A’s owner buys half of Coliseum site for $85m, this is definitely either a good deal or a massive swindle

It’s even more officially official now: The Oakland A’s owners have bought out Alameda County’s 50% stake in the Oakland Coliseum site for $85 million, signing the deal yesterday, 18 months after a tentative deal was first announced, and 10 months after it was supposedly finalized. (The wheels of real estate grind exceedingly slow.) If team owner John Fisher is successful in acquiring the other half share of ownership from the city of Oakland — negotiations for that piece remain underway — then he’ll have control of the entire 155-acre site to do with as he pleases, whether it’s for residential development or a new stadium or a giant Ferris wheel or what have you.

What you want to know, I’m sure, is whether this is a good deal for the public or a massive giveaway, and I am here to tell you: Man, these are hard questions! There are definitely benefits to unloading the Coliseum land, which includes the stadium, the Oracle Arena, and surrounding parking lots — Fisher would be on the hook for $5 million a year in operating costs if they maintain the current setup, plus would have pay property taxes on the site, which the county doesn’t. But since any buyer would be in the same boat, really the question remains whether this is a fair price for the land.

And as we’ve seen again and again, setting a fair-market value for land is way more art than science, especially if you don’t put it up for public bidding and instead just hand it to the guy who happens to be standing next to you. A study of land sales in Oakland from 2005-2010 puts the average price at $1.4 million an acre, which would mean Fisher would be getting about a $50 million discount; on the other hand, home values have been soaring in Oakland in recent years, so maybe a decade-old study isn’t the best way to determine current values? It’s almost like sports team owners/real estate developers like to get land instead of cash because it’s so hard to tell whether this represents a public subsidy!

In fact, the A’s land deal is even more convoluted than that, since the Coliseum site purchase is still coupled with a plan to build a new stadium at Howard Terminal about four miles away, which would require maybe $200 million for “transportation and other infrastructure” that would be paid for with city tax kickbacks. It’s really the kind of thing where you’d want to negotiate everything at once, including what Fisher would be allowed (or required) to do with each parcel and how much public infrastructure money would be provided — but the county is strapped for cash right now and has been wanting to get out of the stadium business for a while, so it’s tapping out. This leaves it up to Oakland Mayor Libby Schaaf to ensure she negotiates the best deal possible for the public, and she’s been very quiet of late. Hopefully before any city deal is finalized, we’ll have some better appraisals of both the Coliseum land value and the infrastructure costs; though if past history is any guide, that’s not too likely unless the mayor demands it. Schaaf used to draw a hard enough line to be considered part of the Gang of Four of city mayors who wouldn’t kowtow to team owner demands — this will be a good test of whether she’s going to end up a Tait or a Nenshi.

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Friday roundup: Return to some pretense of normalcy (for now, depending) edition

Morning, everybody! We’re coming up on halfway through June, and the sports world is beginning to awake from its pandemic-inspired slumber: Spain’s La Liga soccer league held its first restarted games yesterday, with fake crowd noise and CGI fans (I’m watching via DVR right now: the fans disappear periodically and are replaced by ads, something I’m sure league broadcasters wish they could do in normal times); England’s Premier League is set to begin games next Wednesday. Japan’s J League is set to restart on July 4, with fans possibly returning at reduced capacity a week later. Germany’s Bundesliga, meanwhile, is several weeks into its restart and going full speed ahead despite occasional players testing positive and going into quarantine.

Over in the U.S. — currently 7th worldwide in new Covid deaths per day, behind Chile, Peru, Brazil, Mexico, Sweden, and the UK — the NBA is planning to finish its season and then play the playoffs entirely at Disney World starting July 30, though it’s not certain that all players will show up given they’d be isolated from their families for seven weeks at minimum. MLB commissioner Rob Manfred has promised “100 percent” that there will be a 2020 season of some kind, though again, it’s always possible lots of players will just stay home rather than risk their health to get less than a third of their regular salaries in exchange for a month-long preseason plus a month and a half of games. MLS is relaunching with a World Cup–style tournament at Disney World, to be followed by a season as yet to be determined. The NHL is shooting for a playoff tournament starting in August, maybe, depending. The NFL is still insisting it will be able to play its regular season as usual in September with full stadiums, though individual teams are planning otherwise.

