Nenshi, city council respond to Flames pulling out of arena negotiations

Buckle up, gang, because it sure sounds like the negotiations between the City of Calgary and the Calgary Flames regarding a new home for the hockey club are going to get worse before they get better. After Flames president Ken King announced that the club was stepping away from negotiations, Calgary mayor Naheed Nenshi and city council made a move of their own.

First, council voted 8-4 to release negotiation details between the City and the Flames, effectively taking their in-camera talks out into the open. Nenshi then spoke to the media, confirming a handful of aspects of the negotiations that were (to this point) speculated upon.

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The arena price tag was confirmed to be around $550 million and the three-way split reported by the Globe and Mail between the City, Flames and a ticket tax confirmed as “mostly accurate.” The City’s contribution would be a loan, and the comments sure make it seem like Metro Calgary’s report about the loan repayment mechanisms being the sticking point is fairly accurate as well. At $550 million for the new building, that would be approximately $183 million from the City, $183 million from the Flames and $183 million from a ticket tax. (Our guess was only off by $50 million.)

The details on the City’s offer will be released “in coming days.” As for the prospect of reigniting negotiations, the mayor stuck to his guns.

“We remain at the table,” said Nenshi.

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  • Thatz Nuckin Futz

    This is a dance. Seems every sports town goes thru it at some point in their lifetime. The mayor doesn’t want to fleeced by the absentee billionaire owner. The ownership group pleads poverty and hints at relocation. Time for patience everybody. They’ll figure it out despite all this fawning for the cameras. I just wish Bettman would stay away or at least take more of a neutral stance. I realize he’s bought and paid for by the owners but the City of Calgary has been a stalwart franchise for 30+ years and Gary should respect that instead of acting like a mafia lawyer.

  • Parallex

    Ken King: *Runs into room hyperventilating* Mu, Mu, Murray! Mr. Edwards!
    Murray Edwards: Yes Ken what is it?
    Ken King: It’s the City Sir!
    Murray Edwards: Calm down man, what about the City?
    Ken King: Sir… th-th-they expect to be paid back!
    Murray Edwards: *Faints*

    • Hockeyfan6778

      Haha I can totally see that now.

      I like that loan idea. Seems like the city is putting in a fair attempt to get this done. And fair enough if flames don’t agree but negotiate civilly this was a tasteless antic by king

      • cberg

        Let’s see. The Flames put up 1/3 of the costs from their own money, the Flames put up another 1/3 of the money which the city loans to them, to be repaid, and the final 1/3 gets put up via the Flames customers via higher prices. So the Flames put up all of the costs/risks, the city gets the facilities at no risk and their contribution is acting as a banker with a repayable loan. Have I got that right?

        • BendingCorners

          The owners want all the revenue so yes the owners absorb all the risk and pay all the costs. A sweetheart loan at a low interest rate lowers their costs. Putting the team up as collateral eliminates the biggest risk for the city. All good.

  • Albertabeef

    That’s right. Awesome! Keep it up Mr Mayor! Best mayor in

    Calgary since Ralphy! :). Ken King and ownership tarnished all my optimism for the season. Might have well have traded Johnny and Chucky for a bags of pucks the way I feel right now.

  • Derzie

    In any sane world, this is more than fair. City, owners and fans contribute an equal share. Fans get entertained, Flames keep all the profit, city gets it’s investment back over time. Could not be better.

      • McRib

        This is a great deal and to be honest Victoria Park is the absolute best location anyone has proposed. I frankly don’t want anything to do with a combined Hockey, Football complex (not that I don’t want a new Football stadium) the footprint would just be too large to be taking up valueabke downtown real estate .

        The absolute best part of this is the two other mayor candidates don’t support publicly funded arena (Bill Smith doesn’t know what he supports), but the other candidate is vehemently against it because he knows in today’s society, it’s a deal breaker for getting elected.

  • SeethingRed

    The hang up is who will have access to the facility when the Flames are not using it…..if the answer is the public…then the City needs to eat some of the bill.

    • dontcryWOLF

      Nenshi recently repayed the tax payers that money ($300 000). Something he didn’t need to do. That showed some class. Say what you want about his job as a mayor, but that showed a level of principle rarely seen in business or politics.

