Flames CEO says city recouping its arena cost via taxes means “us paying for everything”

As promised, on Friday the city of Calgary released its proposal for funding a new Flames arena that team owners rejected, and it looked pretty much exactly as previous reports had had it: Costs would be split one-third/one-third/one-third between the city, the team, and a new ticket surcharge, and the city would recoup its third via a combination of property taxes on the building, team rent, and revenue from non-hockey arena events:

Sounds simple, right? Split the costs, split the revenues. Unless you’re Flames CEO Ken King, who immediately fired back that this would leave his team paying “120%” of the costs:

“Their proposal has us not only paying for everything, but more, when you consider incremental taxes,” he said. “Flames’ cash comes from Flames’ revenue—I think we all agree on that. User fees comes from Flames’ revenue, I think we can all agree on that. And in whatever form they want this payback, that comes from Flames’ revenue, as well.

What’s going on here is a fundamental disagreement over the nature of “our money.” I could explain this in economic terms — King wants to count every scrap of arena income, and even taxes they’d be paying just as everyone else pays, as Flames revenue — or in metaphorical terms — as I told the CBC on Friday, the Flames’ position that they should get to pay off their costs with arena revenues but the city shouldn’t is like asking someone to dinner and saying, “Let’s split the check, but then I get to eat both meals.” But I’d prefer to direct you to the ultimate authority on this matter, which is the Odd Couple’s “casino night” episode. If you don’t want to sit through the ads, here’s a transcript of the relevant part, which starts at around the 11:00 mark and comes after one of Oscar’s friends has won big at the casino night fundraiser for Felix’s opera club:

Felix: What have you got there? Where’d you get all that money?

Oscar: From Arnold, he owed it to me.

Felix: What?

Oscar: Yeah. He owed it to me since the year one.

Felix: The “let it ride” guy owed you money?

Oscar: That’s my Arnold.

Felix (reaching for a pile of cash): Well, that’s wonderf—

Oscar: Don’t touch the money, Felix.

Felix: But what a—

Oscar: Don’t touch it, I told you not to touch it.

Felix: But now the opera club gets its money back. Yay!

Oscar: I don’t think I heard you.

Felix: We’re saved! We get our money back!

Oscar (hastily gathering up his money): Now I know I didn’t hear you.

Felix: Surely you’re not thinking of keeping that money?

Oscar: Why not? It’s my money!

Felix: No, it’s not! It belongs to the opera club!

Oscar: How do you figure that?

Felix: Well, Arnold got it from us, you got it from him, you give it back to us! Then everybody’s even!

Oscar: That can’t be right. See, I’d be out all this money.

Felix: No, you wouldn’t! You’d just be back where you started from!

Oscar: Yeah, but only Arnold wouldn’t owe it to me anymore. See, I had this money coming to me.

Felix: But it came from the opera club! From them to him to you to me! It’s like an isosceles triangle!

To his credit, Calgary Mayor Naheed Nenshi was calmer than Oscar about the whole thing, replying that “our argument is that the city needs to share in the upside, if we’re going to share in the cost,” and that he was open to any and all ideas for achieving this: “If it makes more sense for the city to own and the [Flames] owners to pay rent we can absolutely look at that. If it makes more sense for there not to be rent, but a revenue-sharing agreement we can look at that.”

As for what the Flames ownership were asking for, meanwhile, the Globe and Mail reports (citing unnamed city sources) that the team wanted not only to pay no property taxes and share no arena revenue, but to have taxpayers foot the bill for police presence at games and give Flames fans free public transit rides on game days:

The requests would put a multimillion-dollar dent in the city’s finances and could result in higher taxes. Waiving transit fares on game days, for example, would mean giving up about $10-million in revenue annually, according to one of the sources. Calgary would then have to fill this gap, perhaps by cutting transit services to other parts of the city or raising property taxes, the source said. Covering the cost of extra policing would also amount to an operating subsidy, according to the source who provided the detail about security expenses to The Globe and Mail.

