New Downtown Calgary Arena

[McMurph]

Originally Posted by tomthumb2

I agree H.E.

And while I respect everyones opinions here and agree with most, the selfish side of me would love a world class facility with all the bells and whistles. I guess we'd better just accept the Dome as is or move to Balzac.

I didn't realize the mayor and council of Balzac was offering a handout.

The idea that Regina and Edmonton "figured it out" is outrageous. The solid and consistent stand that Nenshi and the councillors have maintained is the way it should be done. When this is finally done other cities may very well be looking to us as a role model. As for "politicians dragging it out", it's King and the Flames that are dictating the pace of this. And FWIW they're not exactly dragging it out -- they're making a careful and deliberate decision and continuing to shake the tree to see if any public money will fall out. It's that kind of approach that probably made them gazillionaires.

I suspect that in the end the city will contribute a fair bit in the way of infrastructure improvements to a new arena / stadium district (the language really is making this sound big). I doubt they'll offer a whole lot else. I suspect (and hope) that King and the Flames have more class than Katz to demand it.

[joe498]

Originally Posted by MalcolmTucker

The problem with this argument is the assumption that arenas make a huge profit, and so do the Flames. That owners have lots of money doesn't mean it makes sense to put that money into an arena. Their money did not come from owning the sports team.

The way I see it is this: if we didn't have the Saddledome and the Flames, the city would likely build a facility to host large concert events and the occasional Briar and Memorial Cup. Now the incremental costs between that theoretical facility (or renovated Saddledome) and what the Flames want makes sense for the Flames to cover, while paying what would be fair rent on the theoretical facility that is paid for with public dollars.

Does anyone believe Calgary should not have a large event facility? Or that the Saddledome can operate indefinitely without a large infusion of capital?

Ideally the new National Music Centre, Jack Singer, Mcmahon Stadium and the Stampede Grandstand already do this. The Saddledome is also not on the verge of collapsing.

And yet again, the city basically makes nothing out of what ever event this is, not to mention that this city lacks future infastructure funding to take people to these events in the first place. Assuming these events would take place downtown, parking is an issue and mass transit is the best option. A new arena or football stadium is a huge amount of money that could be used to build needed transit.

Pro sports does make huge money and if they didn't, players wouldn't get $100m/4-5 year contracts. If an owner is not prepared to maintain the costs associated with running a quality organization then they are not suited to being the owner, team goes up for sale and relocates. This is how the system works.

Considering council is prepared to raise taxes yet again, I doubt any of these tax increases will be going to the intended purpose and we can all patiently wait to hear the next increase in future years.

Majority of the people that would be paying for a facility like this can't afford to regularly make use of any of these events either.

[ByeByeBaby]

Originally Posted by MalcolmTucker

On the Northlands renovation:


As for the $22 million in profit, spending all of the profit on loan repayment would raise $400 million dollars if the province provided low interest financing, or they could raise the money at sub 3.4%.

$22 million sounds like a lot, but it is not. And share value is like being house poor, it doesn't mean you're rich.

Share value is quite unlike being house poor, in that you can sell a portion of the shares to raise revenue anytime you want. It also doesn't mean you're not rich, and just one of the Flames ownership consortium is worth $2.2 billion dollars, the 14th richest Canadian. I'm baffled as to why you are so opposed to admitting that this is a profitable business, with rapidly rising value, owned by billionaires.

[MalcolmTucker]

I am just saying, if a billionaire owned a hospital that made a nominal profit, and the city needed a new hospital, we wouldn't throw up our arms and say, build it yourself you greedy millionaire, paying your millionaire doctors. Just because it is sports doesn't make a project worthless from a public perspective. We don't ask all doctors to take a pay cut to pay for their fancy new hospital.

An arena is a civic asset that if someone else doesn't build the city will eventually build (or renovate) on our own accord.

Now, do I think the Oilers deal was too rich? Probably. But a binary reversal isn't optimal either.

[Riise]

Originally Posted by MalcolmTucker

I am just saying, if a billionaire owned a hospital that made a nominal profit, and the city needed a new hospital, we wouldn't throw up our arms and say, build it yourself you greedy millionaire, paying your millionaire doctors.

I'd be up in arms if the City helped pay for this new hospital and didn't take a portion of the nominal profits.

[ByeByeBaby]

Originally Posted by MalcolmTucker

I am just saying, if a billionaire owned a hospital that made a nominal profit, and the city needed a new hospital, we wouldn't throw up our arms and say, build it yourself you greedy millionaire, paying your millionaire doctors. Just because it is sports doesn't make a project worthless from a public perspective. We don't ask all doctors to take a pay cut to pay for their fancy new hospital.