      • Newbietwo

        You mean because he had to get a lawyer for a demfamation suit because he chose to diss a key business member in Calgary he is the mayor of?

        And you know what even if that was not the case pure fact is he would never understand my needs a citizen because he will never relate to it..

        • Avalain

          That may very well be true, newbietwo, but from how you talk with this whole thing lately you sound like your needs as a citizen are the needs of the top 5%. I’m not saying that is a bad thing, but it’s not necessarily accurate for the average person.

  • Parallex

    Quite the power move by City Council. The transparency vote I mean, one would think that if it was remotely possible that CC would come out looking bad they wouldn’t vote to open.

    • Skylardog

      Actually, the fact that the city is really contributing nothing (the loan must be repaid), and that fact that they voted to release the details of the negotiations publicly, suggests to me just how out of touch this council is. I am shocked at how little (nothing) the City is offering. Made my view of the Flames much brighter, and has tarnished my view of City Council.

      There is public benefit. Just the taxes on the player’s salaries is $37.5 million per season. Which begs the question, where is the Federal and Provincial contribution to this?

      • KKisTHEproblem

        Glad you are not running city finances. Loaning $183 Million of tax payer dollars (including many taxpayers who are not flames/hockey fans) is not nothing. Building does not get built without that contribution and there is always a chance of not getting repaid: its called default and it is a very real risk when lending money.

      • Parallex

        Aaaaaaand it turns out there was no loan. It would be a straight dollar contribution that the city would just redeem through property tax (like every other business).

    • Robear

      Yah I actually find it surprising that the Flames would take this tactic. It feels like they are completely deaf to the potential public backlash. I find the whole thing rather insulting. THey claim there was no political motivation – Yet this is during the mayoral election and immediately after Nenshi put out a video on his vision for the East Village including a new arena. They said they were willing to negotiate, yet they act like petulant children who arent getting what they want!

  • Rocky Mountain Blues

    I get a kick out of those who think the offer is such a fair deal with 1/3 from Flames, 1/3 from city and 1/3 from a tax. The only thing is, the City’s 1/3 is a loan, not a contribution. So the reality is 2/3 Flames, 1/3 tax, City $0. I understand and support the need to keep taxes as low as possible, however there are some things that a major city needs in order to attract new business and residents. I have been involved with commercial real estate in a number of Canadian cities and what those cities offer for amenities and quality of life has an impact on attracting business. Calgary seems to be good at funding the arts (which is important) but seem to seriously neglect the sport side of the equation even though that is just as important. The city will receive a substantial economic benefit from doing the new rink and stadium to replace McMahon if it is done right. That economic benefit as well as all the events that would come to Calgary as a result of having facilities on par with all the other major cities in North America would enhance the quality of life here as well as draw new economic activity. If no contribution from the city other than a loan is their best offer after a few years of negotiating then I understand the Flames position to withdraw. The flip side is that if you don’t upgrade and you do eventually lose the Flames, that will have a detrimental impact on the economy and quality of life, not only directly from the flames but also all the other events and business that would have been attracted to the city.

    • Parallex

      Why isn’t a loan a contribution?

      Seriously, it’s just a mechanism for the city to recoup it’s investment… if instead of loan payments the City got the rights to the parking revenue would that mean they didn’t “contribute”. If so your basically saying that the only way anyone can contribute is if they lose money on the deal.

        • Rocky Mountain Blues

          So Parallex, let’s go out to dinner at an expensive restaurant once a week for the next year. I will pay 1/2 and you can pay 1/2, only mine is just a loan that you have to pay me back at the end of the year. I originally paid 1/2 which seems fair but the reality is it will end up costing you 100% of the bills and me $0. We would both benefit from the deal since it we will both have great meals but I have a feeling you wouldn’t be pleased since you would end up paying all the price for some of the benefit while I would pay none of the price and still receive benefit from the transaction. I am betting you wouldn’t think that is as fair when you are the one being stuck with the bill instead of the Flames.

