New Downtown Calgary Arena

[PPAR]

Ok, so with the new attendee information of approx 1.8 million a year,(thanks) a new facility could pay off an interest free 250 million loan in 28 years with a $5 ticket tax. Add a buck or two to cover interest.

[Ayreonaut]

Originally Posted by PPAR

Ok, so with the new attendee information of approx 1.8 million a year,(thanks) a new facility could pay off an interest free 250 million loan in 28 years with a $5 ticket tax. Add a buck or two to cover interest.

Just in time to start planning the Saddledome's replacement's replacement!

[Fuzz]

How price sensitive are Flames fans though? I'd imagine 20% would be fine for most of them, given they like to complain how bad the facilities are at the dome, and that they would gladly pay more for better facilities. As for concerts, people seam to have no problem spending $200-$400 for concert tickets. I think $5 is way to low.

My point is, I think there is a lot of room to have the users pay for it. I'd rather it come out of the users than general public. In fact, I might go to Calgary Puck and start a thread asking how much they would be willing to pay in a ticket tax. I'd do it here, but there are a lot more users there. Would it be best to offer the choices as a % or $ figure? Let's see what the appetite is...

[You Need A Thneed]

Originally Posted by Fuzz

How price sensitive are Flames fans though? I'd imagine 20% would be fine for most of them, given they like to complain how bad the facilities are at the dome, and that they would gladly pay more for better facilities. As for concerts, people seam to have no problem spending $200-$400 for concert tickets. I think $5 is way to low.

My point is, I think there is a lot of room to have the users pay for it. I'd rather it come out of the users than general public. In fact, I might go to Calgary Puck and start a thread asking how much they would be willing to pay in a ticket tax. I'd do it here, but there are a lot more users there. Would it be best to offer the choices as a % or $ figure? Let's see what the appetite is...

How much the ticket tax is doesn't really matter. The overall cost of the ticket matters.

[fusili]

If we are debating whether fans are willing to pay an increase in ticket costs to cover the cost of the arena, etc, then there is no justification for a new arena. If the argument is that our current arena is not up to standard, then purchasers should be willing to pay more for the upgrade.

At the end of the day, this is still a proposal by a for-profit organization asking for government money to make more profit, with little to no public benefit. Unless you are providing a public good (a non-excludable, non-rivalrous good that provides a positive benefit to citizens) then you shouldn't get money.

[The Fisher Account]

Originally Posted by fusili

If we are debating whether fans are willing to pay an increase in ticket costs to cover the cost of the arena, etc, then there is no justification for a new arena. If the argument is that our current arena is not up to standard, then purchasers should be willing to pay more for the upgrade.

At the end of the day, this is still a proposal by a for-profit organization asking for government money to make more profit, with little to no public benefit. Unless you are providing a public good (a non-excludable, non-rivalrous good that provides a positive benefit to citizens) then you shouldn't get money.

Yeah, but you and everyone here knows it's going to happen, so why keep bringing up this tired old idealistic argument? The Flames are going to get taxpayer money because no other organization is going to step in a build a new arena in this community of 1.5M people.

It's inevitable. Cross your fingers The City get's a good deal and the area gets cleaned up. But this will never be 100% privately financed, so just bend over and try to smile a bit.

[fusili]

Originally Posted by The Fisher Account

Yeah, but you and everyone here knows it's going to happen, so why keep bringing up this tired old idealistic argument? The Flames are going to get taxpayer money because no other organization is going to step in a build a new arena in this community of 1.5M people.

It's inevitable. Cross your fingers The City get's a good deal and the area gets cleaned up. But this will never be 100% privately financed, so just bend over and try to smile a bit.

No its not. We can say no. That is actually something that governments and citizens have the power to do. I understand that no other organization is going to build an arena, but honestly, unless fans and the organization are willing to pay for it, we don't need it.

I get the field house argument, that is a public good. It provides recreational opportunities for everyone in the city, which I see as a public benefit. Being able to watch your team play hockey in a nicer arena is not.

[The Fisher Account]

Disagree with me if you want, but there will be a new facility built. It really is inevitable.

[fusili]

Originally Posted by The Fisher Account

Disagree with me if you want, but there will be a new facility built. It really is inevitable.

I don't doubt that, but I hope that what is built is properly paid for and more thought out.

[MalcolmTucker]

Originally Posted by PPAR

Ok, so with the new attendee information of approx 1.8 million a year,(thanks) a new facility could pay off an interest free 250 million loan in 28 years with a $5 ticket tax. Add a buck or two to cover interest.

$13,134,797 a year at ACFA 3.266 % for 30 years. Totally doable.

[lubicon]

It would make more sense if the ticket tax was a variable amount depending on the ticket price rather than a fixed tax per ticket regardless of price. People wont want to pay a $20 dollar tax on a $15 Hitmen ticket.

[PPAR]

Fans go to the same building though. Facility fee should be fixed. The Hitmen can stay at the saddledome if they don't like it.

