Category: Calgary Flames

Looks like this headline may have been slightly premature, as the Calgary city council voted unanimously Wednesday to revive talks on a new Flames arena, whether the Flames owners want to or not:

Council met Wednesday to discuss the collapse of the deal for a new downtown arena, emerging out of an hours-long closed door meeting shortly after 10 p.m. to talk next steps.

Council has also tasked city administration with determining whether there may be other parties interested in partnering with the city. The event centre assessment committee has also been re-established.

The results of that decision are due back before council at the March 8 meeting.

That’s all a bit mysterious, as any “other parties” potentially interested in filling the growing gap in arena funding is presumably going to want something in exchange, which would cost either the city or the Flames and leave everyone right back where they started — but sure, there’s no harm in seeing if you can find a greater fool, all it costs is council and staff time that could be spent on other things.

City Councillor Peter Demong added that the vote gives the council “the time we need to really consider what the future event centre looks like, whether it’s a brand-new building or renovation of the existing building,” so a renovation of the Saddledome is still on the table, too. But so is a new arena! Everything’s on the table! Maybe somebody will see a way of building a new arena for less than $600-million-plus and still make Flames owner N. Murray Edwards happy, or space aliens will land and deliver a $100 million bill to the council on the condition they can watch hockey in an arena with cupholders that fit their pandimensional space drinks, or really anything! There’s nothing more exciting than a blank page — get out your pencils and smell them, Calgary city council!

Two weeks after the Calgary Flames owners walked away from their $600 million arena deal (including about $300 million in public subsidies) over who would pay the last $10 million in cost overruns, the plan has been declared officially dead by city officials:

It's official: the City's arena deal with the owners of the Calgary Flames has been terminated. The two parties had to agree by late on Dec 31 to proceed to construction and that did not happen. City manager says the deal will not be resurrected. #yyccc

— Scott Dippel (@CBCScott) January 3, 2022

The apparent fallback plan is for the Flames to remain at the Saddledome, where they have played in 1983. (The arena got an $18 million upgrade courtesy of the city in 1994, after the Flames owners dropped hints that they would move without one.) The Flamesnation fan site helpfully links to a CBC report from 2020 that used a Freedom of Information request to unearth a 2018 engineering report that projected $48 million in needed work over the next decade:

• Architectural, $33.8 million.

• Building envelope, $1.7 million.

• Structural, $3.1 million.

• Mechanical, $3.5 million.

• Refrigeration system, $1.7 million.

• Electrical, $4.9 million.

• Elevator, $90,000.

Most of that “architectural” work is repair work to the Saddledome’s distinctive saddle-shaped roof, which uses a unique system of concrete panels suspended from cables, making it hard to predict exactly how much work will be needed, since you can’t just go look at how other concrete-cable-suspended roofs have fared at age 39 and up.

As for who’ll pay for it, the CBC noted that the Flames are responsible for paying for building repairs via a maintenance account that’s funded by ticket surcharges. Flamesnation, however, implies that who pays is still up in the air:

So here’s what probably happens next: the two sides will sit down and come up with a plan to determine how extensive the work required for the Saddledome’s extended lifespan will really be. (And how much it will cost.) And then they need to discuss who pays how much of the expected costs.

The Flames have 11 years left on their lease at the Saddledome, so one would think Calgary could just point at that and say, “You agreed to do upkeep, you have the money, you’re only paying us $1 a year in rent, go have fun.” Though it’s always possible that the team and the city will sit down to discuss a lease extension beyond 2033, at which point building upgrades will almost certainly be on the table. It would be nice if somebody would file a Freedom of Information request to get a look at the lease; I can’t immediately tell if you have to be a Canadian to file one (this explainer says you need to be an “interested person”), so maybe some reader or journalist from Alberta would be interested in helping out with this? You know where to find me.

So yeah, if you weren’t up and checking Twitter last night, Calgary Mayor Jyoti Gondek took to the tweets to announce that the Calgary Flames arena deal had gone and imploded over a matter of $9.7 million in cost overruns:

2/6 The deal struck in summer of 2019 envisioned a $550 m deal w/costs split equally between CSEC & the City. In addition, the City provided land, 90% demolition of the ‘Dome, excess flood/site remediation, & levies. Total City contribution: $275m + $22.4m = $297.4 plus land.

