Flames and Calgary agree to keep discussing new arena, can’t agree on where to find $1.3B

The Calgary city council voted 12-3 on Monday to continue discussions with the Flames and Stampeders owners on a new hockey arena and football stadium, either via the mammoth CalgaryNEXT complex or a cheaper Plan B whose details have yet to be determined. And the two sides had very different interpretations of where things go from here, not least over what the actual price tag, which for CalgaryNext the city says will be $1.8 billion, while the team owners say they can do it for a mere $1.3 billion. First, Flames CEO Ken King:

“Frankly, who knows which may emerge better. We have a luxury here. We get to choose between what may be two very, very good ideas.”

And then, Calgary Mayor Naheed Nenshi:

“Certainly there’s a difference of opinion on numbers, but if I’m looking at their numbers they still say this is a $1.3 billion project. Obviously there’s a lot more questions, including who’s got $1.3 billion. … Even their best-case scenario is still a lot of money that we don’t have.”

There’s nothing wrong with talking, really, and Nenshi and the council seem to remain determined to take a hard line that any new venue proposals don’t involve shoveling piles of money at the teams that the public would never get back. This could drag out forever — which isn’t necessarily a bad thing, unless you’re King and his fellow Flames and Stampeders execs, wringing their hands about how their profits aren’t as big as they’d be if they got massive public subsidies for a new building or two, and I’m guessing most of you aren’t. Though with municipal elections coming up in 2017, you have to figure King and friends have in the back of their minds that maybe they can wait for a new, more-profits-friendly city government — I tried checking on Nenshi’s latest poll numbers, but they haven’t turned up, though I did discover that Calgary residents are strongly in support of playground swings.

ADDENDUM: And then there’s this:

Calgary report: Combined stadium-arena would cost public $1.2B, Flames should give up and start over

Calgary Mayor Naheed Nenshi is not your average mayor when it comes to sports subsidy deals: He’s insisted on evaluating the Flames owners’ arena plan on whether it’s good for the public, not just good for the team, openly called out NHL commissioner Gary Bettman as being a paid shakedown artist, and promised a public debate about any arena decision. Now the Calgary city manager’s staff has completed a hard-eyed analysis of the plan for a combined Flames arena and Stampeders stadium, and determined that it would cost $1.8 billion, double the total that the teams had estimated, with the public cost coming in at between $1.2 billion and $1.4 billion.

That’s a hell of a lot of money, even in devalued loonies. According to the city report, the extra $900 million would go toward “land, municipal infrastructure, environmental remediation, and financing.” Most of that isn’t even the long-worried-about creosote contamination cleanup (which comes to around $65-110 million), but other items: New transportation infrastructure is down for another $166 million, for example, and finance charges would be an additional $371-390 million. (It’s not immediately clear if these are present value or nominal figures — if the latter, then it’s not really fair to count them as an added public cost, since it’s just the cost of paying later instead of now, like the additional money you pay on your home mortgage over time compared to what your mortgage is actually worth.)

The city council is scheduled to discuss the report on Monday, but it’s likely to be a short discussion — the CBC says the $1.2-billion-plus price tag “effectively scuttles the proposal as it stands.” And the report itself recommends as much, indicating that “the CalgaryNEXT concept is not feasible in its present form or location and alternative development concepts, locations, and financial models should be investigated.” In particular, it suggests looking at building a new arena near the site of the current Saddledome (which the Flames owners previously rejected as not ambitious enough) and putting a new football stadium and field house at the current site of the Stampeders’ stadium at the University of Calgary.

There’s still some concern here that by focusing on alternative sites, this could end up becoming a battle of where to build the new arena and stadium, not whether to fund one with public money — though given that the report repeatedly indicates that the city government’s first priority is that “public money must be used for public benefit,” and Nenshi has said the same, probably not too much concern. Mostly, instead of taking the team owners’ demands and price figures as a given, Calgary sat down and trying to figure out if it made sense financially from the city’s perspective — and the answer came back “hell, no.” Now they’re kicking it back to the team to come up with a plan that makes sense. It’s all eminently logical and responsible, and only remarkable because so few city administrations do anything like this.

So far, Flames CEO Ken King is insisting on keeping CalgaryNEXT alive: “I realize we may sound simplistically optimistic, but we still think there’s some room here,” he said yesterday, which is definitely either the first or third Kübler-Ross stage. There’s still many months or years of haggling to go here, almost certainly, but Calgary has set an excellent example for other cities on how to go about tackling the first round.