In short, the grand sports epidemiological experiment has begun, and we’re just going to have to keep checking back week to week to see how it’s turning out. Playing fan-free games in regions with low current infection rates seems to be working out okay — at least if you don’t mind that players will occasionally keep turning up infected and have to be quarantined, which is fine enough on public health grounds even if it might leave players antsy — but how that translates into fans in seats, or a world where a second wave kicks in starting in September just as leagues are in full swing, remains a work in progress. The best bet remains not to plan anything more than a few weeks in advance, which is understandably hard when you’re trying to steer an aircraft carrier of an institution like a sports league, but for individual fans we can just enjoy whatever’s on TV this week while we wait for our ticket refunds to trickle in one month at a time.

Anyway, on to the week’s stadium and arena news:

  • To the confusing lack of firm information about the Carolina Hurricanes‘ new arena lease, add the news that Hurricanes owner Thomas Dundon has “termination rights” and the executive director of the local sports authority is mumbling about how maybe it’s time for a downtown arena. This still looks to be in the long-game phase — if you’re not playing the long game during a hopefully temporary global health crisis, you’re pretty dumb, not that sports team owners can’t be dumb when necessary — but it’s worth keeping an eye on, because we know well that sports team owners and elected officials love nothing more than to meet behind closed doors to plot things while waiting for the money to return.
  • Calgary mayor Naheed Nenshi is defending spending tons of city money on a new Flames arena and other big development projects as the smart thing to do during an economic downturn, and he has a point in terms of government spending being a smart thing to do when the cost of borrowing is cheap and people need jobs so they’ll start spending again. Whether it’s a smart thing to spend that money on a new hockey arena when the city is in the middle of slashing school budgets is another question.
  • Henderson, Nevada has issued some renderings of its planned arena for the Silver Knights (what the Vegas Golden Knights‘ farm team will apparently be called, which, okay), and I gotta say, they are seriously lacking in batshittery. Long-distance images of generic fans, with no lens flare or fireworks or Mitch Moreland? Okay, there’s a giant statue of a knight and one fan raising his hands in the air in the parking lot for no particular reason, but step up your game, Henderson, America needs entertainment, or else we’ll have to start pretending that our game consoles are hockey arenas!
  • Speaking of long-term vs. short-term thinking, people who want to own major-league (or minor-league) sports teams are lobbing plenty of lowball offers, but aren’t getting many takers.
  • Here’s an article about how college football teams will only let you into games if you’re old or rich, which seems about right for America.
  • Wait, there was a baseball stadium named after Marge Schott? Who ever thought that was a good idea?
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Cost overruns, tax breaks could inflate Calgary’s public cost of Flames arena to $250m or more

The city of Calgary has finally revealed some of its legal contracts with the Flames governing the team’s new arena — six months after voting on it, because that’s totally how democratic oversight is supposed to work — and the highlights include:

  • As previously reported, the city will pay $275 million toward construction, plus financing charges and the cost of demolishing the old Saddledome (previously reported at $12.4 million), while receiving $250,000 a year for 10 years in naming-rights fees, plus 2% of all ticket sales, capped at $3 million a year for the first five years. Last time I crunched the numbers on this I came up with a net total of $212.9 million in public costs; given that the ticket tax payments will be significantly backloaded toward the end of the lease, the base cost to the city is probably more like $230 million or so.
  • Not as previously reported, the city will be on the hook for any insurance premiums above what the team would pay if the arena weren’t in a flood plain, and will have to cover 50% to 67% of any construction cost overruns, depending on future negotiations.
  • The Flames owners won’t be property taxes, but instead will make payments in lieu of taxes in the amount of
    Yep, they omitted the actual payment amount, citing a section of Alberta’s Freedom of Information and Protection of Privacy Act that exempts from public disclosure laws information that would be “harmful to business interests of a third party,” though the very next section says the exemption doesn’t apply if “the information relates to a non-arm’s length transaction between a public body and another party,” so hopefully we’ll see some lawsuits to get that number revealed.

The total cost is impossible to say without knowing how much of a tax break the team is getting or how much cost overruns could be, but suffice to say we’re probably looking at more than $250 million now, which is a whole hell of a lot more than the $47 million net loss the arena’s backers touted to get the deal approved by the city council.