What we have here, folks, is a good old-fashioned impasse, though only one of the two parties has math (or geometry) on its side. I’d suggest Nenshi and King settle this by trying to double their money at the pool hall, but I’m not sure the showrunners would go for it.

 

This week in boondoggle vivisection: Plenty of good seats available in SF, Cleveland, Ottawa

We’ll get to the weekly news roundup in a minute, but first, I need to mention this editorial from yesterday’s Globe and Mail, which makes several eminently reasonable points about how Calgary shouldn’t capitulate to the Flames owners’ extortion attempts for arena cash (“using past bad decisions to justify terrible future decisions does not qualify as logic,” “arena financing is a hamster wheel, and here is an opportunity to jump off”), and then says this:

Everyone involved should take note of a remark this week by Neil deMause, renowned stadium boondoggle vivisectionist and creator of the fieldofschemes.com website: “The number of mayors who’ve been voted out of office for standing up to sports team subsidy demands remains zero.”

That’s right, I am a major-newspaper-certified renowned boondoggle vivisectionist, y’all. Clearly it’s time to order some new business cards.

Okay, the rest of the week’s news:

  • The Los Angeles Rams aren’t the only California team having trouble getting fans to turn out for games in the September heat: The San Francisco 49ers are seeing so many empty seats on the sunny side of their stadium that they’ve hired architects to see if it’d be possible to add a sun shade. One problem: The stadium can’t get any taller, as it’s in the flight path of San Jose’s airport. Until then, the 49ers are handing out free water bottles and sunscreen to fans on the hot side of the stadium, which is nice and all, but probably isn’t what you want for your big marketing push. This once again points up how smart the 49ers management was to stick fans with PSLs before the team got lousy and people noticed how crappy the new stadium was for actually watching football in.
  • And speaking of empty seats, the Cleveland Indians won their American League–record 22nd straight game yesterday, but they still can’t sell out their ballpark, which not that long ago saw a record sellout streak of 455 straight games. Indians GM Mike Chernoff blamed Cleveland’s small size, the start of the school year, and “weekdays,” three things that apparently didn’t exist in the ’90s. At least he didn’t blame the 23-year-old stadium or demand upgrades as a solution — yet, anyway.
  • And also speaking of empty seats, the Ottawa Senators have begun tarping over part of their upper deck for every game, because they can’t sell tickets there. The Senators owner is already blaming his 21-year-old arena for that one (apparently the last owner built it in the wrong place), so team president Tom Anselmi was left to say: “We just need more of us to come to more games more often.” Can’t argue with that!
  • And also also speaking of empty seats, the 2018 Pyeongchang Winter Olympics have only sold about 5% of available tickets so far to actual fans (ticket brokers have bought up another 18%), with less than five months to go before the games start. If you’re looking to snap up a bargain to watch curling, though, be forewarned: Not all the new hotels planned for the Olympics are finished yet.
  • And speaking of seats that a team hopes won’t be empty, the Oakland A’s will be letting in fans for free to a game next April against the White Sox. Make jokes all you want about how dismal an A’s-White Sox matchup will be, it’s still free baseball, and you never know what you might see that you’ve never seen before.
  • NHL commissioner Gary Bettman declared that that the scaled-down Nassau Coliseum is “not a viable option” for the New York Islanders, two weeks before the team is set to present plans to Nassau County for a new arena near Belmont Park. A total coincidence, I’m sure.
  • The Rhode Island state senate started hearings on a new Pawtucket Red Sox proposal yesterday, with the team owners and their allies noting that “the team’s 54-percent share of stadium costs is the highest portion of private investment in 14 AA and AAA ballparks built over the last decade,” according to the Providence Journal. What was that someone was just saying about using bad decisions to justify terrible future decisions?
  • Deadspin’s Drew Magary has come up with a new nickname for the Atlanta Falcons‘ new iris-roofed stadium: Megatron’s Butthole. Drew Magary needs to be put in charge of all stadium nicknames, starting immediately.