Flames video touting $890m stadium-arena is an unintentional comedic masterpiece

Calgary Flames CEO Ken King has released a new video on the team’s proposed $890 million stadium-arena complex, hoping to reverse the negative momentum that the project has built up since it was first floated last summer. And if standing in a white void while yammering buzzwords over renderings and clips of girls holding hockey sticks and people running up a flight of stairs will do the job, he nailed it:

I could go into a point-by-point breakdown of King’s speech, but fortunately I don’t have to, because Kent Wilson of Flames Nation has already done it. Among the points Wilson notes: Hockey arenas don’t really serve as “catalysts,” claims that building a combined arena and stadium represents a “$330 million savings” aren’t supported by any actual numbers, and the Flames wouldn’t really be paying for more than half the cost. And then there’s this, on King’s assertion that “CalgaryNext is also going to fulfil the top unfunded recreational priority for the city: a fieldhouse“:

Here’s how the hypothetical conversation between the team and the city would go on this topic:

Flames: “Hey, wouldn’t it be great to have a fieldhouse?”

City: “Yup, we’ve wanted one for awhile. We figure it will cost about $200 million to build. We aren’t sure how to justify the cost budget-wise right now though.”

Flames: “How about you just roll the $200 million cost into the arena district we’re planning in the West Village? Then the Stamps can play there too.”

City: “What? That doesn’t change the problem of funding it.”

Flames: “Can you imagine all the things the city can do with a fieldhouse? Did you know Calgary is the only City in…”

City: “You’re not answering the question.”

Unless the Flames come along and say “we’ll help pay for the fieldhouse”, or bring something new to the concept of the fieldhouse, any discussions of a fieldhouse aren’t useful. It would be like a neighbour telling you to buy a hot tub for your backyard so he can use it once in awhile. And when you tell them you’d like a hot tub but can’t afford it, he starts regaling you with the benefits of a hot tub.

And all this is at a Flames fan site, mind you. Clearly King is going to need a bigger video. Maybe something with a magic hockey puck.

Calgary mayor on Bettman’s attempted Flames arena shakedown: “That’s not how we operate here”

Monday’s attempt by NHL commissioner Gary Bettman to shake down Calgary for more Flames arena money on the grounds that “the cost is never going to be lower than it is today” didn’t go over too well with subsidy-skeptic Calgary Mayor Naheed Nenshi, leading to one of the better media skirmishes in recent days. First, Nenshi went before reporters and, in essence, said not to listen to anything that NHL guy says:

“I don’t know why anyone would think this is surprising or news, this is the man’s job, this is what he does,” said Nenshi.

“Perhaps in other cities that he has come to, the city councils have just written cheques based on back-of-the-napkin proposals without any consultation to the public or without any analysis, that’s not how we operate here.”…

“I know that Calgarians require very wealthy people from New York to come and tell us what we need to do in our community because they understand vibrancy better than we do,” he said.

Then Nenshi doubled down the next day:

(High point: “I never thought I would have a column in the Hockey News praising the fact that I am willing to ask questions of the NHL commissioner.”)

At which point Bettman went on Calgary radio and got into a fight with his interviewer:

(High point: “It would really be easier for me to explain it if you were not interrupting me,” right after he tried to answer a question about arena subsidies by talking about the owner’s charitable contributions. Second high point: “I don’t comment on clubs’ economics” right after being asked if the Flames turn a profit, immediately followed by saying “their long-term stability will be threatened” if they don’t get a new arena.)

This is shaping up to be a battle for the record books, especially with Nenshi enjoying strong public support for his “prove to me what’s in it for taxpayers” stand on the Flames’ arena plans.

Bettman to Calgary: Get new Flames arena for only $490m, act now, supplies limited!

Your request for at least $490 million in public money for a combined hockey arena/football stadium Frankenstein monster is going nowhere with the skeptical mayor. So who you gonna call? You got that right:

[NHL commissioner Gary] Bettman told [Calgary]’s business community at a chamber of commerce event Monday there should be more urgency to get the project underway, particularly from city council.

“I’m having trouble understanding why there hasn’t been further progress on CalgaryNEXT,” Bettman said. “No matter what anyone thinks of the proposed CalgaryNEXT project or the cost of the project, the cost is never going to be lower than it is today…”

The Scotiabank Saddledome, built in 1983, will be the oldest NHL arena when Canada celebrates its 150th birthday in 2017, he said.

Wow, is that really possible, that no other NHL stadium is more than 32 years old? Why, no, it’s not: Even once the new Edmonton Oilers and Detroit Red Wings arenas open this year and next respectively, there’ll still be the New York Rangers in Madison Square Garden, born 1968. (And renovated a couple of times since then, but Bettman didn’t say “oldest unrenovated arena.”)

Anyway, this appears to be a somewhat new twist on the old stadium playbook, with Bettman arguing that Calgary residents shouldn’t look at the sticker price, but rather act now because this sale won’t last forever! Which isn’t a new twist in the marketing world, but hey, half of Bettman’s job consists of declaring these kinds of ultimatums, so give him credit for at least coming up with a new way to phrase it.