Calgary Mayor Naheed Nenshi says he’s not concerned about cost overruns because the Calgary Municipal Land Corp. “is the project manager on that project, they know how to build stuff on budget and on time”; all those who are reassured by this, please raise your hands. Now, all those who are wondering when Naheed Nenshi was replaced by an alien shapeshifter, please raise your hands. Keep ’em up, I’m still counting…

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Friday roundup: New stadium demands in Calgary, 90% shortfall in promised Raiders jobs, corporate subsidies found (yet again) to do squat-all to create jobs

Happy Friday! Is Australia still on fire? (Checks.) Cool, I’m sure we’ll be ready to pay attention to that again as soon as there are some more images of adorable thirsty koalas.

In the meantime, news on some slightly less apocalyptic slow-moving catastrophes:

  • CFL commissioner Randy Ambrosie says the Calgary Stampeders deserve “a state-of-the-art, beautiful stadium” but he’ll “take my queues [sic, seriously, Montreal Gazette, you’re supposed to be an English-language paper]” from team execs for when “they think it’s time for me to be a guy who makes a little noise and tries to stimulate a positive discussion.” Yep, that’s a sports league commissioner’s job! Why a new stadium is Calgary’s job and not the Stampeders owners’ job is less clear, but given that the team owners did such a good job at extracting public money for an arena for the Flames (which they also own), you know they’re going to be jonesing for a sequel. (In fact, a Stampeders stadium was originally part of the Flames plan before Mayor Naheed Nenshi rejected it as too expensive and only would approve the Flames part, so maybe this is just a case of a team owner deciding it’s easier to get sports projects approved in serial rather than in parallel.)
  • It’s now been 100 days since Nashville Mayor John Cooper called a halt to Nashville S.C.‘s stadium construction, and Cooper is still not answering questions about when it may resume. Previous indications were that he’s refusing to issue demolition permits in order to renegotiate who’ll pay for cost overruns, but it would be kind of cool if he’s just realized that he can take advantage of MLS having approved a Nashville expansion franchise before everything was signed off on regarding public stadium subsidies by just declining to build the stadium and keeping the team. (Nashville S.C. will have to play in a 21-year-old NFL stadium until then, boo hoo.)
  • Las Vegas Raiders stadium proponents promised it would create 18,700 construction jobs, and now it’s only creating 1,655 jobs, and the stadium boosters say this doesn’t count off-site workers like “support staff at construction companies, architects and engineers, and equipment and service suppliers,” but really it’s more about how most of those 18,700 jobs were never full-time anyway. At least state senator Aaron Ford can sleep at night knowing he didn’t deny a single construction worker a job; guess he isn’t kept up by thinking of any of the people who were denied jobs by virtue of the state of Nevada having $750 million less to spend on other things.
  • 161st Street Business Improvement Director Cary Goodman has a plan for a new NYC F.C. stadium in the Bronx to benefit the local community by having it be owned by the local community, so that “when naming rights are sold, when broadcast fees are collected, when merchandising agreements are made, or when sponsorships and suites are sold, revenue would pour into the [community-owned] corporation and be distributed as dividends accordingly.” This sounds great, except that broadcast fees don’t go to a stadium, they go to the team that plays in a stadium, and also things like sponsorships and suites and naming rights are exactly the kind of revenues that the NYC F.C. owners would be building a stadium in order to collect, so it’s pretty unlikely they’d agree to hand it over to Bronx residents. We really gotta get over the misconception that stadiums make money, people; playing in stadiums that somebody else built for you is where the real profit is, and don’t anyone forget it.
  • Reporters in Kansas City are still asking Royals owner John Sherman if he’d like a downtown baseball stadium, and Sherman is still saying sure, man. (See what I did there? Huh? Huh?) This article also features a quote about how great a downtown ballpark would be from an executive vice president of Vantrust Real Estate, which owns lots of downtown properties; it must be nice to be rich and get to have your Christmas present wish lists printed on local journalism sites as if they’re news.
  • A new study of business tax incentives found that state and local governments spend $30 billion a year on them, with no measurable effect on job growth. Also, most of the benefits flow to a relatively small number of large firms (good luck getting a tax break for your pizzeria), and some states spend more on corporate tax breaks than they collect in corporate taxes, with five (Nevada, South Dakota, Texas, Washington, and Wyoming) spending an average of $44 per resident on tax breaks even though they have collect no state corporate income tax at all. (The biggest spenders on a per-capita basis: Michigan, West Virginia, New York, Vermont, and New Hampshire.) Surely local elected officials will now take a hard look at the cost of these subsidies and ha ha, no, even when tax breaks are proven failures it takes decades before anyone might notice and do anything about them, so don’t hold your breath that anyone is going to see the light just because of one more study, at least not unless it’s accompanied by angry mobs with pitchforks.
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Calgary residents ask city to reconsider arena funding amid budget cuts, are rebuffed by mayor as “distracting”

