Flames CEO says Calgary making it hard on prophets (no, not profits, through radio, so maybe)

Calgary Flames CEO Ken King went on TSN 1050 radio in Toronto yesterday (sorry, don’t know where it’s archived) to talk about his $890 million Frankenstadium plan, and got in some quality whining about how he’s not appreciated enough for being willing to put up half the cost of a project for his own team’s benefit:

“It’s funny, if you get off a plane from New York or London or Paris and said, hey, I’ve got $550 million and I’m kind of interested in your city and I’m kind of interested in doing a project, people would be falling over themselves. Please, please come here. But it seems in sports it’s difficult to be a prophet in your own country.”

I … don’t think that’s actually true that out-of-towners get automatically lavished with property-tax kickbacks and cash from the city treasury and money to clean up polluted sites, at least not any more than in-towners do. But it’s always nice to lead with complaining that no one loves you enough for your money.

And speaking of those property-tax kickbacks — what would be called tax increment financing (TIF) in the U.S., and is a community revitalization levy (CRL) in Canada — King confirmed that these wouldn’t be just taxes on the stadiarena, but on all the development that would theoretically take place around it:

“There will be office towers, condos – just like stuff between Air Canada Centre and Rogers Centre – that will be built. A portion of the taxes from those – a portion – for a period of time will be used to finance the project. By the way, those are taxes that don’t exist if we don’t do this.”

This is the age-old argument for TIFs, and it has a gaping logical hole: If there’s actually demand for office towers and condos, then they’ll be built somewhere in your city, with or without a new sports venue. (Unless you think people will suddenly flock to Calgary to buy condos the minute the Stampeders are playing in a new stadium instead of an old one, which, uh, yeah.) Which means that you end up with the same amount of overall development, but the city suddenly not getting new property tax revenue to pay for all the things that are needed to support an expanding city.

This is exactly what happened with runaway TIFs in Chicago, as discussed this week on the penultimate episode of KUCI’s Heather McCoy Show. (Last episode this Tuesday! Tune in to hear if Heather can top Jon Stewart’s Daily Show farewell!) It’s really nice to think that there could be a perpetual motion machine that could use tax money to pay for things without it costing anybody anything — really nice if you have $550 million in your pocket and want $500 million more from the public, that is — but Calgary might want to check on how well it’s actually worked in practice first, just in case.


5 comments on “Flames CEO says Calgary making it hard on prophets (no, not profits, through radio, so maybe)

  1. Didn’t hear the TSN 1050 interview, but as you might imagine Mr. King has been freely available to anyone who might want to talk to him about how great his proposal is.

    You can hear one of the interviews here:

    pmd.fan590.com/podcasts/pts/pt_20150820_175538–Prime-Time-Sports—August-20—5pm.mp3

    And more generally, PTS podcasts (one of which I believe Neil was on some months ago) here:

    www.sportsnet.ca/590/prime-time-sports/

  2. While there is some merit to King’s position on this (that this development, including the dangled carrot come red herring fieldhouse, would not happen without the subsidy), there are also some serious problems with what he has said.

    Yes, the brownfield site will “have” to be cleaned up at some point. So will almost every other contaminated site on the face of the earth. How’s that Chernobyl cleanup coming along, btw?

    There is no deadline for cleaning up that brownfield site, nor is there money presently allotted for it. Putting a strict deadline on same will have the same effect as having to build a stadium (or 20) by the time the Olympics come – it instantly drives up costs. That is what artificial deadlines do, and it is what they are designed to do frankly. As he $890m plan does not include the cost to clean that site up (as I read it), mentioning it in the same breath as the stadium plan in an effort to make it seem “free” is dishonest. I’m sure their position on that would be “we aren’t responsible for the conclusions people arrive at”, even if they have deliberately structured their arguments to point people in that direction.

    The fieldhouse argument is more or less the same. The city wants one but has never made it enough of a priority to put on the capital plan in any year to date. The “we’ll build it for you if you give us the money you were going to spend on it anyway” argument is weak. If the city prioritized the facility, it could be funded and built at any time. Paying someone else to incorporate it in their program only works if it is cheaper to do so. In this case, it appears it will not be.

    If a new car will cost me $30,000 if I buy it myself and “maybe as little as $30,000 if I have someone else do it for me”, why would I hire someone else to buy my car? There is no benefit beyond enabling my own laziness.

    The PTS interview linked above has some decent questions asked of King. And, to be fair, he does a pretty good job of answering them. I tend to agree with McCowan that the costs should be set out (including amounts for contingencies, a clear explanation of what costs are not known and what the range of independent estimates for these are) and the taxpayers given an opportunity to vote on whether they want to pay for it or not.

    A sports complex is not a hospital, school, fire station or public road. It is by definition a want and not a need. Let the people who will have to pay for it decide whether they are willing to pay extra for a new building.

    If the taxpayers aren’t, maybe Flames fans are willing to pay an extra $25 per ticket over 30 years to cover the Arena portion ($700m, give or take, including some finance charges on that portion not contributed up front by the team itself). The Flames could also sell 8000 PSLs at $7500 up front and raise $60m right off the bat. That’s not even twice the cost of a reasonable season ticket…

    If it turns out that the Flames fans aren’t willing to pay for their new arena (either up front or over 30 years), why should anyone else be?

  3. TSN 1050 interview is available here:
    http://www.tsn.ca/radio/toronto-1050/king-people-need-to-be-educated-about-flames-arena-plans-1.348446

    Local radio interview on Fan 960 where King uses the exact same line about people coming from New York or Paris. Nothing like rehearsed lines! And of course the radio host doesn’t call him out on it.
    http://www.sportsnet.ca/hockey/nhl/teams/calgary-flames/ken-king-chats-calgarynext/

    Deputy mayor interview on FAN 960 where no tough questions are asked either.
    http://www.sportsnet.ca/960/the-big-show/city-needs-an-open-mind-for-calgarynext/

  4. The media hype machine is starting. Flames might move out of town if we don’t build this; we can use it as part of an Olympic bid; we’ll lose our urge to greatness if this doesn’t get done!

    http://calgaryherald.com/opinion/columnists/braid-calgarynext-sets-high-stakes-in-a-battle-for-calgarys-future-2