New Downtown Calgary Arena

[Fuzz]

I listened to it online, and I'm not sure what business case you are referring to? I didn't hear any part where he mentioned the city would get back all the money for reclamation, field house and inevitable road and transit costs. He basically showed up as a cheerleader and reiterated everything we already know. I'm not impressed at all with the proposal, and he didn't change my mind.

He talked like we are going to be reaping benefits of revitalizing a blighted area, and I might agree if the proposal was to pay for reclamation. If it made economic sense to do that at this point in time, the city would have moved on it. I'd be OK with the city giving them the land, but asking us to clean it up is a bit rich.

[Riise]

Originally Posted by Cage

Overall I think Bettman gave a good presentation about the need for a new arena, the business case for the arena is solid, IMHO.

[...]

The other $2 billion has to come from revenue expansion realized in part by newer stadiums.

Thanks for the review, it's nice to hear from someone who was present.

Can you elaborate on the solid business case? Also, was this a solid business case for the Flames and the City or just a solid business for the Flames?

[Ramsayfarian]

Here's the video of Bettman's presentation.

• Video Link

I think I or someone else posted this video in this thread, but it fits so well.

[AaronMak]

I think the project is great idea. Unfortunately i only THINK it is because we haven't been given enough information to KNOW if it really is or not. Calgary desperately needs the complex not only for the flames; but also: the stamps, roughnecks, added convention space (as our convention centre is almost ready to also be replaced), and we lose countless big-name concerts due to the horrendous condition of the saddledome. CalgaryNext should be used to revitalize the west village, spark regional investment, bring in an MLS team and bring the city the caliber of entertainment that it really deserves. And if we build it while times are slow, it keeps thousands employed over the period of construction. Im glad Nenshi isn't buckling to anyone and being cautious, but this project is moving ahead painfully slow and the mayor seems to be the one holding up the reigns.

As someone who grew up in Vancouver, I was saddened for Calgary when I went to my first flames game. The fans are amazing, the atmosphere is amazing; but the arena reminded me of a basement. Its dark, ugly, unwelcoming, small and cold. It's also ONLY an arena. this is 2016. We don't just build arenas, we build whole neighbourhoods. Time for a modern stadium district.

[tomthumb2]

With all the negativity about CalgaryNEXT (and our ever sliding economy), I just don't see it ever happening. Best case scenario is the Flames build their own rink with no bells and whistles (not sure how much that would cost) and just forget about a stadium. I guess as long as fans still show up, they won't improve McMahon, not that U of C would pay for that anyway.

[CrossedTheTracks]

Originally Posted by Cage

Something I learned at the luncheon, NHL revenues have grown from $400 million to over $4 billion under Bettman's 23 year tenure. I would estimate that inflation and league growth by 6 teams would account for natural rise in revenue to $1.5 to $2 Billion. The other $2 billion has to come from revenue expansion realized in part by newer stadiums.

Or, um... how about ticket price inflation totally out of step with general inflation? I don't have any long-term numbers I can point to (Flames prices up 26% from 2012 to 2014 according to http://blog.tiqiq.com/2013/09/2013-14-nhl-average-ticket-prices-team/), but I just about fell out of my chair when I looked at ticket prices recently.

Hey, if the market supports it, bully for the owners & players. But I'm not so sure that "newer stadiums" is the proximate cause of this... (yes I'm well aware newer stadiums have more luxury boxes...)

Originally Posted by Cage

Another aspect of Bettman's speech, the City and in-particular the city political leaders need to get behind this proposal if its to be brought to fruition. Bettman did correctly point out that Edmonton's Mayor at the time, Mandel, was 110% behind the new arena and sportsplex proposal.

Kind of self-evident when the Flames are asking for so much from the city? Pardon me if I'm putting words in your (Bettman's?) mouth, but it kind of sounds like this means that council should get behind it for, uh, the sake of getting behind it.

[dazzlingdave88]

Originally Posted by AaronMak

I think the project is great idea. Unfortunately i only THINK it is because we haven't been given enough information to KNOW if it really is or not. Calgary desperately needs the complex not only for the flames; but also: the stamps, roughnecks, added convention space (as our convention centre is almost ready to also be replaced), and we lose countless big-name concerts due to the horrendous condition of the saddledome. CalgaryNext should be used to revitalize the west village, spark regional investment, bring in an MLS team and bring the city the caliber of entertainment that it really deserves. And if we build it while times are slow, it keeps thousands employed over the period of construction. Im glad Nenshi isn't buckling to anyone and being cautious, but this project is moving ahead painfully slow and the mayor seems to be the one holding up the reigns.