The city of Calgary is facing a $23.45 million budget shortfall that could result in cuts to police, fire, and transit services, and also spending $200 million or more on a new arena for the Flames. What to do, what to do?

Some councillors, including Evan Woolley and Jeromy Farkas, have said that as the city looks for cuts in this year’s difficult budget “everything should be on the table” — including the arena deal

Farkas argued that as there’s still no signed agreement between the city and the Calgary Flames owners, he’d like to see the arena deal revisited.

That’s an idea! And even one that a local economist had suggested earlier this month. But a voice is speaking up in defense of the subsidy deal that was agreed to this past summer after just one week of debate, and if you’ve been in a coma for the last year, the name will likely surprise you:

Mayor Naheed Nenshi said he thinks talk of reconsidering the deal is “distracting.”

“On the arena, we had a very comprehensive public debate, and ultimately, council decided to move forward,” he said. “That is a decision council has made, and frankly nothing has changed in the economy between July and now that would make me say, ‘We’ve got to rethink our capital projects.’”

That’s right: Naheed Nenshi, erstwhile member of the Gang of Four and the man Flames execs tried to force out as mayor because of his opposition to arena funding and declared “worse than Trump” when they failed, is now the leading defender of giving tax money to the Flames. Our transition to Bizarro World is complete.

If you haven’t been in a coma for the past year, of course, Nenshi’s statement will come as less of a shock, as he was a vocal supporter of the arena deal when it passed, for reasons that weren’t entirely clear even at the time. And they’re even less clear now that it’s been made apparent that most Calgary residents were opposed to the deal (or at least most of those who sent in comments to the council), and there are people literally marching on City Hall to oppose the possibility of a 250% price hike for low-income transit passes as part of the budget cuts. If Nenshi felt like he didn’t have the support to oppose the deal in July, he certainly has political cover to do so now; presumably either he’s agreed to some quid pro quo that is stopping him from calling for the deal to be renegotiated, or is more afraid of alienating developers than nice white-haired people marching on City Hall, or genuinely thinks that this deal is somehow much better than the previous one he rejected despite it not being anything close to the “public benefit for public money” that he had said was his bottom line for any deal.

Meanwhile, Farkas also raised the question of why, if there’s still no formal arena agreement in place, “this was so pressing that it had to go through in the middle of July with barely a week of consultation.” This really is an excellent — and rare — opportunity for a city to rethink a project that was rushed through without enough public debate; it doesn’t seem likely to happen, and maybe wouldn’t even with Nenshi’s support, but it’s still remarkable how quickly the political winds shifted on this one. Hey, Jay Scherer, do you have time to write another book?

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Calgary just bought itself a new Flames hockey arena, but at what cost?

Welp, that went about as expected: The Calgary city council voted 11-4 yesterday to build a new Flames arena, just eight days after most of them learned about the plan and following just a few hours of debate. The estimate construction price tag is $550 million, with the city and team owners splitting the costs, and the team getting the vast majority of the revenues.

Among the highlights from yesterday’s council meeting:

