[trtcttc]

They might increase it marginally, probably around the same as Edmonton, which is about average for the league. Big markets like New York and Toronto are driven up by corporate attendance, especially with the arena right in the middle of downtown. Without that type of demand, unlikely Calgary prices will ever rise that much.

 

[Mountain Man]

They will probably raise ticket prices in stages. Murray wants money so he can convince others to spend theirs!

 

[badc0ffee]

Calgary definitely has corporate attendance. It's not at Toronto or New York level, but it would be higher than Edmonton.

 

[CalgaryTiger]

corporate attendance

That and hockey watchers (as opposed to fans) kill the dome's atmosphere

 

[outoftheice]

Sounds like Monday might be an interesting day for the Event Centre Committee

'Zero revenue': More event centre details expected Monday as criticism of deal grows

One critic says Calgary's deal with the Flames on the Event Centre generates no operating revenue for the city.

calgaryherald.com

 

[Mountain Man]

I wonder if these will be the hidden costs Notley was alluding to. What has come out so far isn't really anythinhg new, the "lease" costs were always CSEC paying the city back. I think the previous deal was structured similar in that regard.

 

[Unknown User]

Well the "answer all the outstanding questions" meeting occurred and predictably doesn't seem to have provided any new information.

Calgary arena deal expected to be finalized this summer

Coun. Andre Chabot called the arena deal "as reasonable a compromise as we could have hoped for."

calgarysun.com

From the article:

Sharp defended Calgary’s lack of direct revenue streams in the deal.
“The city isn’t in the business of making a profit on any city-owned building. You can look at that within the Green Line, the LRT, libraries,” Sharp said."

Talk about completely missing the point.

 

[CBBarnett]

Apologies if this has already been discussed. Apart from the overall deal altogether, one part I still can't wrap my heads around is below. Perhaps someone with a more financial sense can articulate this better:

What's the logic of the 1% escalation v. tying the escalation to some sort of metric like inflation? Surely the public want to allow for the payments to increase at a rate that links to either annual revenue or expected cost inflation (e.g. CPI or a construction cost inflation)?

1% won't beat annual inflation in any of the next 35 years likely - what am I missing? Seems arbitrarily low and can't understand the logic, even in the mental-gymnastics world of stadium public financing.

I get why CSEC would love this term, but why would the city ever agree to this?

 

[darwink]

What's the logic of the 1% escalation v. tying the escalation to some sort of metric like inflation?

The city's expenses won't increase by the inflation rate, so why should the payments?

 

[Duck Lightning]

We'll have to see where everything lands when the definitive deal is struck this summer.

 

[CBBarnett]

The city's expenses won't increase by the inflation rate, so why should the payments?

Major structural repair and maintenance costs don't increase with some level of inflation over the lifecycle of a building?

 

[darwink]

Major structural repair and maintenance costs don't increase with some level of inflation over the lifecycle of a building?

For the length of the lease, those should be near or approaching zero.

 

[artvandelay]

Apologies if this has already been discussed. Apart from the overall deal altogether, one part I still can't wrap my heads around is below. Perhaps someone with a more financial sense can articulate this better:

View attachment 483001

What's the logic of the 1% escalation v. tying the escalation to some sort of metric like inflation? Surely the public want to allow for the payments to increase at a rate that links to either annual revenue or expected cost inflation (e.g. CPI or a construction cost inflation)?

1% won't beat annual inflation in any of the next 35 years likely - what am I missing? Seems arbitrarily low and can't understand the logic, even in the mental-gymnastics world of stadium public financing.

I get why CSEC would love this term, but why would the city ever agree to this?

Why would the lease escalator have any bearing on an analysis of the deal? They could have done a flat lease with zero escalator, or increases every five years, or any multitude of lease structures!

What matters is the discount rate used in coming up with the NPV of the deal, which is a matter of interpretation, especially given the craziness of the current market conditions. Discounting cash flows is an art, not a science.

 

[dazzlingdave88]

For the length of the lease, those should be near or approaching zero.

Loan repayment, not a lease.

Question, does the city already have the extra $316 million in reserves to cover CSEC portion or are they borrowing to cover that portion? If they are borrowing, what interest rate would they get?

 

[artvandelay]

Sounds like Monday might be an interesting day for the Event Centre Committee

'Zero revenue': More event centre details expected Monday as criticism of deal grows

One critic says Calgary's deal with the Flames on the Event Centre generates no operating revenue for the city.

calgaryherald.com

Ooof, not sure this guy's business diploma included any finance classes.

If there was a clause guaranteeing the City a certain % of the building's revenue, I can guarantee you the same people would be squealing about how the City shouldn't be exposed to any business risk!