The Calgary city council approved around $200 million in subsidies for a new Flames arena earlier this month only eight days after releasing the proposal, meaning there was no time to tell how the public felt about the idea of using tax money to help pay for a billionaire’s new sports home. There’s plenty of time now that it’s too late for it to have any impact, though, and it turns out Calgarians — at least, those who wrote in to the council during those eight days — were not so crazy about the idea:

An analysis of more than 4,000 individual public submissions found about 55 per cent of those who wrote to the City Clerk’s office did not support the deal approved by city council in an 11-4 vote on July 30.

In particular, reports the Calgary Herald, which requested the public comments — apparently in Canada public records requests move a lot more quickly than in the U.S. — people were upset about the rushed timetable (“The fact that the Flames made the timeline so tight that it disallowed for meaningful public consultation shows an utter disdain for democratic norms and should have been an absolute non-starter”) and the fact that Calgary was approving arena funding at the same time it was cutting its operating budget for things like transit and fire services (“Do not let [Calgary Sport and Entertainment Corp.] bully you into spending money that could desperately be used elsewhere”).

Sometime sports subsidy apologist Mark Rosentraub told the Herald that allowing public input vs. deciding behind closed doors each “has its ups and its downs,” and that “if people are dissatisfied, then they should vote the scoundrels out.” That’s way easier said than done — people vote on a multitude of issues, so it’s tough to punish elected officials for a single decision, especially if their opponents would have done the same thing — but given that the council’s approval ratings were already in the toilet before the arena move, this certainly isn’t going to help. Unfortunately, the next elections aren’t until 2021, by which time it’s extremely likely there will be something fresher in voters’ minds to use as a basis for their ballots — and if you suspect that that’s yet another reason why the council wanted to vote as quickly as possible, you’re probably not far off.

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.

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.

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 Jim Cunningham 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.

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?

After public input has been received, Calgary city council will vote July 29 (one week from today) to ratify the deal or not, according to Davison.

He says the city wants to hear from the accessibility, arts and sport communities on what they want to see in the new arena. #yyccc

— Sammy Hudes (@SammyHudes) July 22, 2019

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

City manager: next week is our last council meeting. "It's important to capitalize on momentum… three or four days after coming to an agreement on an arrangement." #yyccc

— Meghan Potkins (@mpotkins) July 23, 2019

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.

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.

And:

“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.