Weekend Reading: Unpopular Opinions Edition

I grew up in Calgary in the 1980s and became a huge Calgary Flames fan at a young age (’89 baby!). The Flames organization, like many Canadian sports teams, struggled in the 1990s as the league expanded and the Canadian dollar sunk below 70 cents (player wages are paid in U.S. dollars).

By 1999, attendance had fallen off severely, prompting owners to issue an ultimatum: buy more tickets or the team would relocate to the U.S. The appeal worked, for the most part, and by 2004 the Flames returned to the post-season with one of the most memorable Stanley Cup playoff runs in history. The Saddledome has been sold-out ever since, but now the club’s ownership group is pushing the City of Calgary for a new arena.

It’s a compelling argument on the surface. A brand new arena will attract world class events and provide the city with a shiny new jewel in the heart of downtown Calgary. But the argument breaks down when it comes to funding the arena.

The ownership wants to put the bulk of the build on Calgary taxpayers while maintaining free use of the land (i.e. no property taxes), plus keeping all the arena revenues for themselves. The City of Calgary countered with a balanced proposal that would see the $555M project cost split three ways between the City of Calgary, the Flames ownership group, and the users of the facility through increased ticket prices ($185M each).

Meanwhile, Garth Brooks didn’t do the Flames owners any favours when he played seven sold-out concerts in the ‘dome earlier this month.

Despite claims that cities benefit from subsidizing sports arenas, economists aren’t buying it. In fact, Trevor Tombe, an associate professor of Economics at the University of Calgary (and one of the smartest guys on Twitter), said the research is clear there aren’t aggregate benefits of such subsidies for the city as a whole.

Tombe went on to say that public subsidies for professional teams usually only benefit political careers of city politicians.

“Cynically, I would phrase it as it provides a very good photo op.”

So, the unpopular opinion of this sports fan is that cities should stop caving to the demands of billionaire owners and league officials to subsidize new arenas and stadiums. The City of Calgary did the right thing here and I’ll bet the Flames come around in time.

Weekend Reading: Unpopular Opinions Edition

Other unpopular opinions

At the risk of alienating half our readership, here are some other unpopular opinions I share:

  • Raising minimum wage won’t be the kiss of death for business.
  • Tax reform on private corporations won’t crush the dreams of entrepreneurs or send all our doctors south of the border.
  • Universal basic income is an idea worth exploring (pilot projects are underway).
  • Renting isn’t throwing your money away.
  • You don’t need a university degree (or Master’s, for that matter) to have a successful career.

Happy to discuss in the comments below!

This Week’s Recap:

On Monday I explained how to trick your primitive lizard-brain into saving more money.

On Wednesday Marie explained what you need to know to convert your RRSP to a RRIF in the year you turn 71.

And on Friday Marie offered some retirement planning advice for singles.

Weekend Reading:

I hope those of you that grabbed your free ticket to the Canadian Financial Summit got a chance to take in the interviews and presentations this week. It was extremely well done, so hat’s off to Kyle and Justin at Young & Thrifty for pulling this off.

Frank Wiginton explains why you may have all you really need to retire.

A strange yet interesting read on what the rich won’t tell you, written by socially professor Rachel Sherman for the New York Times.

Rob Carrick hit close to home with this article on how to get ahead when your income is hardly growing. I especially enjoyed this part:

“If you want to build wealth, regular investing in financial assets such as stocks and bonds is crucial in a world of weak income growth. A low-cost, diversified portfolio could conceivably produce average annual returns of 2 or 3 per cent after fees and inflation. Invested money grows like you wish your paycheque did.

Dan Bortolotti on how ETF investors sabotage themselves. The problem isn’t your funds; it’s your behaviour.

MoneySense’s Romana King explains how to avoid selling your home at a loss.

This reader’s mom left him the house when she died suddenly three years ago. The day after she died, one of his brothers threatened to sue him for his share of the inheritance. What does he owe his two brothers?

65% of Canadians made a contribution to either a RRSP or a TFSA in 2015. That’s great, but I wonder how many people made a contribution, only to withdraw it a short-time later for another financial need (or want)?

A reader asked CFP Jason Heath how risky are robo-advisors. The answer is they’re not dangerous or safe – the risk lies in the investments you hold. Just don’t worry about robo’s running off with your money.

Million Dollar Journey author Frugal Trader was recently laid off from his government position – a situation that has this millionaire pondering the next stages of his life and career.

Finally, a nice profile of Canadians who didn’t finish university or college degrees – and have zero regrets.

Have a great weekend, everyone!