          • Rocky Mountain Blues

            Parallex, you said “This metaphor fails because to make it analogous to the arena only one of us gets to eat those meals.” I think you are the first person I have heard who believes there is no benefit to the City by having these facilities. There can be legitimate differences in belief of how much benefit would be for the city but the fact that there is economic benefit to the city is a proven. So the analogy is correct as their is benefit to both parties.

        • X Man

          I don’t understand how you think it’s ok for the Flames owners to get their money back in the form of profits, but it’s not ok for the city to get theirs back too?

          • Rocky Mountain Blues

            Looking at the amount each party is putting into the arena with the latest proposal, we see the Flames put in 2/3 of the price (1/3 up front and 1/3 a loan from the City that they pay back.) 1/3 will come from users of the facility through an entertainment tax and the net amount the city is $0. I am fine with the city making money off what it gives to the project, heck if their latest proposal went through I think they should make $1,000,000 for every dollar they put in – that means $1,000,000 X $0= $0. The reality is that there is and has been a significant financial benefit to the City of Calgary from the Flames and related spin offs. Whether the City of Calgary ever puts any money in a new arena or not they will have a financial benefit for as long as the Flames are in Calgary. As I said before, I understand the need to keep taxes low and support wise fiscal decisions but the City will get a huge benefit from this, I don’t think it is too much to ask that they actually put something into it.

          • Rocky Mountain Blues

            One more point:Lets say you buy a house and get a 10 year mortgage from the bank. After 10 years you have paid off your mortgage. In that 10 years your house has increased in value through inflation by 50%. When you sell it (using your logic here) you should pay the bank 50% of your capital gain, after all, they should get their profit too. The thing I don’t understand about people who hold your position is how they don’t see that their is an economic benefit to the city from the construction of and operation of the new facility. That is why it makes sense for the city to actually invest in the project. Skylardog has pointed out some of the benefits the city receives. Just this week we have seen the Flames raise $380 million for local charity at just one of their many fundraising events. I don’t know anyone who doesn’t want the city to benefit from the deal, we just think because of the benefits they should actually invest in the project and not expect it all to come from the Flames.

        • Avalain

          So it can probably be said that the only ones who are paying are the public. The owners will absolutely get back every dollar that they put in, either through increased concert sales, increased prices, or the ticket tax.

        • BringtheFire 2.0

          Where in the world did you get that definition of a contribution? A contribution is not defined by its return, nor is its definition linked to reciprocation.

        • McRib

          No a contribution has as much to do about liability, as it does about repayment. The city is absorbing some of the Flames liability, when you’re talking $150+ Million that’s a HUGE investment. You obviously also don’t understand what interest would be calculated for a tax free loan of this magnitude on the open market? The city is saving the Flames massive amounts of money for giving a interest free loan and once again eating the liability (interest would minimum be in the tens of millions).

          The problem with these taxpayer funded stadiums is the billionaire owners never want to give up a percentage of the revenue streams (tickets, concessions, parking, concerts, etc). If the Flames were willing to do that, I am certain the Flames wouldn’t require that 1/3 repayment, but the Flames won’t because they’ll want full profit margins (which is also why they will never move to the Seattle arena deal, because the ply never get 100% of profits there and willl likely get 0% o concerts).

          This allows the owners to get full access to total profits after a couple of years, while easing some of the liability and large sums of interest. This is a no brainer for rational business people.

        • Parallex

          … Ok. That’s the most tortured definition of contribute I’ve seen yet. Really, you’re saying an investment with a ROI equal to or greater then 0 is not a contribution. Wow.

      • BurningSensation

        Structuring the City contribution as a loan that is paid back is definitely still a contribution.

        – The City borrows $ at a (much) lower rate than the Flames can
        – The City gets paid back over 30 years
        – The City is assumingbrisk as part of the loan, but isn’t making any actual profit

        In essence, the City is losing millions in lost interest and revenue by making this offer (the $ could be invested elsewhere at higher return, or used for infrastructure that provides direct benefits), at no financial gain, and with assumption of risk.

        What the billionaire owners of the Flames want is a handout.

