Revitalizing the Downtown and east Victoria Park is critical for Calgary’s economic recovery. What that looks like should be up to Calgarians–not just the billionaire Flames owners. With the recent termination of the new arena agreement by the Flames owners, Council now has the opportunity to engage with Calgarians, partner with local Indigenous communities and finally get a fair deal for Calgarians.
The Saddledome is an iconic feature of Calgary's skyline. (Image source: Globe and Mail)
Flames owners walk away from sweetheart arena deal
The final design of the event centre proposed by the Calgary Flames ownership was widely criticized as unambitious and falling far short of original proposed vision for Victoria Park.
In July 2021, the Flames agreed to cover all cost overruns for the new arena project, in return for an additional $12.5 million subsidy from the City and removing the City’s development corporation as the project manager.
At the November 18 2021 Calgary Planning Commission meeting for their arena development permit, the Flames owners agreed to all conditions of the development permit and received approval from Calgary Planning Commission. Development permit conditions are applied to every development permit. The Flames owners were already well aware of these infrastructure and climate conditions, and agreed four months earlier to cover all cost overruns.
A few weeks later, the Flames owners changed their minds. The Flames claimed that requirements to build sidewalks and make their event centre slightly more climate-friendly for $16.1 million–$6.4 million of which the City was willing to pay for–was a deal breaker for them. Calgary Mayor Jyoti Gondek was gobsmacked by the Flames owners decision to kill the deal based on 1.5% of the project’s total cost, after previously agreeing to cover cost overruns.
The arena deal was never 50/50: it was a half-billion dollar subsidy for the Flames owners
Seattle’s Climate Pledge Arena is the latest NHL arena to open 100% paid for with private funding.
While the owners of NHL franchises in Toronto, Vancouver, Montreal and Portland paid 100% of the costs of their new arenas, the Swiss-based billionaire Flames owners were set to receive massive public subsidies from Calgary taxpayers. The subsidies included:
- $287.5-million in upfront capital for the new arena (~%50 capital construction costs)
- $15.4-million for the cost of demolition of the Saddledome
- $10-million for flood mitigation, site remediation and other work
- $55.7-million in free land for the new arena
- $3-million for construction of a 1,000-stall surface parking lot
- 100% of all flood insurance covered by taxpayers
For a total taxpayer upfront contribution of more than $371.6-million.
Additionally, under the agreement, the the City would have forgone numerous revenue opportunities to benefit the private for-profit Flames owners’ business with increased operational revenue and exclusive business opportunities over the 35-year agreement including:
- 7.5% share of ticket tax revenue on all non-sporting events over 35 years (estimated value of $300-million)
- Right of first refusal on $100-million worth of prime real-estate development opportunities
- Arena parking revenue (estimated at $13-million, $380,000/year)
- Sponsorship/naming rights revenue (estimated $50-million, $1.5-million/year)
- Event booking and concession revenue
- Increased revenue from greater number of VIP/corporate boxes
For a total estimate of more than $463-million in additional revenue and business opportunities for the Flames owners.
When combined with the public contribution, this amounted to more than half a billion dollars in public subsidization of the private for-profit Flames ownership.
Even in Winnipeg, the public share of funding for their new arena only amounted to just $40.5-million or 30% of the total costs in 2004 (covered by three levels of government).
Billionaire Flames owners and their supporters are using bully tactics to get an even sweeter deal from taxpayers
Over a four day period this past week, the Calgary Herald dedicated unprecedented editorial attention in support of even greater public subsidies for the billionaire Flames owners.
Now the Calgary Herald editorial staff are going to extreme lengths to pressure City Council to rush back to renegotiate an even sweeter deal for the billionaire Flames owners. In a four day period this past week, the Calgary Herald has published an astonishing seven columns pressuring the City to give into the Flames owners’ bully tactics and further subsidize their private for-profit business.
City Council must ensure due diligence is done before committing more than $300-million taxpayer dollars, and certainly should not rush to commit to funding another agreement with the Flames owners.
More public money towards the arena would result in tax increases for Calgarians and/or less funding available for other priority projects in Calgary. Existing unfunded priorities include:
- Fieldhouse sports facility
- Affordable housing
- Revitalizing main streets across Calgary to support local businesses and established communities
- Completing the whole Green Line LRT, from 160 Ave North to Seton in the SE
Flames owners have now underestimated the arena price tag three times before even breaking ground-it’s time to explore other partnership opportunities
Cost estimates for the event centre have already been underestimated by the Flames ownership three times before even breaking ground on construction. First in 2019, when the initial deal was rammed through Council in just eight days. Next in the spring of 2021, when we found out the Flames owners were $70-million over budget. And a third time in December 2021, when the Flames owners tried to get out of paying for the sidewalks around the new arena.
The new event centre was pitched to Calgarians as a "catalyst" for new private-sector investment in Victoria Park. Unfortunately, since the first agreement was signed in 2019, not a single dollar of new private investment has been announced. Only a new 1,000-stall taxpayer-funded surface parking lot has been built.
If the Flames owners have yet to prove themselves as competent project managers, should the City risk putting taxpayers on the hook again for further cost overruns, or should it explore partnership opporuntities with other organizations, including local Indigenous communities?
City Council must properly assess the option of renovating the Saddledome
The private for-profit Flames owners would stand to benefit immensely from a new taxpayer-subsidized arena that added more private VIP boxes and revenue streams for the operators. But is this in the best interest of Calgarians?
Calgary’s new Culture & Entertainment District already has an iconic arena. The Saddledome was opened in 1983 and has been deemed safe to continue to use despite the need for continued repairs and maintenance. The Flames still have 11 years left on their lease agreement at the Saddledome. Engineering reports kept secret by the City of Calgary until obtained by CBC under FOIP indicate that concerns about the age of the Saddledome are of a "superficial nature".
In Toronto, a very similar situation unfolded with the Rogers Centre (formerly the SkyDome), which opened just six years after the Saddledome. While initial plans were to tear down the stadium, home to the Toronto Blue Jays, further study and analysis resulted in a change of course to instead renovate the 32-year old facility for $200M-$250M with 100% private dollars.
The Toronto Blue Jays have scrapped plans to replace the Rogers Centre in favour of a $200M-$250M privately funded renovation. (Image source: BlogTO)
There are also significant environmental benefits to extending the life of giant buildings, which contain large amounts of embedded carbon.
This same rigour of analysis should be done to study this option for the Saddledome, with transparent reporting to Calgarians.
Fair Deal for Calgary: City Council must do its due diligence and engage Calgarians on best use of public funding
Mayor Gondek was elected as Mayor of Calgary on the promise of a “Fair Deal for Calgary”. Now that the Flames owners have decided to terminate their sweetheart deal with the City, City Council must do its due diligence on the best use of public dollars for the revitalization of Victoria Park and the new Culture and Entertainment District. This must involve:
- Engaging with Calgarians on the options and best use of $100s of millions in public funding and business opportunities to revitalize Victoria Park as part of Calgary’s economic recovery
- Properly assessing the option of maintaining the Saddledome over the next 30 years as a baseline cost comparison against the option of subsidizing a new arena for the Flames
- If the goal of a new arena is really attracting more big-name acts to Calgary, consider more substantial funding for music festivals in Calgary