Calgary news anchor asks readers to vote on whether to vote on new Flames arena

When writing about public votes on stadium or arena plans, I’ve occasionally gotten in trouble from readers for mixing up “referendums” with “initiatives,” which are apparently very different things, at least in some places like California where people actually get to vote on things directly on a regular basis.

Which is why I’m really glad to see that in Canada, they just avoid the whole nonsense by holding “plebiscites,” which is what CBC Calgary anchor Rob Brown is proposing for the Flames-arena-plus-Stampeders-stadium proposal:

The mayor isn’t in favour of that idea, saying in his interview that he’d like to see council make the decision. He points to the complexity of the proposal, and how difficult it would be to arrive at a simple yes or no question.

It’s a fair point.

This idea represents a massive change to our city, with a lot of moving parts. Council is supposed to have the expertise to scrutinize this stuff and arrive at conclusions. That’s why we elect these folks.

But city hall could also decide to use that expertise to negotiate a much better deal with CSE, and then bring it to a thumbs-up/thumbs-down public vote.

It’s a fine enough idea in the abstract, and one that CBC readers seem to mostly agree with in the site’s own web, er, plebiscite. (Really, it’s amazing that even 29% of respondents would say “No, I don’t want to have a vote on this” for anything, but maybe Canadians are just polite that way.) But there are some problems with “Let the people decide!” as a complete solution to the question of sports subsidies.

First off, holding a public vote isn’t always a guarantee of the public getting what it wants, for the simple reason that money can often play a bigger role in referenda/initiatives/plebescites than in the usual political process. Back when Joanna Cagan and I were researching the first edition of Field of Schemes, we got to hear Jay Cross, then an executive with the Miami Heat, talk on a panel about public votes where another panelist had said it was too risky to put your entire project in the hands of voters. Nonsense, countered Cross: He’d rather put things to a vote every time, because he knew that by spending enough money on a campaign, he could all but guarantee a win — at which point he showed video clips of the multimillion-dollar ad campaign that eventually won the Miami Heat more than a hundred million dollars in arena subsidies.

In Calgary’s case, Mayor Naheed Nenshi has been a staunch skeptic of the Flames/Stampeders plan, such that the teams’ owners might see making their case directly to the people as a better option, especially given that this is one of those everything-including-the-kitchen-sink development plans that makes the financing (and benefits) as confusing as possible. Nenshi, interestingly, would rather have the city council decide than go to a public vote, which could just be local elected officials defending their turf, or could be a tactical move of his own.

Anyway, all this is to say that direct democracy, while a fine goal, isn’t any less susceptible to the corrupting influence of money than anything else in this universe. (Or even the alternate universe that is Canada.) The best solution, as always, is transparency and education about the real economics of sports subsidy plans — hopefully CBC Calgary can tackle that next.

Flames CEO on those opposed to giving him $500m+ in public cash: “People who h8 are going to h8”

Representatives of the Calgary Flames, the Calgary mayor’s office, and other “stakeholders” (e.g., local developers, because can’t have a meeting without them, right?) met yesterday to discuss the Flames’ $890-million-or-maybe-a-lot-more arenastadium proposal. And while Mayor Naheed Nenshi withheld comment for now following the talks, Flames CEO Ken King did not. At all:

King downplayed the project’s detractors, saying they were the vocal minority.

“There are people that are against anything that’s ever built,” he said, singling out the Canadian Taxpayers Federation, which recently launched an online petition in protest of any tax dollars being used to fund the project.

“People who hate are going to hate,” King said.

He also said it could be difficult to sway the opinion of some politicians — who he wouldn’t name — who are “dead set against it.”

“I’ve had no political pushback other than the people you know who have been outspoken about it,” King offered. “There are political people … you’re written about them.”

Oh, Ken — so close. Also, implicitly dissing the guy across the table for you by calling him a hater if he doesn’t cut you a nine-figure check doesn’t seem like the best negotiating strategy to me, but maybe this is just how they do things on the mean streets of Canada.

Your Labor Day weekend reading: Cost to cities of losing teams, and Calgary’s art of the steal

If you’re looking for some light stadium-subsidy reading to make your blood boil over the last weekend of summer, there were a couple of good ones this week, and I don’t say that just because they quote me a lot:

  • Louis Bien at SBNation has a long piece up about the St. Louis Rams, San Diego Chargers, and Oakland Raiders threatening to move to L.A., and the cost on those teams’ fan bases. (I’m not honestly sure what the “you care too much” is about in the headline, as it doesn’t seem to have much to do with Bien’s actual article, but whatever.) Included is a long section on the dubious threat to cities’ well-being that team relocations actually pose, with my favorite line coming from Rick Eckstein of Public Dollars, Private Stadiums fame:

Quality of life improvements claimed by the franchise were “a load of crap,” Eckstein wrote to me. He continued: “Los Angeles has been doing just fine without football for the last decade; there has not been a mass exodus from Seattle after the Sonics left; the Long Island suburbs will not go vacant with the Islanders moving to Brooklyn, just as they survived the Nets leaving; Montreal has shown no ill effects after losing the Expos while the Nationals decidedly did NOT put DC ‘on the map.'”