  • Several councillors asked for a delay until September so that they could fully vet the arena plan — as one remarked, he’s spent more time researching buying a car than he got to on this deal — but the Flames owners said no. And since the deal itself contained a poison pill where it would self-destruct if not approved by yesterday, the council had no choice but to vote it up or down, with no opportunity even to suggest changes.
  • Many of those voting yes cited a figure, provided by the city’s CFO, that the net present value cost of the deal to the city would be just $47 million, thanks to ticket tax money from the arena and incremental property taxes from the surrounding development that would help defray costs over 35 years. This puzzled me at first because the lowest figure I could come up with was $138.9 million, but it turns out the CFO used the city’s projected bond interest rate of 2.5% as the discount rate for calculating the future value of money, which makes taxes that won’t be collected until the 2050s somewhat less worthless. This is not necessarily the best way of choosing a discount rate, and there are other questions about whether all those revenues should really be counted as defraying the public’s cost (see below), but at least the math checks out a bit better. (I still get at least $60 million for the net present value cost, even using the 2.5% discount rate.)
  • There was some concern expressed about the Flames owners’ exclusive option to buy two parcels of city land valued at an estimated $100 million, but it didn’t get much debate in the limited time available.
  • Calgary Mayor Naheed Nenshi said the deal is better than most other North American sports venue deals — a pretty low bar, as regular readers of this site will already know — adding: “It was important [that] we have a great financial deal and I think we did, but it was also important for us to think about the intangibles that we are investing in. I wanted to make sure we had a great balance of social and financial return, and I think we’ve accomplished that here.”

Okay, so it’s impossible to put a value on “intangibles” like ensuring that the Flames stick around for 35 years without move threats (not that the team owners were threatening to leave, except when they were). But what about that financial return?

The biggest problem is counting future property taxes on the surrounding development as paying back the city’s costs. This would only be new development, yes, but there’s no way to guarantee that it would be new development that wouldn’t happen without the arena, at least somewhere in the city. (Studies of whether new arenas spur increased economic growth come down decidedly on the side of “What, are you high?”) Plus, as discussed here previously, property taxes on new development aren’t a windfall, because they’re already needed to pay the costs of all the city services new development requires — police and fire protection, schools for any children living in new housing, etc. — so counting them as available to pay off an arena is double-dipping. If we throw out the property tax revenues, even using the city’s lowball 2.5% discount rate, suddenly the city’s present-value costs balloon to $165 million. (And probably much more than that, since the ticket-tax money would be significantly back-loaded thanks to ticket prices rising over time, but the city hasn’t provided a breakdown of how those revenues would change over time.)

Then there’s the fact that the Flames would get the land for free — as a swap for the site of the Saddledome — and would pay no property taxes on the arena itself, which is typical for U.S. city-owned arena deals but much less so in Canada. These should both be considered subsidies to the team, but there’s no way to put a dollar value on them without more number-crunching, which there wasn’t time for in the past eight days.

So we’re looking at a city net cost of probably somewhere close to $200 million, at minimum. Meanwhile, the Flames owners would put up the same $275 million up front as the city, but would get way, way more in return: All the revenues from selling tickets (except for that 2% ticket tax carveout) and concessions and ad signage and most of the naming-rights money, and so on. A recently revealed study from 2016-17 by University of Michigan sports economist Mark Rosentraub estimated that the Flames could see increased revenues of $48.7 million per year — even if that’s before deducting their debt payments for the new arena, it would leave Murray Edwards and his fellow owners clearing about $30 million a year in new profits, while the city is losing millions of dollars a year on its share.

And that’s the most damning perspective on this deal: Not that it will bankrupt the city of Calgary (it won’t) or that it’s significantly worse than other awful arena deals out there (it’s not), but that the city council has entered into a partnership with a private sports team where they split the costs roughly down the middle, but the private team owners collect virtually all of the resulting revenues. That is a huge gift to the rich dudes who own the local hockey team, and saying well, at least the city won’t take too much of a bath on its part, if you squint at the numbers right is pretty cold comfort.

None of which matters much now, as the deal is done, with Calgary taking its place alongside Minneapolis and Miami and a whole bunch of other cities that were the poster children for holding the line on sports subsidies, until suddenly they weren’t. Can we please stop pretending that the stadium subsidy racket is drying up now? It may require jumping through a few more hoops these days, but owning a pro sports team remains one of the best ways, short of becoming a defense contractor, to make money off of the public till.

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Calgary city council is really going to approve $275m in Flames arena funding with no debate

The vote on putting $275 million (and maybe more — see below) in city money into a new Calgary Flames arena doesn’t take place until tomorrow, but it’s already becoming clear which way the council is going to go:

The majority of council members have indicated support for the deal, including Mayor Naheed Nenshi, who last week said the arena would create public benefit through “intangibles.”

“It’s about bringing community together. It’s about uniting people,” Nenshi said. “This deal makes sense on its own merits.”

