Flames say their arena plan was fair, because paying taxes is like putting in money, right?

In the continuing Calgary war of publicly released arena proposals, the Flames owners revealed some details of what they’d proposed to the city on Wednesday, and it’s a fascinating glimpse into the mind of business executives in an industry that relies heavily on corporate subsidies.

The Flames’ presentation, touted on a special page of their team website, was largely in the form of pie charts, like this one:

If you’ve been following this story, you’ll know that this is not extremely helpful, since it shows who would’ve been fronting the money for an arena — the owners of the team that would play in it would put in slightly more than the owners of the city whose residents would pay the team to watch games in it, whoo! — but not who’ll get to recoup their costs from new revenues from it. Since this was the entire issue that negotiations broke down over, kind of a slight omission there, Flames pie-chart renderers.

Chart number two, though, comes with a table, and it’s an extremely illuminating one:

Forget the chart on the right, which is designed to convince Calgary residents that hey, Edmonton did a deal kinda like what we proposed, so it must be fair, right? (And also can’t punctuate the name of the Edmonton arena properly, unless they think it’s actually the sequel to a short-lived but acclaimed 1980s dramedy.) The one on the left is what’s important: If you check out the fine print below, you’ll see that the Flames honchos are claiming that under the city’s proposal they’d have to pay for more than 100% of the cost of the project, because future property taxes on the arena ($243 million) would be more than the city’s share of the up-front cost ($130 million).

This is kinda mind-boggling: In no other walk of life would anybody count the taxes that everybody has to pay as a capital cost — it’d be a bit like going to a car dealer and saying, “Sure, you’re knocking almost 50% off the sticker price, but what about all the money I’m going to have to spend on gas, huh?” [UPDATE: Or maybe a better way of putting it would be: If I take out a student loan from the U.S. government, I don’t get to say, “Hey, it’s nice and all that you want your money back, but can’t you take it out of the income taxes that I’m already paying?”]  Or to flip it around, this is saying to the city, Yes, you’d have to put up half the money for our private project, but we’d pay taxes, and sure we know that normal humans and even business pay taxes on top of paying for things that they want and that’s how government can afford to pay for schools and roads and all that, but come on, man, pie charts!

It’s a perfect exemplar of the Casino Night Principle, in other words, where any cash that the private party has ever touched is “our money,” and how dare do you city officials think the public is entitled to it just because that’s the law? In fact, the Flames’ plan even takes credit for money that the team has never touched, by proposing that the city recoup its share via a “community revitalization levy” (a CRL, which is Canadian for a TIF) on property taxes from unspecified development around the arena.

Anyway, all this is now moot, because Flames CEO Ken King told Global News yesterday that “we’re no longer pursuing this concept and need to move on” and “we’ll just get about the business of operating our teams and having some fun and try to win some championships.” Which sounds like good news — yay, enough with the whining about needing a new arena and just play hockey! — but was clearly meant as a threat against Mayor Naheed Nenshi in the run-up to elections this fall. Speaking of which, how’s that going?

Speaking to Global News on Wednesday, Mount Royal University professor of Communication Studies, David Taras, said arena funding seems to have become “ground zero” for the election.

“To some degree, I think there’s an argument that the [Calgary] Flames handed the election to Nenshi, because if you look back at the last election, Nenshi positioned himself brilliantly as ‘I’m fighting for the little guy against the big developers.’ In this election, he’s positioning himself as ‘I’m fighting for ordinary citizens who don’t want to subsidize billionaire business people – and I’m fighting for them against the super-rich.’”…

“It’s boxed in [opponent] Bill Smith a bit,” [Mount Royal University political science professor Duane] Bratt agreed. “It splits his brand, which has been strong on sport and also strong on taxpayer protection.”

Sticking to running a hockey team is probably a good idea for King & Co. — they don’t seem to be much better at electoral meddling than they are at pie charts.

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11 comments on “Flames say their arena plan was fair, because paying taxes is like putting in money, right?

  1. The problem King has is that he actually seems to believe that ordinary taxpayers are “on his side”. Nothing could be further from the truth, of course.

    As cities don’t directly raise taxes through a progressive income tax, but mainly through property assessment and taxation, municipal welfare for billionaires effectively imposes a flat tax on all residents, regardless of income or status (homeowner, renter, landlord, commercial building owner etc). So a retail clerk earning $25k annually might well find themselves paying the same as someone earning $300-400k annually, and pretty clearly cannot afford even the cheap seats.

    I hope Calgary sticks to plan and does not pull an “Edmonton” (who initially feigned playing hardball, then utterly capitulated and gave the team owner more than he was originally asking for). Nenshi does seem to have more public support behind him, however once the moneyed interests demanding welfare start their PR war, the public resistance can sometimes fade…

  2. How much does the Jubiilee or Arts Common pay in property taxes? How about the convention centre, Glenbow, Bell Music Studio??? The answer is none… so your example of a student loan while witty… isn’t accurate when comparing the Flames position on property tax. They’re using the same logic and more appropriately benefit that those other Calgary institutions receive. I’m not a season ticket holder to the CPO or an annual pass holder of the Glenbow but I can assure my tax dollars have been used to fund these buildings and my personal property tax amounts are negatively impacted by the lack of property tax that they don’t pay.

    1. Those are for-profit institutions? And they don’t pay either property tax or rent to a government landlord?

      If the Flames want to reorganize as a nonprofit to get out paying property taxes, that’s their business. And there’s a legitimate debate whether some organizations that are nonprofit in name only should be getting to duck taxes. (The Chrysler Building in NYC doesn’t pay property taxes because it’s owned by the private nonprofit Cooper Union arts college; that’s ridiculous.) But “my hockey team shouldn’t have to pay property taxes because arts organizations don’t pay property taxes” makes about as much sense as me saying “I shouldn’t have to pay sales tax because Meals on Wheels doesn’t.”

    2. Are those entity’s structured the same, and do they make similar amounts of money ask for similar investments form the government?

      If the flames were asking for $20 million or whatever to subsidizing a failing business that had such a high profile, I doubt anyone would bat an eye. But they are asking for many times that to subsidize a business that makes money hand over fist.

  3. Hello field of schemes. I just wanted to maybe suggest to you that you watch Nenshi’s interview today regarding the Flames counter proposal. In it, Nenshi makes a curious comparison, analogy if you like, regarding car dealerships and gasoline. I think you may have a somewhat famous reader looking at your blog and taking notes

    Starts at about 1:45



  4. Felt compelled to share this for a laugh: A satirical article on www.thebeaverton.com suggests our friends in Edmonton seem to have a solution to Calgary’s arena dilemma.

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