmonton’s deal that involved revitalizing a crap downtown is unlikely to benefit the city as much as the team.

      The difference here is that the land is heavily contaminated and uninhabitable, even for more industry. So as long as remediation is a priority, and it seems to be with city council and the general population, you are going to need a catalyst to make this all happen. The city has said as much.

      I’m fiscally conservative to the core, but the reality is that a project like this is the only way to unlock CRL funds. Furthermore the only way to make the CRL use a success is to stimulate a lot of development, and it would take an anchor project like this to do it.

      Yeah the flames would make out well, and the city won’t make a fortune. However it would at least, from the perspective of a Calgarian, force the province to cough up money to fix a mess it owns and stimulate jobs at a time when they are needed (albeit at a cost).

      • Subversive

        “Unlock CRL funds”? What crap is this? Did Inglewood need an arena to put in a CRL? Do you even know that Inglewood also had massive, massive, incredibly expensive soil remediation done as well?

        Derp.

    • Subversive

      I suppose if you follow quotes from individuals like this who are not even remotely associated with the Calgary community then you may as well shut down progress in your own back yard. Providing examples of American economists who have never visited my own city is a non-starter for me! Enjoy the archaic Saddledome and McMahon stadium to your everlasting delight.

      I would rather use common business sense that is closely related to the culture of this community. As a sports fan and born Calgarian I recognize the need for this. I also hear private owners reaching out and asking for support to get his thing off the ground. That includes a fair evaluation of cost sharing that includes public funding for public use i.e. field house and environmental remediation.

      I also recognize the opportunities created pre and post construction. That includes “filled” facilities that can sustain profitability for both the private and public portions of this project. A downtown project that addresses serious environmentalists, satisfy’s a revitalization requirement for funding, a shared cost approach for construction and a fair revenue sharing approach during the operation of the facilities is what I will support.