Flames are taking advantage of two scenarios to apply heat to Calgary
The NHL’s Calgary Flames are using the city’s aspirations to host a future Winter Olympics and the renovation of Seattle’s KeyArena against it in “negotiations” over a new arena.
The Flames have some leverage at the moment, and they know it. They are using the threat of relocation to Seattle and the city of Calgary’s need to have infrastructure in place before submitting a bid for the 2026 Winter Olympics as bargaining chips to get what would be a sweetheart deal for themselves in a new facility.
On Thursday, Allan Maki and Carrie Tait of The Globe and Mail laid out details of the franchise’s demands from the city. In short, it would be a swindling of the city’s taxpayers that even Miami Marlins owner Jeffrey Loria would be envious of.
The Flames are demanding that Calgary pay for over one-third of the cost of a brand new facility in Victoria Park. The expected total cost for that construction is around 500 million loons ($462.49 million USD). In addition to hitting the city coffers with a 166.67 million loon bill, the Flames want the city to exempt the franchise from paying any property taxes for the life of the team’s lease in the building.
As if that wasn’t bold enough, the Flames’ proposal has no structure for sharing the profits generated from their business with the city. There are also no commitments to repay the city’s investment or guarantees that the franchise won’t relocate after the facility opens. To ensure that the proposal is fully one-sided in its benefits, the Flames have also insisted that the city not charge the team any rent.
The full details of the team’s proposal haven’t been released. That leaves a lot of quantities unknown to the public. It’s unclear what fraction of the construction and/or maintenance costs the team is proposing it take on, if any at all. Another unknown is whether or not the team could finance the entire project itself, as it has refused to open its books to the city.
In summation, the Flames want to treat whatever percentage of the construction and/or maintenance costs that they will contribute as their buy-in to the new arena. That would allow them to host their games in the stadium for almost nothing as far as facility expenses go.
Even assuming that the team would contribute the other two-thirds of the construction cost along with taking on the full responsibility of funding maintenance and upgrades over decades, this would be a fleecing of Calgary’s taxpayers. That’s assuming the best. Given what has been revealed about the franchise’s proposal, the best-case scenario is quite unlikely. In short, the Flames are looking to use the force of law to extract the loons from the wallets of Calgary’s citizens and tourists that they may have been unable to get them to hand over willingly.
There is only one reason why an organization that posted an unofficial, projected operating income (revenue minus expenses) for the 2015-16 NHL season of $18 million USD would make such strong demands. That party feels confident that it is holding the lighter, and the other party is soaked in petro (gasoline).
When the city of Seattle and the OakView Group announced plans to go full steam ahead with a renovation of the KeyArena into a facility that could become the home to an NHL and/or NBA franchise, a huge piece of leverage was handed to the ownership of every existing NBA and NHL franchise in terms of improving their situations in their existing locales. As long as the KeyArena sits devoid of an NHL franchise, the Flames have the threat of leaving for Seattle to employ in negotiations.
The team has another strong point of leverage in addition to that, however. Calgary has determined that it needs to make some major infrastructure investments in order to have a chance to land the 2026 Winter Olympics. Part of that investment is a new arena. It seems that the Flames would be gracious enough to allow the Olympics to be held in the facility in exchange for all the benefits they have demanded.
The city has questions about the prudence of hosting the games, and is continuing to explore whether or not to submit a bid. Such an investment for a very temporary event seems unwise, so the city would need an anchor tenant for the facility. The Flames are offering to do Calgary a favor and act as that anchor tenant, albeit one that wouldn’t return much revenue to the city under its proposal.
There’s nothing wrong with being opportunistic in business, and that’s what NHL franchises are first and foremost. This is clearly a moment that the Flames can seize. Neither party disputes the need for a new facility. The city’s counter-proposal has agreed to financing one-third of the construction costs, but from that point forward varies greatly from the team’s proposal.
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A serious problem arises when a business wants to use public funds to buoy the value of its enterprise without any, much less equitable, reciprocity for the people of the municipality. The Flames are applying the Heat to the city council, and if they succeed, it would be Calgary’s taxpayers who get burned.