Flames rejected Calgary’s arena plan because taxpayers would’ve gotten paid back

Following Calgary Flames CEO Ken King’s announcement on Tuesday that his team was going to take its arena-negotiating ball and go home, the Calgary city council voted yesterday to release the city proposal that King had called “spectacularly unproductive.” The details aren’t public yet, but the basics, according to Toronto Metro:

  • An estimated $500-600 million in construction costs would be shared one-third by the city, one-third by the Flames, and one-third by a ticket surcharge.
  • The city wanted to get its third repaid either by new property taxes or by getting a cut of arena revenue.

That’s … perfectly reasonable? That second item would be, in fact, required by law if this were Seattle, and in any event “We’re splitting the costs, let’s split the revenues” is a sensible proposal in any world other than the sports one.

The Flames owners, according to Metro, “balked” at this, and asked for an exemption from property taxes on top. That wasn’t going to get a deal done. So while the talks may have been “spectacularly unproductive,” that doesn’t appear to have been the fault of Mayor Naheed Nenshi or the council.

Declaring an impasse now is clearly meant to put pressure on Nenshi with elections coming up; already two of his opponents in the upcoming election tried to take advantage by saying how they think a new Flames arena is important, though only at the right price, which is actually what the mayor himself is saying, so. There’s also, as Maclean’s columnist Jason Markusoff points out, an element of “the Edmonton Oilers got a new arena, we deserve one too”: Flames CEO Ken King grumbled yesterday, “If we can beat the guys up north—apparently we can’t beat them on the building front, but maybe we can beat them on the ice.” This will not go over well, predicts Markusoff:

A large portion of the Calgary populace will view ceding the arena-building race to Edmonton not as a loss, but as a win: that Cowtown didn’t acquiesce to its hockey barons’ demands. Until the Flames owners can appreciate that, they’ll be stuck in their current saddle.

Maybe? Certainly the mayor and the council’s first reaction — we made a perfectly good offer, here, look at it — doesn’t smack of panic, but we’ll see where things head as the election campaign continues. Ham-fisted threats and unintentionally hilarious self-promotion are kind of Flames exec trademarks by now, but there is that old saying about blind pigs and acorns.

Flames CEO: Mayor Nenshi was mean to us, we don’t even wanna new arena now

As surprise announcements yesterday go, this was less of a shocker since we’ve seen things like it before, but still a bit of a bombshell: Calgary Flames CEO Ken King announced that the team was cutting off talks with the city over a new arena after what he called “spectacularly unproductive meetings,” and will instead remain at the Saddledome for “as long as we can”:

“Scotiabank Saddledome will continue to host a couple million people a year,” he told reporters at a hastily-called news conference Tuesday afternoon.

“We’ll just go on and run our business and do what we can to operate and try and figure out what the future will look like at some point later.”

If you’re wondering if that was a threat, NHL commissioner Gary Bettman was on hand to not make it any clearer for you:

“They’re going to hang on as long as they can,” the commissioner said. “At least, that’s the current view.

“That’s not a prospect that thrills them or anybody else. But it is a realistic assessment of the situation they find themselves in.”

This is partly the old “we can’t be competitive without a new arena” gambit, which we detailed in Chapter 4 of Field of Schemes way back in the first edition. The timing, though, is almost certainly intended to put pressure on Mayor Naheed Nenshi, who is in the middle of a re-election campaign, as well as the rest of the city council — or at least to send a message to voters that if they want arena negotiations to resume, they’d better pick some leaders with less backbone.

How well that will work out is hard to predict — the number of mayors who’ve been voted out of office for standing up to sports team subsidy demands remains zero, and Nenshi’s tough stand against the Flames owners’ demands has been fairly popular. Still, with the mayor’s poll numbers softening to where his re-election is maybe no longer going to be a walk in the park, King and the other Flames execs clearly saw an opportunity here and went for it; the puck is now in Nenshi and the council’s, uh, ice.

Flames president threatens to move team to Quebec without new arena, CEO says, “Who, us?”