An arena is a civic asset that if someone else doesn't build the city will eventually build (or renovate) on our own accord.

Now, do I think the Oilers deal was too rich? Probably. But a binary reversal isn't optimal either.

Calgary is in Canada, billionaires don't own hospitals here.

If a billionaire owned a shopping centre that made a nominal profit, and the city needed a new shopping centre, we can and do throw up our arms and say build it yourself. If a billionaire owned a movie theatre or a restaurant or a chain of bars, or a casino, or any other profitable entertainment business, we can and do throw up our arms and say build it yourself.

You're getting increasingly desperate with the hypotheticals - what next, the Russians are invading and the billionaires are the only ones who own tanks?

[suburbia]

Originally Posted by MalcolmTucker

I am just saying, if a billionaire owned a hospital that made a nominal profit, and the city needed a new hospital, we wouldn't throw up our arms and say, build it yourself you greedy millionaire, paying your millionaire doctors. Just because it is sports doesn't make a project worthless from a public perspective. We don't ask all doctors to take a pay cut to pay for their fancy new hospital.

An arena is a civic asset that if someone else doesn't build the city will eventually build (or renovate) on our own accord.

Now, do I think the Oilers deal was too rich? Probably. But a binary reversal isn't optimal either.

A radical and likely very controversial suggestion, but given that the Flames are a long-term business play, and that gifting land or what have you will directly increase the value of the team, would it be completely naive to request a stake in the team in return to an in-kind contribution? The ParkPlus deal just reinforced to me that there is nothing wrong with the City doing business on the side.

[MalcolmTucker]

People are assuming that arenas and sports teams are massively profitable. All I am saying is that they are not.

Now it may be possible to pay for an arena with ticket levies, if the Saddledome is closed or faces a similar levy, but as they say, you don't get blood from a stone. If the new barn has a rental cost $180,000 per night higher ($10 a ticket), most shows that the dome can support will stay at the dome.

I could see the arena ended up back at the Stampede grounds for that very reason, as long as the board agrees to shutter the Dome, or operate it as part of the same lease.

[polishavenger]

Originally Posted by Riise

I'd be up in arms if the City helped pay for this new hospital and didn't take a portion of the nominal profits.

Ultimately it comes down to whether you treat the stadium as a public good, or a private asset. If the stadium is a public good, then the city should fund it, and own it and run it like a business. The flames would be the anchor tenant, and would pay a lease rate accordingly to what would make sense for the stadium to be a going concern. The remainder of the non flames days would be leased to other events. The city could then also be the beneficiary of all the residual land value around the stadium that I would hope would be developed with res, commercial, and retail.

If its a private asset, then the private owners need to put their "ass" into asset and take the risk and all the upside that goes with it.

[suburbia]

Originally Posted by polishavenger

Ultimately it comes down to whether you treat the stadium as a public good, or a private asset.

You can't discount the opportunity cost also (which would be huge in West Village).

I'm curious as to the value proposition in context of convention space.

[Spring2008]

Originally Posted by suburbia

Without wanting to be offensive, the reality is that Edmonton and Regina need this for revitalization, whereas in Calgary, this project will actually displace on-going revitalization.

Yeah exactly, we're not in the same situation at all. Plus CMLC has sunk $300M in infrastructure/public realm in East Village already with more coming. Priority is to continue densifying this area plus other inner city neighbourhoods with infrastructure already in place and land available.

I would approve of the city paying and owning facilities such as a field house plus maybe some of the infrastructure upgrades, but other than that I think ownership knows they're going to have to put up their own equity.

[Policy Wonk]

I think what I took away from the article was in a "Lead, Follow or Get Out of The Way" scenario the city might do none of the above. And if it turns out the city has a strong preference for the Stampede Grounds we could be in for a very long stand-off.

[monocle]

I'm guessing it's WV, public-private with the Flames owning/operating the arena/stadium and the City fixing the roadaggedon, operating a fieldhouse, and remediating the remaining land to be sold EV-style.
10 years from now, West Village is a hub of sporting (pro and amateur) activity with a healthy mix of res and commercial to keep it busy on off game days.

Crazy? Probably, but surely there is some future tax benefit to the City to fix the mess (contamination, traffic, density) down there?

[*Stardust*]

If the arena takes up most of west village, will there be room for other developments? Extra density in West end would always be welcome.