As someone who grew up in Vancouver, I was saddened for Calgary when I went to my first flames game. The fans are amazing, the atmosphere is amazing; but the arena reminded me of a basement. Its dark, ugly, unwelcoming, small and cold. It's also ONLY an arena. this is 2016. We don't just build arenas, we build whole neighbourhoods. Time for a modern stadium district.

You have some interesting priorities....You argue for spending money on an arena and against spending money on the Green Line

[Coldrsx]

Meanwhile is awesometon...


https://twitter.com/HCDurech/status/685300991521112065

[tomthumb2]

^^^ Yeah we get it already, Edmonton is better than Calgary in every way. Thanks for sticking the knife in a little further.

[O-tacular]

Originally Posted by Coldrsx

Meanwhile is awesometon...

Yes indeed...

[Cage]

Riise and fuzz bring up the point about Business Case, I thought it would be good to review the definition of business case;
https://en.m.wikipedia.org/wiki/Business_case

A business case captures the reasoning for initiating a project or task. It is often presented in a well-structured written document, but may also sometimes come in the form of a short verbal argument or presentation. The logic of the business case is that, whenever resources such as money or effort are consumed, they should be in support of a specific business need.

At its basics a business case document identifies that a potential course of actions will solve the identified needs. In this aspect, the Bettman speech did identify the business needs CalgaryNext is hoping to satisfy. Additionally the Bettman speech did offer examples where the CalgaryNext approach has been successful in the North American market place. From these angles, the Business Case is solid.

Bettman stated in his speech that he is primarily stumping for the arena and entertainment complex aspects of CalgaryNext and really doesn't concern himself with the stadium/field house portion. The stadium portion is the perview of CFL Commissioner to explain.

[Cage]

Originally Posted by CrossedTheTracks

Or, um... how about ticket price inflation totally out of step with general inflation? I don't have any long-term numbers I can point to (Flames prices up 26% from 2012 to 2014 according to http://blog.tiqiq.com/2013/09/2013-14-nhl-average-ticket-prices-team/), but I just about fell out of my chair when I looked at ticket prices recently.

Hey, if the market supports it, bully for the owners & players. But I'm not so sure that "newer stadiums" is the proximate cause of this... (yes I'm well aware newer stadiums have more luxury boxes...)



Kind of self-evident when the Flames are asking for so much from the city? Pardon me if I'm putting words in your (Bettman's?) mouth, but it kind of sounds like this means that council should get behind it for, uh, the sake of getting behind it.

The $400 million to $4 billion figure is top line revenue growth for the NHL as a league, and is net of markets that have tanked, such as Tampa Bay, Atlanta, and Phoenix to a certain extent.

Note the figures quoted on the URL including the flames 26% 2 year ticket price increase figures solely relate to secondary market fluctuations for flames ticket and not reflective of primary market price increase.

As for council being onboard or not, what Bettman is saying is that unless council is 110% behind getting CalgaryNext completed, the arena, stadium, entertainment complex will not be built. Does council want to get CalgaryNext deal done or is council looking for way to decline CalgaryNext.

[Fuzz]

Betman talked about other cities that had areas of blight and could benefit form stimulus. The West Village is not that. When I think of "business case" I think that someone has looked at the financials and it makes sense. I did not get that feeling at all. Well, OK the business case is 100% solid for the legue and the Flames organization, absolutely. I just don't see it for the city. And I don't think he made that case at all. If he had said, "his is what we think it is going to cost on the cities side, and this is how much additional revenue can be brought in to cover that", then OK. But I didn't get that at all. Probably because they know it doesn't make financial sense for the city.

[s211]

Originally Posted by O-tacular

Yes indeed...

Where dumpster (should) meet fire.

[Cage]

Most of what cities provide does not meet financial economic sense. Take Transit as an example. Hand over the reigns of Calgary Transit to Westjet and they will make it profitable. But most transit supporters will be horrified at he results. Bus schedules cut 75% and only operating on the busiest of routes. Feeder service to c-train cut unless each bus is 80% full, but a massive expansion of park and ride and LRT.

can you give me three examples where the city utilizes greater than $50 million capital and has an investor grade return on capital (eg the financial business case makes sense)?

The city needs to put together their own analysis based on their own business case formula. Then the city needs to tell Calgary Sports and Entertainment a yes or no answer. Either way the city council will get a lot of negative feedback. It just a matter of deciding the faction that will be dissapointed the most.

[MalcolmTucker]

Originally Posted by Fuzz

Betman talked about other cities that had areas of blight and could benefit form stimulus. The West Village is not that. When I think of "business case" I think that someone has looked at the financials and it makes sense. I did not get that feeling at all. Well, OK the business case is 100% solid for the legue and the Flames organization, absolutely. I just don't see it for the city. And I don't think he made that case at all. If he had said, "his is what we think it is going to cost on the cities side, and this is how much additional revenue can be brought in to cover that", then OK. But I didn't get that at all. Probably because they know it doesn't make financial sense for the city.