    • Neddd

      @Rocky Mountain Blues
      The city providing a loan is still a contribution as they are taking on risk. How much risk depends on what type of guarantees the Flames would be providing, my guess is that they would provide very little in terms of guarantees. This is why some transparency on the deals discussed thus far would be helpful.

      The other key question is who benefits from the non hockey events, how are these profits divided? Without understanding these points its difficult to form an opinion on who’s being difficult, etc.

      Also, as already pointed out by others here, the economic benefits associated with stadiums/arenas are exaggerated as the associated entertainment dollars would be spent elsewhere in the local economy if the team was to leave.

        • Neddd

          What are you talking about “Risk on a $183 million loan is nothing”. If the new facility is not profitable, and the Flames lose money, how does the city get its money back? Saying that the city receives part ownership of the facility is not helpful “if” it is proven to not be profitable.

          • Rocky Mountain Blues

            I notice that those who oppose the Flames receiving any money from the City have a couple of arguments. First, they say the Flames owners are billionaires and they are making all this money from this deal that they don’t need any help, they are just greedy. Then when we discuss the fact that the City isn’t putting any actual money into the arena, just a loan to the Flames we hear about the incredible risk the City is taking on because the Flames might go out of business and the City might end up having to put actual money into it. They make it sound like an incredibly risky venture. So what is it, is it a cash cow, easy money for the Flames or is it a high risk venture that the city has a good chance of getting none of their loan back because the Flames are probably going to go broke?

          • McRib

            ““Risk on a $183 million loan is nothing”

            You lose every rational business minded person with this comment. Once agin do you understand what interest on a loan of this magnitude would be in the “real world”, $30-40 Million minimum. Things like flooding or fires never occur in this area of the world, EVER!!! Global financial crises never occur as well!!

            One last point, you say the City isn’t giving anything to the Flames? Do you understand what large commercial plots of land ar sgoing for in prime areas of the city like Victoria Park right now? Lol. The land donation is a MASSIVE investment!!!

            Just because mayors in the past like David Bronconnier have given away free land left and right to all of their cronies like it was going out of style, doesn’t mean it’s not a huge investment.

  • Skylardog

    If I get this right, then the City is really contributing nothing. A repayable loan is not a contribution. I am sure the Flames could get a loan all by themselves.

    The question is what is the public benefit. It can take so many forms, but just a few are direct taxes from the Flames, indirect taxes from business and individuals that benefit by having the Flames in the city (restaurants, bars, taxis etc.) , civic pride, employment during construction, social benefit of a public meeting place, hotel taxes, airport taxes, utilization of public transit, charity (I will note that the Flames raised $400,000 for charity yesterday), it goes on and on. On the same note, why are the Alberta and Federal Governments not involved? The taxation of just the players salaries at the $75 Million cap is worth about $37.5 million per year. That number is $0 if the Flames move to a US city like Seattle. That can help with healthcare, bridges, roads and schools. A repayable loan from the city is not a contribution. There is public benefit, and we as a city, province and country should be putting in something. The question is how much?

    • dontcryWOLF88

      The city puts in plenty. They build the roads that get to the arena. The traffic lights at intersections. The transit that supports that system. They provide the police, ambulance, and fire services that are available in emergencies. They remove the garbage and clean and maintain the green spaces nearby. Thos are things cities do.

      What cities funds ought not to be for, I suggest, is corporate infrastructure. Every mayor of Calgary since since Ralph Klein said the same. Dialogue on this subject has changed over recent times as a matter of precedent. X city elsewhere pitched in for a sports arena, so we must too.

      • Kevin R

        I think Macleod Trail & traffic lights are older than the Dome. The games & concerts generate revenue & passengers for LRT that goes directly to the City. I believe people get charged for garbage removal as well, its not a City expense, it’s a service that is taxed to the users. The transit is a must for a City of 1.4 million whether you have a hockey team or not. Infrastructure is what brings head offices to your City, bring jobs & consumers & tax payers that make a City vibrant. We would have the LRT whether the Flames were here or not. Flames generate extra revenue for the LRT. For the life of me I have no idea what your point is here.

    • Parallex

      No, the city is contributing 1/3. We’re making an investment not giving a gift.