Traditionally, sports team owners love move threats, because they scare the bejeezus out of city officials, but hate actually making them themselves, because they get fans (and potentially those same city officials) really mad at you as a carpetbagger and possibly make it harder to sell tickets once you get the new stadium or arena or renovations or whatever you were trying to shake loose with the threat. It’s a big reason why sports commissioners exist, to go around dropping relocation threats so that owners don’t have to.

The Calgary Flames owners already tried that gambit, and it didn’t go too well. Now, they seem to have hit upon, inadvertently or not, a new tactic: Have one of your team execs make the threat, then disavow all knowledge of anything he said.

And:

At the end of the luncheon Burke was pushed on whether the Calgary Flames have any options other than staying in Calgary.

“You don’t think we could find a place to go? Let’s see, Quebec. They have a new building that meets NHL standards.”

Burke is the Flames’ president of hockey operations, and has previously been dispatched to disparage the team’s current arena in the middle of a nine-season sellout streak (“the finest state-of-the-art 1988 building in the league”), among other tasks. (He’s also memorable for saying of hockey labor talks when he worked for the Toronro 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.”) So he’s totally the guy you want out there demanding that the city revive the $1.2 billion stadium-plus-arena subsidy plan that it previously declared dead, then threatening to move the team to Quebec City if you don’t get it — and best of all, since he’s just a flunky, when the media freaks out you can just do this:

Ken King, Calgary Sports and Entertainment Corporation President and CEO made a statement hours after the luncheon that indicated Burke did not speak on behalf of his organization:

“Brian Burke runs Hockey Operations for the Calgary Flames and he and many Calgarians have strong views about this topic. However, he is not our spokesperson regarding a new events centre for our city. We remain committed to our dialogue with the City and very optimistic we will get to a positive conclusion. We admire everyone’s enthusiasm on this subject.”

Now that’s some weapons-grade plausible deniability right there. No idea whether Burke ran his mouth off without permission and King (who still isn’t the team owner, mind you, but speaks more directly for the oil barons who actually own the team) slapped him down, or if this whole two-step was part of the plan from the start, but either way, well played, Flames management team! (Except that Quebec probably wasn’t the best threat location to pick, given that the owner of that arena would want to own any NHL team that played in it, but hey, you can’t have everything.)

Calgary Mayor Naheed Nenshi, meanwhile, refused to take the bait, as usual:

“We will continue ignoring all of this stuff in the media and trying to come up with a deal that makes sense for Calgarians, that makes sense for taxpayers and makes sense for the team,” Nenshi said.

Makes sense for taxpayers and makes sense for the team is usually a tough nut to crack, which is largely why the Flames still play in an arena built in 1983, which omigod that was more than 30 years ago, had they even invented ice then? We’ll have to wait and see whether Burke’s outburst has any lasting ripples in either the media or the city council, but for now, let’s just enjoy it for the perfect performance art that it is.

New Calgary report: Lookit, a parking lot, maybe somebody could build a Flames arena there?

The Calgary city council was presented with a new city report on the “Plan B” option for a new Calgary Flames arena just north of the Saddledome yesterday, and, um:

The report doesn’t include renderings, or information about cost or funding, and city administration refused to answer questions about the report ahead of Monday’s meeting.

Also:

The new centre, for which there are no plans yet, would include an NHL-level arena along with other “ancillary services” that are yet to be determined, the report says.

“Preliminary site planning and architectural investigations have determined that there is sufficient site area for an event centre with the same specifications and details as the event centre included as part of the CalgaryNEXT design,” the report said.

So basically, this report says, hey, there’s a big empty parking lot near the Flames’ old arena, bet you could fit an arena there. That’s nice and all, but wake me when somebody actually has some idea what it would cost or who would pay for it. Meanwhile, here are some Flames fans debating the new site. (Don’t click the link for the report, it’s broken.)