Only two arenas in the league have solid investment cases, as in revenues they bring in directly fund them: Air Canada Centre and Madison Square Garden.

[fusili]

Originally Posted by Cage

Being a member of the Chamber of Commerce, I was at the Bettman event.

The agenda for the event was 1/2 about CalgaryNext and 1/2 about league, but in reality it was all about CalgaryNext.

Overall I think Bettman gave a good presentation about the need for a new arena, the business case for the arena is solid, IMHO. For the record, going into the meeting I was skeptical about the need for a new arena.

For the doubters out there, for people who just want to hate Bettman for being NHL Commish, or hate the CalgaryNext proposal because its public money for private interests; I submit the CFL Commissioner should come to Calgary and advocate for the stadium/field-house portion of the venue. I doubt the CFL business case is solid as Bettman/NHL.

Something I learned at the luncheon, NHL revenues have grown from $400 million to over $4 billion under Bettman's 23 year tenure. I would estimate that inflation and league growth by 6 teams would account for natural rise in revenue to $1.5 to $2 Billion. The other $2 billion has to come from revenue expansion realized in part by newer stadiums.

Another aspect of Bettman's speech, the City and in-particular the city political leaders need to get behind this proposal if its to be brought to fruition. Bettman did correctly point out that Edmonton's Mayor at the time, Mandel, was 110% behind the new arena and sportsplex proposal. During the Q&A session with Chamber CEO, Bettman did disclose he requested a meeting with Mayor but could not fit it into their schedules. I find it interesting that Bettman is in Calgary during the City Council's scheduled meeting. It provides a convenient out for everyone involved.

That's nice that those new stadiums have yielded $2 billion in additional benefit to the NHL. Also awesome that the vast majority of the capital required for that increase in revenue has come from municipalities. Are all of these cities now part owners of the NHL. Are they receiving dividends on the investment. Because they are the largest investors now. No? Why not.

Next time I want to start a company, I'm going to ask the city to build my production facility for me. They can build the structure, I will use it, pay not rent, they can take on the maintenance and liability, but don't worry, I am employing people and contributing to the economy. Plus, my profits will increase massively.

How about this? Calgary builds the arena, but receives 70% on the net increase to the value of the team from today? If I was an investor contributing 70% of the capital necessary for increased productivity, I would expect 70% of the increase in value. Wouldn't that be fair?


Also, what economic benefits does the stadium provide? Low income employment from concessions and caretaking staff? Does a sports stadium attract labour? Does it give access to new markets? Does it enhance existing businesses?

Ask yourself these questions: What does an arena do to attract an IT company? A pharmaceutical company? How about an energy company? Are these the primary drivers which cause companies to move or invest in a city? Or is it the availability of labour, permissive regulatory and tax environments, ability to attract and retain labour, access to markets, infrastructure, etc. What the hell does an arena have to do with any of these things?

[Riise]

Originally Posted by Cage

At its basics a business case document identifies that a potential course of actions will solve the identified needs. In this aspect, the Bettman speech did identify the business needs CalgaryNext is hoping to satisfy. Additionally the Bettman speech did offer examples where the CalgaryNext approach has been successful in the North American market place. From these angles, the Business Case is solid.

What I'm taking from this is Bettman spoke about the solid business case for CSEC. It is great to hear that they have thought things through on their side but CSEC is going to require a fair bit of assistance from the City and Province. The City and Province will need to evaluate the proposal based on their needs but as CSEC is putting in a request for a substantial amount of assistance, shouldn't there be an onus for them to show how this project is more than a 'want' for the City.

[Fuzz]

Originally Posted by Cage

The city needs to put together their own analysis based on their own business case formula. Then the city needs to tell Calgary Sports and Entertainment a yes or no answer. Either way the city council will get a lot of negative feedback. It just a matter of deciding the faction that will be dissapointed the most.

I'm not sure why it is up to the city to provide a business case for this? King should have had numbers with this proposal. They showed up with a few really bad renders, and some vague numbers of what the facility will cost, that's it. They did nothing to convince the city it is in their interest to do this. I've got nothing against some contribution form the city, but they are asking for a huge hit to taxpayers, with little justification.

[Bigtime]

I wonder if this proposal can start a war in our own media? The sports guys are all for it and wondering why the city just won't get behind it, while other reporters and such are questioning it and the public dollar ask.

It also seems that the one thing economists seem to agree on is that there is no discernible return on public dollars being used to build arenas/stadiums for private sports enterprises.