This is a follow up to an earlier piece on this topic, with news yesterday that the City of Calgary and the Calgary Flames professional hockey team had reached a tentative agreement on a new arena in a blighted section in the downtown area. This arena would replace the Saddle Dome, their current facility, which is about 35 years old it was built for the Winter Olympics that Calgary hosted back in 1988 (believe it or not) it does not seem that long ago.
The deal has been discussed for a few years now, and active discussions began in 2017. The two sides reached a point last summer where the Flames ownership indicated, and senior management began to talk publicly about, relocating the team to another city. They even mentioned U.S. cities as possible destinations. This was seen as an attempt to “strong arm” the political powers in Calgary, but it is not like National Hockey League (NHL) teams have not relocated in the past, which put it inside the realm of possibility.
The framework of the initial deal, back about a year or so ago, had the city paying 33% of the cost of the building, the Flames paying a portion of the building, and the remaining amount would be supplied through a “facilities tax”, essentially a ticket tax paid by fans as well as other visitors to the arena.
However, the math in the current deal announced yesterday has changed, according to local news sources, Calgary will pay 50% of the cost of the proposed $550 million arena, the Flames will pay 22%, and the “ticket tax” will fund the remaining 28%. The city will own the building, the Flames ownership will most likely pay their contribution in some sort of annual payment over a ten year period, and the ticket tax will be paid to the city most likely annually.
The team ownership comes away from this deal well, the clear winners. It also triggers the conversation regarding whether a city should have ownership of an asset like an arena or stadium. It should also be noted that the Flames will be responsible for the maintenance and operational management of the facility, which will have a cost associated with it, especially as the building ages.
It is very similar to the agreement in Edmonton with the Oilers new arena. The structure with the “ticket tax” is similar in that agreement as well. The difference in Calgary is that they are trying to push a deal through by Monday of next week. Many parties involved, including residents, feel that is not enough time to make a decision of this magnitude, one that will impact the city for many years to come.
The proposal is supposed to be put into a public vote on Monday, if it is voted down, the path forward will be very unclear. In the event that it is passed, then the measure will most likely be the source of controversy in Calgary and could prompt certain parties to try to appeal the decision on a national level. The other way it could go is a conditional acceptance or conditional decline that would offer an extension of three months for further review and consideration.
The city officials have to figure out how to change the narrative that looks like they are being “taken to the cleaners” for 50% of the cost of the project. They have to come up with a rationale behind why the expenditure is beneficial for the city of Calgary.
The city and the team ownership also have to address the faction of the public who feel that the funds being used on a hockey arena (events center) could be spent on something with greater impact to the community. The objective being that the new arena will bring jobs, economic development, and investment to an abandoned area of Calgary.
This has happened in other cities with NHL and NBA arenas moving downtown with numerous examples of how the new arena has jump started the economic investment in city areas that were largely forgotten. Edmonton is a good example of this, the new arena brought tremendous financial investments and development to that area of the city.
The residents need to be consulted because the facilities tax is going to foot almost thirty percent of the cost of the proposed new arena. They need to decide if that is the direction that they want to go with their entertainment dollars in the future.
In the end, all parties involved could, in my view, use more time to evaluate this proposal and decide upon the best course of action for the funding of the new arena. The Saddle Dome is an aging facility that is becoming cost inefficient to maintain to NHL standards, which is prompting both sides to understand that a new facility is on the horizon. It just cannot seem like it is being pushed through on a fast track, which is exactly how it appears at this point.
Those deals, historically, have backfired, and the time and effort of so many end up being wasted. The parties involved have to consider that too before moving too fast with this agreement.