Also, councillor Jyoti Gondek said a new arena was needed so that people could watch e-sports like League of Legends and Fortnite. With a straight face, presumably, though the Calgary Sun doesn’t say.

Meanwhile, a bunch of economists have noted the same thing I did here, which is that projecting $400 million in new city revenue over 35 years is not the same as $400 million today, which means the city will almost certainly be taking a loss on the deal — and that’s if taxes on new spending don’t simply cannibalize taxes on old spending, which will almost certainly be the case given that this is just a matter of moving an arena a few blocks away. Also, it’s not counting any cost overruns, an agreement on which “still needs to be worked out,” according to the Toronto Star, but the “expectation” is the city would be on the hook for 50% of them.

If that’s all somewhat confusing and seems to call for a more in-depth examination of the numbers, well, tough, because the council is voting tomorrow. This is kind of an amazing ending to a years-long arena debate where the city seemed set on holding firm against any significant public subsidies, but also kind of not amazing, because that’s how these deals tend to happen: not for a long, long while, then all at once.

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Exactly how bad is the new Calgary Flames arena deal?

With all of four days of public comment period (expiring today at noon) allowed before the Calgary city council votes next week on its Flames arena plan, the local media have been commenting like crazy on how it’s either terrific or godawful. Among the takes:

  • Toronto Star columnist says it’s “a pleasant surprise that somebody had actually decided to do something in this gloomy town,” and that despite the fact that the city will get little in the way of ticket taxes and naming-rights money, and Flames owner Murray Edwards could get a huge gift in the form of development rights to public land, it’s a good “compromise” because Calgary “badly needed a win on something, anything, after the debacle that was the bid for the 2026 Winter Olympics.” (Ed. note: The “debacle” was that the Olympics bid didn’t happen because Calgary voters didn’t like it.)
  • Edmonton Journal columnist David Staples says the new deal “appears to be far more favourable to the Flames owners than the arena proposal that broke down in 2017 and also more favourable than the deal Oilers owner Daryl Katz got in Edmonton”: He says Edmonton paid 47% of the Oilers’ arena cost, Calgary would pay 50% of the Flames’, up from 33% in the proposal from two years ago. But he admits that the “details are murky,” and ends up noting that even pro-arena Edmonton officials say it ended up being good to have a lengthy public debate on that city’s plan, though of course their side still won in the end, so they would say that.
  • Calgary Herald columnist Don Braid says that the new arena is good because Taylor Swift and Paul McCartney will be more likely to play there.
  • Macleans writer Jason Markusoff writes that the Flames owners “sweetened the pot” by agreeing to pay a ticket tax, but mostly city officials wanted something they could “claim victory” on: “Nenshi and the council want to remember what victory tastes like and get the public excited about something, even at the risk of getting the public furious anew. After Monday’s presentation, Nenshi gathered King and other principal players in the talks for a handshake photo op, until an aide rushed over and reminded the mayor of the optics of shaking hands on a deal that was just opened to public feedback. Oopsie.
  • Small business owners are mostly mad because the local economy sucks and they’d rather see their own business taxes reduced.
  • Global News contributed a not-very-helpful listicle of costs of recent NHL arenas that didn’t include any details of how much the public paid for each, because that shit is too complicated for a listicle, man, do you know how many posts we have to write today?

So who’s right? As covered here on Tuesday, even with the ticket tax and naming-rights money, the city looks like it would take a rather large loss on its arena spending, while the Flames owners would rake in all the profits (presumably, anyway: the city’s report doesn’t include anything on the team’s side of the finances). That’s true even if you count property taxes on the development around the arena as a net plus — without getting too much into “present value” terminology, suffice to say that so much of the city’s take would be pushed out so many years into the future that it wouldn’t be nearly enough to pay off the debt the city would have to take on right now for arena construction costs. I get a net loss to the city of at least $139 million, counting all the new property taxes as a positive, but not counting costs like land and tax breaks that aren’t specified in any of the documents released so far.