  • Katie Baker in Grantland has an article that does a really cool thing, taking the “Art of the Steal” chapter from Field of Schemes (and subsequent “Art of the Steal Revisited” chapter from the expanded edition) and applying it specifically to the Calgary Flames owners’ arena demands. Best quote in the piece, though it’s not new and wasn’t particularly said about arena demands (it was about hockey lockouts), is from current Flames president Brian Burke when he worked for the Maple Leafs: “My theory is, make the first meeting as short and unpleasant as possible. Sometimes it’s better to just punch the guy in the face.” Not sure if demanding at least $490 million in taxpayer cash while claiming this would be for the public good quite qualifies as a punch in the face, but it’s pretty close!

Poll finds Calgary residents don’t want to spend public money on Flames arena, are confused by polls

A poll of Calgary residents by Mainstreet Research and the Calgary Herald finds people like new things, but don’t like to pay for them. Also, they will answer lots of contradictory things if a poll asks them contradictory questions.

To the specifics of the poll on the $890 million or maybe really $1.2 billion Flames and Stampeders stadium/arena/floor wax plan:

Do you think the Scotiabank Saddledome, current home of the Calgary Flames & Calgary Roughnecks, needs to be replaced? 32% replaced, 27% renovated, 23% leave as is, 17% not sure.

Do you think McMahon Stadium, current home of the Calgary Stampeders, needs to be replaced? 35% replaced, 32% renovated, 19% leave as is, 14% not sure.

That indicates that a majority (50-32% for the arena, 51-35% for the stadium) of Calgary residents think the existing arenas shouldn’t be replaced. Clear enough, right?

Do you agree or disagree with the following: a proposal to build a new arena, stadium, and field house is good for the city. 30% strongly agree, 25% somewhat agree, 13% somewhat disagree, 18% strongly disagree, 14% neither agree nor disagree.

What the.

Thinking about everything you have seen or heard about Calgary Next, do you support the project or oppose the project? 19% strongly support, 20% somewhat support, 20% somewhat oppose, 14% strongly oppose, 26% neither support nor oppose.

Okay, so people don’t think the existing stadium and arena should be replaced, but do think a new stadium and arena would be good for the city, and aren’t sure whether they support or oppose the project. I guess given the first two, the last one shouldn’t be all that surprising, but that’s a lot of cognitive dissonance there.

What else we got? Oh, right, no one has asked yet about paying for it.

As proposed, funding would come from the following sources. $200 million from the Flames ownership group; $200 million from the city for the municipal field house; $250 million from a ticket tax on users, and the remaining $240 million would come from a community revitalization levy with governments giving up or postponing future tax revenue. Do you support this financing model? 19% yes, 49% no, 33% not sure.

Even taking into account that very large “not sure” (of which I’m sure a large percentage actually represents “Whaaaaaaa? Can you say that again slowly?”), that’s a significant sentiment in opposition to putting up $490 million in public tax money. (Though the way the question is phrased, I suppose it’s possible that some people are upset that the public wouldn’t be putting in more tax money. Possible, but unlikely.)

In your view, how should CalgaryNext be funded? 45% Flames ownership, 40% Flames and government, 15% not sure.

Okay, that seems to indicate that a plurality of poll respondents don’t want any public money used for this.

As polls go, this is a hot mess, and if it indicates anything, indicates that people simultaneously believe everything they are being told about the stadium+arena project. (It’d be good for the city! We don’t need it! We don’t want to pay for it!) Perhaps somebody (*cough cough Calgary Herald*) could be doing a better job of explaining it, so people could come up with some non-contradictory opinions?

Anyway, enough with the public — what does the Calgary city council think of the proposal?

Ward 4 Coun. Sean Chu said he agrees with the 49 per cent of poll respondents who oppose the proposal’s financing model.

“I’m always of the opinion the taxpayers’ dollar should not be supporting any professional sport,” he said.

“From what I’ve heard, people are unanimously saying no tax dollars for this project.”

But Coun. Evan Woolley, who represents the area where the complex would be built, said despite the poll indicating many are opposed to spending public money on the megaproject, it may be exactly what the city needs.

“We have a downturn in the economy and we have an opportunity to build something that will diversify our economy,” he said.

This is going to be a long debate.

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.