Flames CEO threatens to move team, denies he’s threatening to move team, universe explodes

Almost 20 years ago, Joanna Cagan and I coined the term “non-threat threat” for the common practice of sports team owners warning that their teams would leave without a new stadium, while simultaneously saying that that was the last thing they wanted. (We could have gone with the “paratrooper gambit,” but in the days before hotlinking we weren’t sure everyone would get the reference.) But until now I’d never seen a team owner actually levy a move threat while explicitly claiming he wasn’t making a move threat — until now:

“There would be no threat to move, we would just move, and it would be over. And I’m trying my level best to make sure that day never comes, frankly,” [Calgary Flames CEO Ken] King said during an interview on Sportsnet Fan 590 in Toronto on Wednesday.

So I sort of know what he’s saying — “There won’t be any warning, we’ll just be gone, boom” — except that saying that on the radio is actually pretty much the definition of a threat. That last bit about “trying my level best to make sure that day never comes,” meanwhile, is straight out of the Vercotti brothers playbook, or concern trolling if you prefer.

The goal of this non-threat threat, of course, is to shift the terms of the Calgary Flames arena debate, from “Why should the city give your team $1.2 billion?” to “How are we going to keep the team in town?” (The timing, coming two days after Calgary Mayor Naheed Nenshi declared the Flames owners’ previous arena plan “dead,” was surely not coincidental.) And with that “hey, we don’t want to move” element, King simultaneously gets to introduce plausible deniability, which both keeps fans from descending with torches and pitchforks and also sidesteps any questions about exactly where the team is threatening to move to — since it’s not really a threat, see?

Whether this is a real non-threat or a fake one, though, depends on exactly that: What other options do the Flames owners have? The team currently sits smack in the middle of the NHL as far as team valuation, according to Forbes, and turns about a $20 million a year profit. Would oil sands tycoon N. Murray Edwards and his fellow owners really move the team to, say, Seattle (if that city built a new arena) or Quebec (which would require selling the team to local owners there) in hopes that it would catapult them into the upper tier of NHL franchises? It’s not impossible, but it also doesn’t seem very likely, compared to the more plausible interpretation that King is just dropping idle threats (sorry, sorry, non-threats) in order to panic Calgary fans and elected officials into not caring about that $1.2 billion.

And so how’s that panic going, anyway? Mayor Nenshi seemed unperturbed, or feigned unperturbation at least:

“The owners of the Calgary Flames have repeatedly assured Calgarians that they would not threaten to move the team, and I assume that they have not shifted from that position,” Nenshi said. “I plan to enjoy the playoff run while letting the conversations continue.”

The Calgary Herald, meanwhile, scoured social media to find that some people are made at Nenshi (“nenshi do u work as much as u tweet???if flames leaves calgary,you should leave yyc”) while some are mad at King (“If this is such a great idea, then why don’t these well-off business people pool their resources and build one?“), which should surprise no one who’s ever been on social media. (No reports yet on whether the threat has moved the poll numbers on an arena subsidy plan.)

Over the weekend, King tried to clarify things, or at least forestall some pitchforks, by issuing a statement on the Flames website that read in part:

In response to a question, are you going to use the threat of moving as a tactic, I said we would not. I also said we would “just move.” The facts are we need a solution and if it is deemed that there is no made in Calgary solution we will have to make a decision at that time, which logically could include deciding to move the team. It is merely one out of a few possible outcomes if we are unable to reach a deal with the City that will work for both sides.

To which one Flames fan replied on Twitter:

Yep, that about sums it up. Though if it ends up working as a savvy negotiation tactic, King will surely be able to live with the Twitter ridicule.

Calgary mayor sticks fork in Flames-Stampeders combined stadium-arena plan

It’s always best not to assign too much significance to the exact wording of off-the-cuff remarks, and the CalgaryNEXT stadiarena plan for the Calgary Flames and Stampeders has been pretty much dead since it was revealed last April that the public cost would be at least $1.2 billion, and the city council could still overrule him, and declaring one plan dead isn’t the same as declaring all plans dead. Still! Calgary Mayor Naheed Nenshi actually using the word “dead” — as in, “the thing about a new arena project, and I’ll use those terms because CalgaryNEXT, the West Village project, is dead” — is a pretty good sign that the Chest Protector Dome is, in fact, dead. Time to move on to Plan B, of which nobody actually has a clear one, but it sounds a lot more polite than “lump it.”