All these known unknowns are why some elected officials — and, presumably, Calgary citizens, though it’s hard to tell since they’ve barely had time to speak up since Monday’s arena announcement, and nobody gives them newspaper columns — have been complaining that four days of public input and then just three more days (two of them on the weekend) to process those comments is less a spirited public debate than a fig leaf over a done deal. City councillor Evan Woolley, whose proposal to push back a council vote to September was rejected by a 9-4 vote, remarked, “I have asked numerous times what the rush is, why one week, and I have not been given a clear answer.”

Pro-arena councillor Jeff Davison, who warned his fellow councillors before the vote on Woolley’s measure that any delay would mean “this deal is done tonight and you will forever be known as the council that likely lost the Calgary Flames” — the deal included a clause that it would be null and void if not approved within a week, presumably exactly so that Davison could pull this two-minute-warning maneuver — claimed that the plan all along was to have only one week of discussion, which his fellow councillors immediately said he was wrong about. But they still voted, 9 out of 13 of them at least, to limit any public debate to less than four days.

And limiting public debate, it appears, is what a majority of the Calgary council did agree on, in part because it’s hard to claim a nine-figure arena subsidy for a sports billionaire as a “victory” if the public gets to disagree with you about that. Back to Cunningham:

Public engagement is great and all that, but sometimes decisions are necessary, even if they cost money and piss some people off.

And the deal will go through, imperfect as it may be. At the end of the day, that’s probably what should happen. After all, some things are more important than politics, fiscal rectitude, or citizen consultation.

Hockey, for example. Not to mention civic pride.

I, for one, eagerly await Gary Bettman’s 2019-20 NHL marketing campaign: Hockey. It’s better than democracy.

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Calgary reveals complex Flames arena plan involving $212.9m in subsidies, gives public a whole week to discuss it before final vote

After a three-hour meeting that was closed to the public as promised, the Calgary city council did end up releasing some details last night of its deal with Flames owners for a new arena, to be built on current Calgary Stampede parking lots, to replace the Saddledome — at just after 7 pm Calgary time. Let’s sift through the various news reports to try to piece together just exactly what the council agreed to:

  • The new arena would cost $550 million, with construction costs being split evenly between the city and the team, $275 million apiece.
  • The Flames would pay all operating and maintenance costs for the arena.
  • The city would own the arena, which often isn’t a good thing for the public because it can mean a building gets out of paying property taxes, but this is Canada so that isn’t necessarily the case. The city’s presentation, however, just mentions $158.1 million over 35 years ($74 million in present value) in incremental property taxes from new development around the arena, so it’s unclear whether the arena itself would be tax-free or not.
  • The city would collect a 2% tax on every ticket sold, amounting to a projected $155 million in revenue over 35 years, which amounts to about $72.5 million in present value.
  • The city would also get a unspecified percentage of naming rights revenue, amounting to only $2.5 million over 10 years, which is present value of a little under $2 million.
  • The city will pay $12.4 million toward demolition of the Saddledome, 90% of the cost.
  • No word on whether the Flames will pay any kind of rent of ground lease beyond the ticket tax and naming rights share, or who would cover cost overruns, or whether there would be additional infrastructure costs or who would pay for them.

That’s a little hard to put a final number on, but if we take the city’s $275 million construction cost plus $12.4 million demolition cost, then subtract out the $72.5 million from ticket tax revenues and $2 million from naming rights (property taxes are just what any development of the land would normally pay to help fund all the city services that new development requires, so they’re not really a net plus), we get: $212.9 million in public costs, plus any potential public share of cost overruns or land cost breaks. Or, to put it another way, the city and the Flames owners would be splitting construction costs down the middle, and the team would be collecting all revenues on the place except a thin trickle of ticket taxes and a sliver of naming rights money.

Compared to the last Flames arena proposal, which was projected to cost taxpayers at least $1.2 billion, this one does seem to involve lighting less public money on fire. That’s about as much positive as we can say about it, though, and $212.9 million–plus toward a $550 million arena is still an awful lot of money — pretty close in percentage terms, in fact, to the $311 million in public money toward a $676 million arena that Edmonton spent on the Oilers, to much popular consternation. “It could have been worse” is extremely faint praise for any sports venue deal, especially when the median outcome for cities in such deals is “pretty awful.”

There are still a lot of unknowns about the deal — it’s tough to analyze a proposal that is just a single page of summary numbers with some clip art thrown in — but hopefully more details will emerge before the council votes on the plan … I’m sorry, did you say next Monday?


