Will Flames arena plans go up in ‘flames’?

Article posted by Coliseum, May 3^rd, 2021

Image: CBC News Canada

The multimillion dollar arena deal (new arena for the Calgary Flames) between the City of Calgary (Canada) and the owners of the professional ice hockey team Calgary Flames has hit the pause button over “a difference in the current budget estimate and the program requirements for the facility”.

‘CBC News Canada’ stated that the above information has been given by the Calgary Municipal Land Corporation (CMLC), the City-owned entity responsible for overseeing the $550 million project.

The Calgary Flames are a professional ice hockey team based in Calgary (Canada). The Flames compete in the National Hockey League (NHL) as a member of the North Division. The club is the third major professional ice hockey team to represent the City of Calgary, following the Calgary Tigers and Calgary Cowboys. The 19,289-capacity Scotiabank Saddledome in Calgary is their home venue.

Apply for membership

The National Hockey League (NHL) is a professional ice hockey league in North America, currently comprising 31 teams: 24 in the United States and 7 in Canada.

‘CBC News Canada’ further stated that an emailed statement from CMLC, attributed to its President and CEO Kate Thompson, reads, “The Calgary Municipal Land Corporation (CMLC), along with our partners at the City of Calgary, provided an update to the Council at the April 13^th closed door meeting on the progress of the Event Centre. We started this project by developing principles and a program that would create a building that Calgarians would be proud to have in their City, and over the past several months, the team has developed a design to reach that goal.”

The emailed statement says that the parties have agreed to pause the project to allow time to “resolve these challenges” related to the budget.

The ‘Calgary Herald’ stated that the City Council greenlighted the deal for a $550-million Event Centre in 2019, just eight days after the proposal was made public. The Calgary Flames owners – Calgary Sports and Entertainment Corporation – and the City are set to split the capital costs equally, but the City is also responsible for the cost of pulling down the decades-old Saddledome.

Detailed agreements between the City and the Calgary Sports and Entertainment Corporation were inked in late 2019 and made public shortly after, laying out a process for dealing with insurance, possible cost overruns and the fate of the Saddledome.

Councilor Jeromy Farkas, who is running for Calgary Mayor’s position in 2021, voted against the deal when it was before the Council – “I didn’t support the arena projects because of the unrealistic budgets and the very real chance of taxpayers being on the hook for cost overruns. And it looks like the budget’s already been blown through.”

He said that if the project is over budget, the Council has to come clean with Calgarians and that “not one penny more” should be invested in the arena.

Added Farkas, “If we don’t have a good grasp on costs, we absolutely have to pause the project. It would make no sense to proceed with this project if it’s not in a transparent way. . . . The deal was sold to Calgarians on certain terms and, like it or not, the Council approved the deal.”

Calgary Mayor Naheed Nenshi, who is not seeking re-election, has a different view and sent out a statement which read, “It’s not uncommon for major capital projects to be in this position. Far better to have these issues sorted out at this stage than to have unexpected cost overruns after construction has begun.”

The deal to provide up to $275 million of City funds to help build a new home for the Calgary Flames came just days after the Council announced budget cuts to services like transit and affordable housing and provided very little time for feedback from the citizens.

It met with opposition from those who did not want to see public dollars paid out to help finance a building for a private corporation.

The deal between the two partners means the City retains ownership of the building, but Calgary Sports and Entertainment Corporation, owner of Calgary Flames, is supposed to be the primary user of the space.

Councilor Jeff Davison said the two parties are still working together and that the Calgary Sports and Entertainment Corporation have not asked for more money – “The Council has not asked for additional public dollars to go into this project. The Council is committed to the deal we have signed. We are committed to the four major capital projects that we have going on in the City and we put a very specific model forward, a very specific model to go and do that.”

The Calgary Sports and Entertainment Corporation is a privately- owned professional sports and entertainment company based in Calgary, Alberta, Canada formed in 2012.

The building is intended as an anchor for a newly developed entertainment district skirting the Stampede Grounds and adjacent to the East Village in downtown Calgary. It is one of several major projects approved by the City, including the nearby BMO Centre expansion for conventions.

The ‘Calgary Herald’ further stated that the CMLC, a wholly-owned subsidiary of the City of Calgary, is managing the building’s development. They announced last summer that the eminent design firm HOK and the local company Dialog would design the replacement for the Saddledome in East Victoria Park, Calgary.

The CMLC was expected to reveal the Event Centre design this Spring, with construction starting later this year on a facility that will hold up to 19,000 people. It’s unclear how the pause might affect that timeline.

Thompson added, “The decision to take this pause is the responsible and prudent approach to ensure we find the best solutions to move the project forward successfully, without incurring any additional costs on the project while these discussions progress. The team is working collaboratively to find a suitable path forward.”

Concordia University (US) economist Moshe Lander said he isn’t surprised to hear about questions around the cost of Calgary’s new arena – “The pause is probably more pandemic than anything because the City is in dire financial straits, but this is the problem when you use public money to finance stadiums and arenas.”

Lander added, “This is not a problem that’s going to go away six months from now when we reach critical vaccination levels that things can start to return to normal. The City budget is going to be broken for a long time. Now the issue starts becoming, ‘Who’s going to come up with that money?’”

A City Council discussion was held behind closed doors recently. When the meeting resumed in public, the Council voted 9-5 to adopt three confidential recommendations and not to disclose the discussions.

Councilors Druh Farrell, George Chahal, Evan Woolley, Jeromy Farkas, and Jyoti Gondek were opposed.

Farkas said at the time that the discussion was “the most stunning thing I’ve seen in my entire time as a Councilor”.

Mayor Nenshi said that statement was “rather dramatic”, but he wasn’t able to give any details about what the Council talked about – “If there were ever a decision that required Council to, for example, spend money or enter into any kind of agreements, that has to be a public debate.”

Councilor Jyoti Gondek said she can’t speak about the reasons she voted ‘No’ because the recommendations were kept confidential -“All we know right now is it’s pens down while things are sorted out. Anything I say right now absent of the information, and absent of the ability to share it publicly, would be purely speculation. The one thing I don’t need to speculate on is I think we have a good deal in place, and it is still in place.”

Both Farkas and Gondek are running for the Calgary Mayor’s post in the upcoming municipal election, set to take place on October 18^th this year.

Continue to follow Coliseum for latest updates on venues business news. Coliseum is dedicated towards building the best global community of sports and entertainment venue executives and professionals creating better and more profitable venues.

Become a member of the only Global Sports Venue Alliance and connect with stadiums, arenas and experts from around the world. Apply for membership at coliseum-online.com/alliance and make use of the 365Coliseum Business.

Watch 250 member-exclusive videos with valuable tips for your venue