[Socguy]

The case for the Edmonton and Calgary arenas are nowhere near the same. The project up in Edmonton has tremendous potential to transform and revitalize their downtown. In fact I would rank Rogers place as one of Alberta's most important/transformational civic constructions currently underway. For this reason, the city of Edmonton showed great vision in (finally) getting this thing done.

There is no similar case for a new arena in Calgary. Sure, the Flames could use a new barn and I'd love watch games in a shiny new building, but at best it's a sideways move for the city. A new building won't generate enough new business to come close to justifying the kind of public resources the Flames are inevitably going to want.

If the flames want to use the West village site, that's even worse. Is the city going to spend 2-300 million to remediate the land and re-route those major roads only to plunk an arena down? I would hope not, the city has big plans to densify the inner city and I suspect the (eventual) build out of the West village will be a major part of that. An arena has no place in such a vision. If a new arena is built, it should stay on the stampede grounds.

[jawagord]

Originally Posted by Bigtime

A very thorough write up by Mr. Markusoff.

I think King and Company are going to have a hard time with the general public if they are indeed trying to get public funding for a new arena. They've hit resistance over the last few years about it already, and with things like oil dropping, cost of living issues, and the general affordability of Calgary being a concern the average Joe is going to say no.

I think the city should step up with something, cetainly cash won't fly with taxpayers but I think land loan, tax breaks would. While I'm not a season ticket holder I've watched the stamps and flames for free on TV literally 100's of games plus attending the occasional game at the dome or McMahon. In comparison the city is giving land and spending $250 million in tax dollars on a new library and I haven't been to a city library in 15 years!

[RyLucky]

There have been some really great points from all forumers.

There are also a few key assumptions that we need to elucidate:

-How many seats? How many boxes? A few years ago, King told me there would be the same number of seats, but they would be better, and there would be about 2x as many boxes.

-Will the Saddledome remain? Who owns it when the dust clears? In the same conversation, King told me there was no way to keep both, because the saddledome is too expensive to operate and Calgary's market can't support two arenas.

-In 1980 the team cost $16M. Today it is valued around $451M.



My view:

The public DOES stand to potentially benefit from the construction of a newer, larger stadium, but from this gain we must subtract the opportunity cost of premium land, debt servicing, and the loss of the Saddledome. In my estimation, the sum magnitude of direct and indirect benefit to Calgary would probably be in the 10s of millions annually with only minimal social benefit, assuming the alternative is the status quo. Bus service hours, bike lanes, and beautification projects might be better bang for our buck, especially given the limited commitment/risk of investing in these public services/infrastructure. For the price of the stadium, we could probably build 25 state-of-the-art minor hockey arenas and free equipment for every kid in Calgary. Calgary could probably build its own Rideau Canal for half a billion.

Where it IS worth investing city $$$ is in peripheral projects associated with a new stadium, so that private ROI can be maximized. This might include anything from road realignment to transit to site work for adjacent developments. The city should do whatever it can to keep the area near the new stadium as vibrant, multi-use, and 24-7 as possible. The last thing we want is for $0.5B dollars to be spent to get the same thing we have now. As outdated as the Dome might be, the area surrounding the Dome is 100x worse.

Ideally, this is what I would like - though a complex agreement always has room for compromise:
-City-owned land be donated to ownership group
-private developers fully fund stadium construction and operation
-as part of the deal, the city promises to spend x million dollars by such a date on upgrading the entire WV, including changes to road layout, pedestrian infrastructure, park space, river access, possibly a CPR underpass to 17th street, a new bridge to 19th st NW, and maybe even fix CROWCHILD.
-City holds exclusive right to parking management
-City charges for water&power
-Building code on stadiums be carefully revisited, ensuring design is up to modern best practices that will benefit Calgarians
-property tax exemption (may depend on how concession space is owned/leased/controlled)

This kind of deal would mean the owners would build the stadium for $400-700
M (partly user fee), and the city would spend invest a few hundred million (depending on scope) around the stadium to ensure its success while addressing some other needs at the same time.

The timing is also important. It would be great to take a Keynesian approach and buy this during the next down turn, so long as we could save before and/or access low interest. In light of recent property tax hikes, it might be best to wait a few years. It would also be great to move forward as CMLC involvement in the EV begins to wrap up. I'm pretty skeptical of an Olympic bid in the next few years, but perhaps down the road.

[joe498]

Originally Posted by MalcolmTucker

I am just saying, if a billionaire owned a hospital that made a nominal profit, and the city needed a new hospital, we wouldn't throw up our arms and say, build it yourself you greedy millionaire, paying your millionaire doctors. Just because it is sports doesn't make a project worthless from a public perspective. We don't ask all doctors to take a pay cut to pay for their fancy new hospital.

