Worst. Deal. Ever.

Taxpayers to front 97% of the $1.2-billion new arena under Danielle Smith’s deal

In a surprise announcement just days before the provincial election period, Danielle Smith proposed a new scheme to publicly fund 97% of the costs of a new $1.2-billion arena for the billionaire Calgary Flames owners. The proposed deal, hatched behind closed doors, not only reflects a doubling of the previous budget but also a dramatic shift in responsibility for the upfront capital costs over to taxpayers. The previous arena agreement saw a 50/50 cost split with the Flames owners.

Source Data: City of Calgary Planning and Development Services Report to Regular Meeting of Council - April 25, 2023, Table 1: Summary of the Financial Framework

 

Your taxes will go up to subsidize a new arena for billionaires 

According to University of Calgary economist Trevor Tombe, the $538-million capital commitment by the City of Calgary would be equivalent to a 2.4% increase to residential property taxes, or about $88 per year for the median homeowner.

Source: Twitter.

 

Taxpayers will shoulder most of cost overruns 

According to the City of Calgary, Calgarians are on the hook for most of the cost overruns should the new arena blow over budget yet again. This massively increases the financial risk for Calgarians since 100% of the project management for the arena was handed over to the Flames ownership. Under the previous arena deal,100% of the cost overruns for the arena were the responsibility of the Flames owners.

Under previous agreements, the City of Calgary was also fully responsible for any flood damage to the arena, which is proposed to be built below grade in the Elbow River flood plain. It is not publicly known if taxpayers will be on the hook again to cover flood damages under the new agreement.

The site of the arena in East Victoria Park flooded extensively in 2013.

 

Billionaire Flames owners could receive the lion’s share of profits

Details on how revenues generated by the new arena would be divided between the Flames owners and the City are not yet public but millions of dollars per year from ticket taxes, parking, naming rights, added corporate boxes, event booking and concession sales are up for grabs. 

The proposed arena deal would also see the billionaire Flames owners given special treatment for the development rights of four major land deals around the arena, which could be worth billions of dollars of business potential.

 

Map of area around new arena site showing surrounding new development sites. Source: City of Calgary.

 

No tax revenue uplift for the rest of Calgary until 2048

Since the new arena is proposed to be publicly owned, it would not generate any property tax revenue for the City. Furthermore, the property taxes generated from any new developments in the Rivers District surrounding the new arena would not even begin to flow back to the City of Calgary general revenues until 2048, after the Community Revitalization Levy (CRL) for the Rivers District expires. 

The City’s half billion dollar arena subsidy will have little public benefit if there is not much development in the area around the arena - as has been the case for the last 30 years with an operating arena and convention centre.

 

Lack of transparency

For an investment of over a billion dollars in public funds to benefit a private, for-profit sports franchise there is an unacceptable lack of transparency. Under the terms of the new deal, the City of Calgary was required to keep details of the agreement confidential until after the provincial election. 

 

No due diligence, cost/benefit analysis or public engagement

Neither the Government of Alberta nor the City of Calgary have produced any evidence of even the most basic due diligence on such a significant use of public funds to subsidize a private, for-profit sports franchise. To this date, there is no record of a cost/benefit analysis on publicly funding a new arena, or a comparison between the costs of a new arena or renovation/maintenance of the Saddledome. There are also no plans to engage the public on the costs of the deal.

Numerous peer-reviewed studies show there are no economic benefits to publicly subsidizing arenas and stadiums for professional sports teams.

 

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