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  1. Sarah (Smile & Conquer) on September 16, 2017 at 9:35 pm

    As an Edmontonian and Oilers fan, I’m shocked that I agree with just about all of your unpopular opinions 😉

    I read the details Nenshi released about the deal and it sure does seem like the city would be getting a raw deal. I’m not surprised it was rejected. Although the Edmonton arena deal had plenty of controversy, the city was given much favourable conditions, and it really has made a huge difference to our downtown core.

    I hope something gets worked out in Calgary. Let the Battle of Alberta continue!

    • Echo on September 17, 2017 at 8:48 am

      Ha! The other challenge Calgary faces is a bit of a “me-too” complex, i.e. building a new arena just because Edmonton now has one. It’s hard to replicate the timing, conditions, and public sentiment that made the Edmonton deal happen.

      Hopefully the team can move on from the bullying and scare tactics and come to a reasonable solution with the city.

  2. Nicole on September 17, 2017 at 7:23 am

    As a Calgarian (transplant of course) I don’t want to pay taxes for a new arena. I barely get to see one game to see my favourite team every couple years because prices are so high.
    So H-E-double hockey sticks NO! Calgary should not be funding a new arena for the flames organization to continue making money. As for the rest. No, school is a big waste of time in some cases. A minimum living fund for everyone would be interesting. Minimum wage won’t kill every small business (stop shopping conglomerates if you’re so concerned).
    Oh yeah. And renting at least you’re not hit with unexpected furnace break downs, maintenance and taxes (like those used to fund sports arenas you don’t utilize).
    Love the weekend editions – gives me lots of interesting articles to read.

    • Echo on September 17, 2017 at 8:41 am

      Hi Nicole, thanks for your comments. Sounds like we’re on the same page!

  3. Rob on September 17, 2017 at 7:43 am

    You are too young to remember the “brain drain” of the 90’s. Your contention that doctors won’t move south isn’t supported by history,. I remember allot of smart people who are in demand picking up and moving,

    • Doug Boraas on September 17, 2017 at 8:35 am

      Yes, and a lot of those doctors have since moved back as the U.S. didn’t have the favourable working conditions we have in Canada!

    • Echo on September 17, 2017 at 8:39 am

      Hi Rob, the so-called brain drain was overblown by the media. While more Canadians did move south in the 1990s, by 2000 there were only an estimated 820,713 Canadians in the United States compared with 844,351 some 20 years earlier (in 1980):

      “the brain drain that is causing the departure of many of Canada’s high income earners remains a by-product, not mainly of Canadian conditions, but of the state of the US economy and the immigration policies of the US government. Changes in either have the potential of slowing the southward movement faster than any Canadian policies could.”


    • Richard on September 17, 2017 at 10:06 am

      It may not be everyone but it certainly would be some. I don’t see how that would benefit us. It seems like it would be better to create more opportunities here instead so that more people could do well.

      Whether this happens or not it looks like the announcement is a way to get votes from people who think that they will never do well as long as anyone is better off than them.

  4. brett on September 17, 2017 at 9:47 am

    I think that Ken King and Gary Betman made a significant mistake by attempting to blackmail the Mayor and Council into a deal prior to the municipal election. Don’t be fooled. The timing of their statement was purposeful.

    What they did not anticipate was Calgarians response to this crass attempt at financial and political blackmail. It has appeared to have backfired and support for our mayor has apparently increased.

    Let’s be real. The Flame (and the Stamps) have no real interest in Calgary per sea. They goal is to make money. They could care less what city they are in. Fewer and fewer cities are succumbing to this type of blackmail because the data shows that the economic benefit is highly questionable.

    Besides, how many Calgary taxpayers will be able to afford a to go to a hockey game. And or Stamps fan…..I can assure you that ticket prices in a new venue will increase substantially. I can also assure you that the Flames/Stamps organization will blame it on the the city.

    At the end of the day I ask myself if Calgary should subsidize Petro Canada, Nexen or any other for profit commercial enterprise. Flames/Stamps are no different.

    Calgary is much more than the Flames hockey team. The Flames do not define who we are. The Flames organization desperately want to link their for profit team to who we are in Calgary. But it is an illusiion. We are much more than the Flames.

    • Echo on September 17, 2017 at 4:09 pm

      Hi Brett, great comment. It’s true that more and more cities are looking at the evidence that subsidizing sports arenas is generally bad policy (or at least not as beneficial as it’s typically presented).

      You bring up an interesting point about subsidizing other for-profit corporations, but the truth is we also do this all the time. Giving away free land or tax incentives to attract businesses to your city, or to a particular area of your city is part of economic development. It’s just not as public as a sports arena.

  5. M on September 17, 2017 at 1:32 pm

    Please explain how our country would benefit by putting everyone who does not contribute to the country’s coffers, on a free ride called Universal basic income. We already have too many people on this free ride, it’s called welfare.