      Think of it this way… in actuality the City is contributing 67% of the construction cost and will as a result receive revenue streams in the form of Rent (lease), User Fee (Ticket Tax), and a low interest loan payment (which constitutes CS&E’s 33%).

      • Skylardog

        No – it is a repayable loan. The city is contributing nothing.

        If it is an investment, as you say it is, then what is really happening is the city is not only getting an arena, not only getting a public meeting place, not only getting the spin off taxes from businesses, hotels taxes, airport taxes, use of public transportation, and everything else that spins off from the Flames being here, but also from financing the deal. In other words you are saying they are making money off the Flames for “allowing” the Flames to build an arena for the City’s benefit. It is worse for the Flames than I thought, now that you pointed that out to me.

        • Parallex

          That’s asinine. The city will be investing in a facility… they have every right to seek revenue streams from that investment equal to (and *gasp* even make a modest profit from that investment).

          Seriously it’s like some people think it’s not an investment unless the City of Calgary takes a loss.

  • WilliPlett25

    First off, nice job Flames brass for sucking all the excitement from a promising year and the best roster this team has had in a few decades. Second, why are they are trying to hold taxpayers and die-hard hockey fans hostage in a bad economy? ‘Pay up losers, or we will so passively aggressively threaten to move this team.’ Why were the Flames not putting a solid plan together a decade ago when the Dome was not aging well? Now they expect taxpayers to pay millions b/c they lacked of a viable plan of their own? Yup, #greed. And what about McMahon Stadium … are they going to make the University and City pay for its replacement next year?

    • That's My Point

      This is the best roster in decades? The Oilers have better goals against with worse dmen last season! Another goalie experiment again this year? WTF? Major changes needed to this Flames team that gets swept by Ducks and Oilers in playoffs and regular season. A move to a new City could help with that.

      • Atomic Clown

        One. It was one year that we got swept by the oilers. First time in 8 f***in years you nitwit. It doesn’t help that the oilers have the best player since Crosby handed to them through luck. Maroon and Draisaitl had career years, and Talbot pulled off a Dominik hasek. Unless you think all three can perform just as well or better continuously, it was an aberration. Kind of like the flames cinderella run in 2015. I concede that Mike Smith is not a permanent solution, but he’s better than Elliot (more consistent numbers with one of the worst teams in the league). Your idiocy knows no bounds

  • Ludis Fanaticus

    I recognise posturing and negotiation. However, I most certainly don’t appreciate this move by the Calgary Flames management.
    I will table my frustration with the City, as it would seem that they are willing to be transparent with the ‘talks’ regarding a new building.
    So lets hear that side. Notably, the Flames were not prepared to provide any details related to financial contribution at yesterdays press conference.

    Many writers here have expressed the basic two sides of this issue reasonably well.
    I am not taking sides, yet, but as a fan I am happy to have this opportunity to express my frustration with my chosen hockey club.

    What did Flames management really expect would happen upon announcing they were taking their bat and ball home?
    The city leaders (politicians) are instantly backed into a position of fight. There is no room for flight.
    So now, Flames management have poisoned the well, in at least the short term, and galvanised a good chuck of the electorate against them in the process. As much as people hate some of the Cities vision on public art and green space, the rallying cry of ‘Welfare for Billionaires’ is too effortless a target.

    Like many I am angry that a season of promise and summer anticipation has been stained by the very creators of our positive vision.
    I hope this issue soon fades and the two sides sit down, out of the public eye, and create something we can all comment on and debate.

    In the interim, Flames, please stop with the passive aggressive threats, please stop pretending you are ‘not running for anything’. Please stop bringing your lawyer to a press conference to deliver intimidation.
    You are being manipulative; that much is transparent.

    • Skylardog

      I actually look at the Flames reluctance to divulge numbers as mature and respectful, given that the city was OFFERING NOTHING! To me it showed a respect towards the bargaining process to not out the City’s $0 offer.

    • class1div1

      Nenshi played a big part in poisoning the well.Not sure how people can call the guy a negotiator. He doesn’t get along with a lot of people,especially rich ones.He took on a position that requires a lot of teamwork but prefers to showboat and run off at the mouth.Not really a guy you’d call a leader.