An arena is a civic asset that if someone else doesn't build the city will eventually build (or renovate) on our own accord.

Now, do I think the Oilers deal was too rich? Probably. But a binary reversal isn't optimal either.

I have never ever heard of a privately owned hospital that has ever received public money to build a new private hospital. On the other hand, I have heard of plenty wealthy individuals who have made philanthropic donations to a public hospital with terms as to how the money is to be used.

The city is not going to receive a return on the investment. Unless an agreement is made in which the city can recoup initial investment this is a ludicrous idea. It's not the cities job to provide private organizations buildings to own and operate. It's also not fair to ask those that can't even afford to attend games to subsidize millionaire players and billionaire owners. Unless Flames management is willing to provide the city a share of the profits (possible) or pursue a lease arrangement (possible) or provide all Calgary residents a piece of the pie which is obviously (impossible) then this is absurd. In the way it has been proposed, the only money the city genuinely gets back in our current tax system without a city charter or a sales tax is property taxes. Consumer spending is largely irrelevant from a cities perspective without a city charter or a sales tax. From a provincial tax perspective the city loses far more than it gets back in the form of our current provincial tax system. For a province that relies on the oil revenue roller coaster, $60 oil as per OPEC meeting doesn't sound overly generous.

The difference between building a central library and a new arena is that the library is actually the cities ownership. The Library is also not a for-profit institution and will soon have no library fees allowing all Calgary residents access. Whether one chooses to make use of such a space is a choice of their own but the space will be available for far more than simply books. Public events, meeting space, music & art will all be additional uses of the space.

The Saddledome is not crumbling. Deerfoot, Crowchild and Glenmore are all age old roads not built for a city of 2,000,000 as we are expected to be by 2024. For the cost of building a new arena, many of these needed improvements and repairs could be addressed. Many neighborhoods in this community do not even have suitable public transit to attend games or stampede in the expensive limited parking downtown. NCSE LRT is a $5B project. Calgary also does not have an airport LRT. This city is not world class and won't be any more world class just because we have the nicest hockey arena. Hockey is also on the decline and considering our provinces growing multicultural demographics, you won't win much support using this building as a hockey arena. Soccer and Basketball are the two fastest growing sports, mostly due to affordability and international play.

For Concerts, the National Music Center is well under construction. Jack Singer is fine for many events. Saddledome still sells out. Mcmahon did fine for Flood Aid.

I should also mention, as angry as people have gotten over a 4.7% property tax increase, I don't see how building a new arena would help ease tax pains. Perhaps a 10% increase would better suit those in favor of a new arena.

Edit: In response to Rylucky, the Saddledome would be forced to be closed. They would not want competing facilities. The other problem with this is if it is not on the Stampede grounds and the Dome is forced to be demolished, the entirety of Stampede ground land and Stampede planning/organizing is in jeopardy causing municipal havoc. The Grandstand isn't in the best of repair, Stampede & Co. will come knocking for subsidies also.

[MalcolmTucker]

Originally Posted by joe498

I have never ever heard of a privately owned hospital that has ever received public money to build a new private hospital.

** Massive tangent **
Most new long term care in the province are private, and the province contributes half the capital cost per bed in exchange for the asset being rent controlled for 20 years or so. The theory being that at the end of 20 years, the renovation costs to bring it up to the new standard are so high, there is no point having it as a public asset, and that the wave of seniors will pass and the province shouldn't really have all these extra beds 20-30 years from now.
** End Massive Tangent **

Private arenas with minimal contributions have worked when it cost half as much to build in markets much larger than Calgary. I just don't think the economics work for a new arena that ticks all the boxes people want, and that not insubstantial public benefits flow from having a modern facility.

Something has got to give, and I don't think the market can bare either a ticket tax, unless we close the saddledome or similarly tax it, or a personal seat license that moves the needle on the economics.

[Policy Wonk]

I'm all over the place on this.

Above all else, I understand that the Flames organization wants to get out from under the Calgary Stampede, it is hard to find fault in that.

I would also not favour direct subsidies to a new arena beyond a favourable deal on a distressed site.

But the city digging their heels in on the West Village is also alarming to me and I suspect objections might be raised to any area with residential potential. That might include Railtown and Firestone.

I suspect even if the city isn't inclined to buy a seat at the table, they might prove very intransigent about some variation on status quo. Either the Saddledome as it exists or might exist or another spot on the Stampede grounds.