— Jyoti Gondek (@JyotiGondek) December 22, 2021

4/6 I did not support that deal.

Since I was elected Mayor, Administration & my office have been working with CSEC to mitigate any additional costs. Two costs were identified: climate mitigation of around $4m and road/sidewalk right of way issues of $12.1m.

— Jyoti Gondek (@JyotiGondek) December 22, 2021

6/6 I wanted Calgarians to be the first to know. I am as disappointed as all of you that this is the way things are ending.

— Jyoti Gondek (@JyotiGondek) December 22, 2021

To briefly recap: The original plan, approved back in 2019 by then-mayor Naheed Nenshi, had the city providing roughly $213 million toward a $550 million arena for Flames owner and billionaire oilman N. Murray Edwards. That rose to $250 million the following year, and to around $300 million this summer, with the city and the team splitting the first $25 million evenly, with taxpayers covering transportation cost overruns and Edwards covering construction cost overruns after that. When an additional $16.1 million in added costs for roads, sidewalks, and solar panels popped up — some of it in a grey area between construction and transportation, since it included sidewalks adjacent to the arena — Gondek proposed splitting them 40/60. At which point the Flames owners said “too rich for our blood” and scuttled the whole thing.

Even if you consider the entire $16.1 million as the city’s responsibility under the original deal, that’s only $9.6 million extra that Gondek asked the team to kick in, so it’s kind of nuts that Edwards and his fellow owners picked this as a hill to die on. The Calgary Sports & Entertainment Corporation, the Flames’ ownership group, later put out a statement pretty much confirming Gondek’s version of events:

The city of Calgary and the owners of the Flames have reached an agreement on how to pay for the $50-60 million in estimated cost overruns on the team’s new arena, and good news, everybody! In what Mayor Naheed Nenshi calls a “huge win for ratepayers,” instead of having to split the first $25 million in cost overruns with the team like the city agreed to do back in 2019, instead the city will split the first $25 million in cost overruns with the team! Yes, that sounds like the exact same thing, but did we mention that all additional overruns will be covered by the team owners? Which was part of the original plan, too, sure, but look, maybe it’ll sound better in raw numbers:

In the just-released documents, the estimated cost for the arena is now $608.5 million. Of that, the city will pay $287.5 million (plus up to $10 million for prep work), while the Flames will pay $321 million.

And that’s it! Oh, except for:

“There are the initial flood and site mediation costs that were already in there that we will be looking at capping at $10 million dollars. CMLC is also, as they would for any developer, doing some utility relocation and so on. That’ll probably be about $4.5 million to $4.8 million,” said Nenshi.

It’s not clear what additional transportation costs will be, though the mayor said he believe them to be minor.

Okay, so that’s $287.5 million, plus $10 million for site prep, plus $4.5 million or so for utility relocation, plus “minor” transportation costs — that’s barely more than $300 million for what was promised to be a $47 million net cost. (To be fair, the city will get some of that back through ticket taxes; to also be fair, it won’t get much of it back.)

As for why the arena is going so far over budget, it’s because of little things like the initial design being entirely wrong and failing to count how many bathrooms would be needed, totally unforeseeable issues, surely:

“It was built on an inverted bowl design which is very, very steep and it may not have worked in that particular piece of land and it would’ve been bad for accessibility. As we got into further design work, we realized there are some other things,” the mayor told reporters Monday.

“For example, there weren’t enough women’s bathrooms and, in fact much to my surprise, the thought was that there may be too many luxury boxes and not enough seats for regular people.”

The Flames owners, for their part, will raise ticket fees on concerts and other non-sports events at the arena from 8% to 9.5% to pay for their increased share, which ultimately comes out of their own pockets because it keeps them from raising ticket face values as much as they would otherwise, so that’s all fine. The city will pay for its increased costs by, um, Nenshi didn’t actually say, but there have got to be some more zoo workers who can be laid off, right?