[WhipperSnapper]

Yeah, I can't see a ticket tax being a flat rate when ticket values range greatly. See something between 10 and 20%. I'd be concerned if it were applied to non Flames owned events even if they end up managing this city owned facility.

[Big Sky]

I don't necessarily agree with that. True that it's mostly sports fans and concert goers who will benefit, but I would argue it's just it would be used by more citizens of Calgary then say Nose Hill or the bike path system. The city government pays millions for things that are of benefit to only a certain segment of the population. This would be no different except for the ownership.

The argument will be that the city owns Nose Hill and the bike paths, but those items cost money to maintain year after year. The cost into the new arena/stadium would be a one time thing from the city, and it's revenue generating situation (through taxes) unlike the bike paths or Nose Hill which are a cost only.

I'm an avid biker and user of Nose hill and the Bike path system, and I'm thankful the city has supported these things. I also like the idea of having a good stadium or arena available for things that bypass the city because of the current facilities, things like soccer tournaments or concerts, etc...

Originally Posted by fusili

If we are debating whether fans are willing to pay an increase in ticket costs to cover the cost of the arena, etc, then there is no justification for a new arena. If the argument is that our current arena is not up to standard, then purchasers should be willing to pay more for the upgrade.

At the end of the day, this is still a proposal by a for-profit organization asking for government money to make more profit, with little to no public benefit. Unless you are providing a public good (a non-excludable, non-rivalrous good that provides a positive benefit to citizens) then you shouldn't get money.

[MalcolmTucker]

I would argue the facility existing is the public benefit.

The public owns plenty of facilities that are rented out to private corporations at a loss to the government. The only difference is that once the facilities exist it is easy to forget about both the initial and ongoing subsidies.

Should we not rent the Jubilee out for Phantom of the Opera because the profits go to billionaires? Should we only rent out the Jack Singer to artists who can prove they make less than $100k a year?

[Big Sky]

Originally Posted by MalcolmTucker

I would argue the facility existing is the public benefit.

The public owns plenty of facilities that are rented out to private corporations at a loss to the government. The only difference is that once the facilities exist it is easy to forget about both the initial and ongoing subsidies.

Should we not rent the Jubilee out for Phantom of the Opera because the profits go to billionaires? Should we only rent out the Jack Singer to artists who can prove they make less than $100k a year?

I'm not sure if this post was a response to my post. Either way, I'm in agreement on what you are saying. I'm fine with the government chipping in money for the sports complex as long as it's a reasonable amount. I have no problem with the city chipping in money to the Library, NMC or other venues that are a benefit to only a certain segment people.

I think alot of the opposition is because of the Flames being the owners. I get that, but instead of the city footing all of the cost for new facilities I'd rather they chip in a fraction of it. The public still gets their new facilities in the end.

[fusili]

Originally Posted by Big Sky

I don't necessarily agree with that. True that it's mostly sports fans and concert goers who will benefit, but I would argue it's just it would be used by more citizens of Calgary the say Nose Hill or the bike path system. The city government pays millions for things that are of benefit to only a certain segment of the population. This would be no different except for the ownership.

The argument will be that the city owns Nose Hill and the bike paths, but those items cost money to maintain year after year. The cost into the new arena/stadium would be a one time thing from the city, and it's revenue generating situation (through taxes) unlike the bike paths or Nose Hill which are a cost only.

I'm an avid biker and user of Nose hill and the Bike path system, and I'm thankful the city has supported these things. I also like the idea of having a good stadium or arena available for things that bypass the city because of the current facilities, things like soccer tournaments or concerts, etc...

It is entirely different. It is a public good vs a private good. I am talking about the economic definitions of these things.

A public good is non-excludable, which means that once you provide it, you cannot exclude others from benefitting from it. Police services are public, because the city can't somehow exclude some and not others from the benefit of increased security and reduced crime. The same goes for fire protection. I would argue parks are the same (and in fact education and health care, but that is going on a tangent now). The city cannot exclude you from the benefit of using the park (other than fencing it and charging admission, but in that case I wouldn't call it a public good), even though you might not use it.

People who go to hockey games pay for them. And others do not if they cannot pay. That is an excludable good. I can get into the argument that in fact hockey games are primarily attended by wealthier socio-economic classes, which further exacerbates the criticism that we shouldn't be subsidizing them, but I won't. The point is, professional sports games are NOT a public good. They are entertainment the same way watching a movie is, or going to a comedy club. We need to understand this difference if we are going to properly assess whether this is in fact in the public interest.

Also, saying its revenue generating vs not revenue generating is a misunderstanding of costs. If parks cost us $5/year/citizen and we subsidize tickets $100/year/attendee, just because one generates revenue, it doesn't mean it doesn't cost more. Costs should be evaluated on a per activity basis not as a percentage of recovery. Recovering a higher percentage isn't a plus if the cost is commensurately higher.