The reason for the rush is, apparently, “momentum”:


If you’re interpreting that as “if we gave people more than a week to think about it they might stop being so excited and ask actual questions” … actually, I’m pretty sure that’s the only way to interpret it.

And now, the question I’m sure you’re all wondering, which is: What did Calgary Mayor Naheed Nenshi, he of the vow that the city would have to be made whole on any arena spending, say after the announcement of a deal that, even if you count new property taxes from ancillary development (which you shouldn’t), would leave the city stuck with at least $138.9 million in losses? Nenshi said this:

“Let’s cut to the chase. This is a good deal for Calgary,” said Calgary Mayor Naheed Nenshi. “This deal makes sense on its own merits.”

(Nenshi did add that, given the city is currently looking to cut $60 million in fire, police, and transit spending thanks to a city budget crunch, giving hundreds of millions of dollars to an oil billionaire is maybe not the best look: “The optics of this stink. It’s really terrible timing.”)

It’s really hard to see any of this as anything other than an attempt to overcome public opposition to subsidies for a Flames arena by rushing a plan to approval without public scrutiny, which is exactly what the Flames owners have been angling for. And Nenshi, who was largely cut out of the arena talks, has folded completely on his opposition to the plan, which could be tactical — in Calgary the mayor is just one vote on the city council, so if it looked like this plan was a shoo-in he may have decided it was better to retreat and declare victory — but is still a far cry from promises like this one from 2015:

“It’s not going to be a deal that gets presented to the public with a ribbon on it,” Nenshi said Monday in an interview at Bloomberg’s New York headquarters. “We will actually engage the public in discussions about what they think is right.”

Discuss really fast, people of Calgary. The ribbon gets tied on Monday.

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Flames owners and Calgary to announce tentative arena deal, maybe not tell anyone what’s in it

If you’ve been reading this site for any length of time, you’ll know that Calgary Flames owner Murray Edwards’ battle for a new publicly funded hockey arena is one of the most important flashpoints in the sports subsidy world. It features a mayor (Naheed Nenshi) who has insisted on not putting public money into any project that wouldn’t result in a public benefit, a team management that tried to kick Nenshi out of office so they could negotiate with someone more team-friendly, and a city council whose most vocal members is a former employee of Edwards’ oil company who has loudly proclaimed that public debate is a bad idea when you can instead have deals made behind closed doors.

After the last round of arena plans fell apart when it turned out taxpayers would lose more than a billion dollars on the project, Davison got himself, but not Nenshi, appointed to the negotiating committee for the next round of talks. And that round has apparently resulted in something that both the council committee and the team owners have tentatively agreed on, though in Davisonian style, we still may not get to learn much about what the agreement says:

City council will meet Monday to get the first look at a tentative deal reached between the city and the Calgary Flames for a new arena to replace the Scotiabank Saddledome.

The proposed agreement will be discussed at 3:45 p.m. behind closed doors, though details could be made public following the in camera briefing.


“It’s not a deal at this particular point, there’s still lots of steps to go through. It’s really a proposal and we’ll be giving an update,” said [Councillor Ward] Sutherland, who is vice-chair of council’s event centre committee.

“Negotiations, as we mentioned a few weeks ago, had been ongoing. It’s a multi-party deal, so it’s very complex. It deals with the Stampede board, the Flames organization, CMLC [Calgary Municipal Land Corporation] and also the city.”

The important thing to remember, whatever gets announced — or not announced — is that even a “deal” would just be a deal between the Flames owners and the negotiating committee, and it will take a vote of the full council to make it a reality. The council has been split on whether or how to move forward on a Flames arena involving public money, and Nenshi will undoubtedly be vocal about reminding everyone that it’d be dumb to give Edwards a pile of cash if the city doesn’t see any return on its investment, and it’ll be hard to come up with a plan that provides positive cash flow to both Edwards and the city when you’re talking about spending $600 million just to move a hockey team from one part of town to another, and all this will take place against an inevitable backdrop of elected officials feeling pressured into getting something done just to make the issue finally go away.

All of which is to say: This is going to be an interesting day in Calgary, and likely an interesting week and interesting next few months. Whether or not you’re a hockey fan or a Canadian, it’ll be worth tuning in — at least, tuning in to whatever the council lets slip from its closed session.

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