The more interesting statement by Nenshi came after the “dead” thing, actually:

“But, the thing about a new arena project is that our first criteria has always been public money for public benefit, so it really is up to the Calgary Sports and Entertainment (Corp.) to figure out what the public benefit is,” the mayor continued.

Again, that’s nothing new from Nenshi, who’s consistently said he won’t approve any plan without a clear public benefit. But it’s also a bit of a thrown gauntlet: You want money for a new arena, first show me why I should build you one. This is an eminently reasonable way to approach subsidy demands, whether from a hockey team or an auto plant, and provides an even better reason to consider making the great leap northward.

Bettman to Calgary: New arenas are shiny, c’mon and give Flames tax money for one already

Look out, Calgary! NHL commissioner Gary Bettman has come to talk at you about why you should build the Flameswealthy oil-executive owners a new arena whether you want to or not:

“I actually spent an hour this afternoon with the mayor. We had a very cordial, open, candid conversation,” Bettman said. “I’m hopeful that the city and the Flames can be on the same page so this can move forward as quickly as possible.”

And what message did Bettman bring to Mayor Naheed Nenshi? If you had “I will not be shackled to a rusty girder,” you win the pool:

Calgary’s Scotiabank Saddledome is an “old, antiquated, inefficient building” that “doesn’t hold a candle to what has been done in new arenas,” NHL commissioner Gary Bettman said after touring the facility Wednesday.

Speaking to reporters ahead of Wednesday’s game between the Flames and Boston Bruins, Bettman repeated his comments from a day earlier, when he said the city is in need of a new arena.

“In terms of amenities, in terms of facilities, in terms of egress and the like, for all the events that go here, this building was built in the 1980s, they don’t build buildings like this anymore,” he said. “It’s a grand old building, it’s got a great roofline, it’s historic in many ways, but … these aren’t the facilities our hockey teams typically have.”

And for good measure, he dropped in the “arenas cause unspecified good economic things” argument:

“I’m not sure that people that focus on the deal in the appropriate way would say no taxpayer money,” said Bettman. “If in fact, a new project with development creates new revenues and new taxes that didn’t exist before, reinvesting it in the city, reinvesting it infrastructure, reinvesting it in quality of life, seems to make a lot of sense to me.”

Whether it makes sense to Nenshi — who has shown an admirable dedication to actually doing the math on a Flames arena project to see if it would work for the city — is going to be another story. But Bettman got his message, or the Flames owners’ message if you prefer, across in the media, and that’s what this game is all about at the moment. At least until the CBC website starts up an Actually Doing The Math section.

Calgary residents split on $1B-plus subsidy plan for Flames and Stampeders venues

There’s a new poll out of what Calgary resident think of the CalgaryNEXT plan to build a new combined arena-stadium venue for the Flames and Stampeders, and it looks like this:

  • 19% strongly support the CalgaryNEXT project

  • 21% somewhat support CalgaryNEXT

  • 15% somewhat oppose CalgaryNEXT

  • 25% strongly oppose CalgaryNEXT

  • 20% unsure

That’s close to an even split, though the opponents feel more strongly about their opposition than the supporters do about their support. It’s actually more support than I would have expected, given that a city report estimated it would cost the public between $1.2 billion and $1.4 billion and Mayor Naheed Nenshi has summed up the plan as “a lot of money that we don’t have,” but it’s apparently right where numbers have been polling for a while now, so “split” seems a fair assessment for now. The headline news appears to be that the opening of the Edmonton Oilers‘ new arena hasn’t gotten Calgarians green enough with envy to reconsider the finances, which I guess these days qualifies as good news.