Calgary Flames president keeps mum on dispute over new arena

Ken King, the president of the organization that owns the Calgary Flames, made his first public appearance Monday since announcing the end of negotiations with the city over a new arena, but he refused to explain his club's position in the increasingly testy spat.

King, speaking to more than 500 people at a luncheon about the business of hockey, would not, for example, explain why the Flames believe the city's offer is misleading.

"I could but I'm not going to," he said during the question-and-answer session.

His appearance at the Calgary Chamber of Commerce luncheon had been scheduled for months, and the topic, "The future of the Flames: Business and hockey," was especially alluring.

Negotiations between Calgary Sports and Entertainment Corp., which owns the Flames and other professional sports clubs, and the city over a new arena hit a stalemate this summer. Two weeks ago, King announced the Flames were done trying to strike a deal. But rather than retreating, he and the city have taken turns issuing news releases full of pie charts and promoting their respective offers while ripping apart the other side's proposals.

The arena is an election issue – Calgarians go to the polls on Oct. 16 – although King insists his group is apolitical. Still, talk of the arena – and the consequences of not building a new facility – slipped into the discussion.

Which North American city is best positioned to host an NHL team but does not yet have a club? "Several," King said, adding that his organization is not speaking with them.

He also discussed the National Hockey League's revenue-sharing system, indicating the Flames' fortunes are waning.

The club, he said, now cashes cheques from its wealthier counterparts.

"We've gone from a top 10 revenue-contributing team, where we wrote the cheques in the last few years to helping other teams. We have now crossed over. We are now receivers," King said. "Isn't that ridiculous? In this beautiful market.

"It shows you where this is heading – and it is in the wrong direction."

The revenue-sharing formula is complicated and the numbers are not made public, but each eligible team's share is based on something called minimum team player compensation. That is the minimum amount – based on an equation involving the team's and the league's hockey-related revenues – a club has available to pay its players. The difference between that and the maximum team-player compensation is the amount of revenue sharing the team receives. In previous seasons, it has been in the order of $20-million to $25-million (U.S.).

In its November, 2016, financial evaluation of the NHL, Forbes magazine had the Flames valued at $410-million, ranking it 16th out of 30 teams. The New York Rangers were the top-valued franchise at $1.25-billion, followed by the Montreal Canadiens ($1.12-billion) and the Toronto Maple Leafs ($1.1-billion).

The Flames' revenue was listed at $121-million, with $18-million in operating income for the 2015-16 season. The team made $53-million in gate receipts and spent $65-million on player salaries. (The Flames are projected as having $69.7-million in player salaries committed for the 2017-18 season.)

The Flames finished 10th in attendance for the 2016-17 season, drawing 767,829 fans for 41 home games, an average of 18,727 a game.

The City of Calgary calculates a new arena will cost $555-million (Canadian). It offered to pay the equivalent of $185-million and suggested the club pitch in another $185-million, with the other $185-million coming from a ticket tax. The Flames believe a rink can be built for $500-million and want the city to pay $225-million. The club would contribute $275-million but did not provide a breakdown of that amount.

Earlier this month, King said the city's offer is misleading because the ticket tax should be considered a contribution from the Flames – after all, if the market would support heftier ticket prices, then that is cash the club could be pocketing. Meanwhile, the city argues the Flames' proposal is disingenuous because the team's $275-million includes a ticket surcharge of $150-million.