And the cost for the arena sure as hell isn't a one-time thing. Do you know what kind of liability insurance, maintenance, depreciation etc we would get with an arena? The Flames proposal would be for the City to own the arena. That is stupid. We get to own a depreciating asset with a limited number of potential sources of revenue, none of which would come close to covering the depreciation in capital, insurance, liability, maintenance etc. The reason we are being asked to build it is because it is a money pit.

How about you buy me a house, (on contaminated land mind you, that you have to pay to clean), I get to live in it, pay you rent that doesn't cover the mortgage, insurance or anything else, you have to insure and maintain it, then at the end you get to own the house, which is now a completely useless asset? Also, my friends will come over a lot and we will have epic parties, so you can live with the knowledge that you helped some awesome parties happen. What a deal!!!!

[Big Sky]

I guess the plan has changed. I thought the plan was for the city to chip in part of the cost and the Flames be the owner of the complex. Which is the way I would to like to see it.

As far as the excludable and non-excludable, argument goes, I don't buy that. In the end they are both for the public good, just because something can be owned privately doesn't mean it can't be for the public good. Yes technically anyone can use the bike paths or Nose Hill, or the Public Library, or the NMC, or anything else the city operates or has donated money to. Either way not everyone uses those facilities, even if they totally allowed to do so. Is going to the Jack Singer or the NMC or the Library much different than the sporting events?

I agree with you on not wanting the city to own the sports complex, and I also agree about the cleanup. The cleanup part of the argument is specific to the location though, not in general. If the city is not the owner of the complex, then the cost would be a one time thing, and it's a different argument.

Originally Posted by fusili

It is entirely different. It is a public good vs a private good. I am talking about the economic definitions of these things.

A public good is non-excludable, which means that once you provide it, you cannot exclude others from benefitting from it. Police services are public, because the city can't somehow exclude some and not others from the benefit of increased security and reduced crime. The same goes for fire protection. I would argue parks are the same (and in fact education and health care, but that is going on a tangent now). The city cannot exclude you from the benefit of using the park (other than fencing it and charging admission, but in that case I wouldn't call it a public good), even though you might not use it.

People who go to hockey games pay for them. And others do not if they cannot pay. That is an excludable good. I can get into the argument that in fact hockey games are primarily attended by wealthier socio-economic classes, which further exacerbates the criticism that we shouldn't be subsidizing them, but I won't. The point is, professional sports games are NOT a public good. They are entertainment the same way watching a movie is, or going to a comedy club. We need to understand this difference if we are going to properly assess whether this is in fact in the public interest.

Also, saying its revenue generating vs not revenue generating is a misunderstanding of costs. If parks cost us $5/year/citizen and we subsidize tickets $100/year/attendee, just because one generates revenue, it doesn't mean it doesn't cost more. Costs should be evaluated on a per activity basis not as a percentage of recovery. Recovering a higher percentage isn't a plus if the cost is commensurately higher.

And the cost for the arena sure as hell isn't a one-time thing. Do you know what kind of liability insurance, maintenance, depreciation etc we would get with an arena? The Flames proposal would be for the City to own the arena. That is stupid. We get to own a depreciating asset with a limited number of potential sources of revenue, none of which would come close to covering the depreciation in capital, insurance, liability, maintenance etc. The reason we are being asked to build it is because it is a money pit.

How about you buy me a house, (on contaminated land mind you, that you have to pay to clean), I get to live in it, pay you rent that doesn't cover the mortgage, insurance or anything else, you have to insure and maintain it, then at the end you get to own the house, which is now a completely useless asset? Also, my friends will come over a lot and we will have epic parties, so you can live with the knowledge that you helped some awesome parties happen. What a deal!!!!

[MalcolmTucker]

The public has lots of reasons to provide private goods. I would argue that there is a market failure (whether in the case of the arena it is an incomplete market due to the merit nature of the good, a lack of information about the ability to attract tenants over time, or an equilibrium falling below the price of provision [ a form of adverse selection]) — and it doesn't matter why it exists, it just matters that it does.

[fusili]

Originally Posted by Big Sky

I guess the plan has changed. I thought the plan was for the city to chip in part of the cost and the Flames be the owner of the complex. Which is the way I would to like to see it.

As far as the excludable and non-excludable, argument goes, I don't buy that. In the end they are both for the public good, just because something can be owned privately doesn't mean it can't be for the public good. Yes technically anyone can use the bike paths or Nose Hill, or the Public Library, or the NMC, or anything else the city operates or has donated money to. Either way not everyone uses those facilities, even if they totally allowed to do so. Is going to the Jack Singer or the NMC or the Library much different than the sporting events?

I agree with you on not wanting the city to own the sports complex, and I also agree about the cleanup. The cleanup part of the argument is specific to the location though, not in general. If the city is not the owner of the complex, then the cost would be a one time thing, and it's a different argument.

I am just providing the definition economists use to define public goods: https://en.wikipedia.org/wiki/Public_good