    • Echo on September 17, 2017 at 4:03 pm

      @M – There are lots of benefits to implementing a Universal Basic Income. That’s why it’s being studied and pilot projects are being rolled out to test the effects in real-life.

      Think, for example, of a young entrepreneur who has a big idea for a new business but is too afraid to quit his or her job and live penniless while the idea incubates, prototypes are built, whatever the start-up phase looks like before it is ready to market. With a UBI, our entrepreneur can ensure basic needs are met while he or she is in the critical early stages of starting a new business.

      One other benefit, of course, is to end extreme financial poverty. There’s an obscene amount of money in the world and a basic income gives us the means to eradicate this type of suffering.

      • M on September 17, 2017 at 5:39 pm

        Yes there is alot of money in the world. Unfortunately the 1%ers are not going to share. So where do purpose that money come from. Our taxes are already ridiculous high. So how do you finance that without increasing the heavy tax burden the middle class already bares. In theory great idea, in reality no so much

      • Richard on September 18, 2017 at 10:53 am

        It gets a little harder to understand when you look at the cost. Providing just $10,000 to every resident in Alberta would take up the entire provincial government revenue. That would likely be reduced by phasing it out at higher incomes but it’s still a lot.

        For most people it seems like it would involve taking their money just to give it back to them, minus a government administration fee. At worst it could also end up replacing and reducing benefits for some people who really need more. It seems to work best in places that have some outside source of funding, like large government-controlled reserves of natural resources.

        You can think of it like insurance. You can get insurance for every possible loss but you know that you’re just going to end up getting less than you pay for it. Insurance is great when it covers unpredictable losses with a cost that you can’t bear at a reasonable price.

  6. Keith Cowan on September 17, 2017 at 4:50 pm

    I do not understand why you are not concerned about doctors. They spend 13 years going into debt training as specialists before earning a dime and then they take at least 5 years to get back to even. So after 18 years, you think they do not deserve favourable tax treatment. They would have to accumulate $2 million in retained earnings to match the returns from a DB pension that civil servants are guaranteed.

    It seems that Trudeau wants everyone to be incented to go work for the government. That sounds like a Liberal strategy!

  7. Mike Martin on September 17, 2017 at 5:19 pm

    I agree with your comment that raising the minimum wage will not be a kiss of death for business. But, that is not to say nobody will be impacted. Who will they be? The entry level workers and, of course, the consumer – particularly the lower income consumer.

    Business will survive. Business owners will likely perform a balancing act by containing staff costs and increasing prices. It isn’t just the minimum wage worker who will be looking for more money. There is also the team or shift leader who gets a, say, $3 premium. Now they’ll expect to be paid $18, at minimum. More if you base it on a percentage basis.

    There will only be so much room the owner has to increase prices without triggering a buyers’ revolt. So, the shortage has to be made up by reducing the number of employees or their hours or a combination of the two.

    Assuming price increases are part of the equation, how is a lower / fixed income person affected? Their only option is to go without.

    Nobody wins with such populist interference in the market place.

    • R on September 18, 2017 at 10:33 am

      I rarely post here, but I would share Mike Martin’s view.

      It is true that the businesses won’t disappear; jobs might, however. Especially the low-end jobs which are already being replaced by computers/robots.

      Ever been to stores and not see any workers there to help you? Blame the minimum wage.

      The increase in minimum wage will impact the low-income folks the most. Bravo for this strategy.

      Universal income, on the other hand, makes more sense. An increase in minimum wage? Not so much.

      • Richard on September 18, 2017 at 11:58 am

        A universal income to supplement low wages would be an interesting approach. I wonder what people would think about a government program helping to reduce salary costs and increase profits of large corporations.

        On the other hand, if minimum wages are increased I wonder what people will think about teenagers in well-off families, newly restricted from participating in the family business, taking low-skilled jobs and earning a lot more due to those increases. The more rewarding a job is, the more competition there will be for it even as the number of jobs may decrease.

        The only thing that seems clear at this point is that our current system of basing taxes only on individual incomes has a lot of flaws.

  8. Grant on September 19, 2017 at 3:57 pm

    Rob, I wouldn’t be so sanguine about doctors leaving if these changes are enacted. A recent post by Justin Bender quantifying the hit of removing the ability of growing a tax deferred pension in a corporation showed an almost 50% reduction in the value of the pension. Imagine a 32 year old specialist, newly graduated with $200k in student debt, facing a 50% reduction retirement income, and being in the unique position amongst any developed country of not being permitted by law to raise his fees to rectify this problem. It would be only rational to move to greener pastures. Canada is already 27th out 35 advanced economies in it’s per capita number of doctors. I don’t think we can afford to lose any more.

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