By Canadian Press

Decision time looms for new Calgary arena and home for NHL’s Flames

Jul 29, 2019 | 12:03 PM

CALGARY — A new home for the Calgary Flames will be debated Tuesday in city council chambers.

The city and Flames owner Calgary Sports and Entertainment have a tentative agreement to equally split the cost of a $550-million event centre which would replace the 36-year-old Saddledome.

City councillors can approve the deal, vote it down, or delay by asking for a longer period of analysis and consultation.

Mayor Naheed Nenshi intends to vote in favour of the project, calling it “a good deal for Calgary.”

If approved, the soonest shovels would go in the ground is 2021.

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In the agreement unveiled last week, the city says the projected return to Calgarians is $400.3 million over the course of the 35-year agreement with the Flames.

That figure incorporates revenues from ticket sales, a portion of naming rights, retail property taxes in the building, CSEC donations to amateur sports programming and tax generation in the district where it will be built. 

But a Calgary economist disputes that figure, saying inflation wasn’t taken into account.

“That number is unquestionably wrong,” University of Calgary associate economics professor Trevor Tombe told The Canadian Press.

“A dollar in 35 years is worth a lot less than a dollar today. Inflation alone eats away half the value of that dollar over the course of three and a half decades.

“They’re not at all incorporating these issues around the time value of money. It is just Finance 101. This is not how you do it.”

He also points out a $47-million net loss on the project wasn’t made public at the news conference last Monday, and that information only came to light when administration was pressed by councillors later that night in chambers.

But a loss of $47 million over 35 years isn’t necessarily a deal-breaker, he said.

“It’s a money loser, but that’s OK,” Tombe said. “We don’t fund the zoo because we think it will make money. We do it for other reasons and there are those non-economic considerations here too.”

The city vows municipal property taxes will not increase to pay for the event centre.

If revenue streams to the city stated in the proposal were eliminated, Tombe says the arena’s cost to the average Calgary homeowner would be $15 per year in perpetuity.

“Personally, I actually come down and say ‘hey, the intangible benefits, redeveloping that area and the arena for Stampede and other community stuff and civic pride’ to me, that’s worth fifteen bucks a year, but individuals will differ,” he said.

“Whether it is a good deal for the city or not, it’s subjective. We should really be talking about the non-economic intangible benefits.

“In order to have that conversation, we need accurate, transparent and digestible costs so we can say ‘OK, are those costs worth it?'”

Talks between the city and the Flames abruptly broke off in 2017 when a new arena became a fractious civic election issue.

CSEC is putting up the same amount of up-front cash it was prepared to give two years ago — $275 million.

One major difference in the current deal is the Flames will not pay property tax as the city proposed two years ago. The city would own the building.

CSEC, which also owns the WHL’s Hitmen, CFL’s Stampeders and NLL’s Roughnecks, initially didn’t want to give the city any ticket revenue.

The corporation has agreed to hand over 2 per cent from every ticket sold to the city as a facility fee, capped at $3 million annually for the first five years and estimated to bring in $155.1 million over 35 years.

All revenues generated by the event centre go to CSEC, minus its commitment to the city and the sharing of parking revenues with the Calgary Stampede board.

The Flames would be responsible for the operation, maintenance and day-to-day repairs of the event centre.

CSEC has committed to upping its contribution to local sport groups, which the city states amounts to $75 million over the course of the 35-year term.

The event centre is part of revitalization plan for the east side of downtown near the Stampede grounds.

Calgary’s mayor acknowledges the optics of committing to a new arena right now are poor in the wake of last week’s $60 million in budget cuts.

“Let’s be real. This timing stinks,” Nenshi wrote Saturday in social-media post.

“It is one hundred per cent reasonable to ask what the heck council is thinking, bringing forward an agreement on a new arena, talking about spending on other projects, all while reducing the budget by $60 million.

“But we have to continue doing our work as a city on multiple fronts. The big picture remains to continue to build a great community while maintaining our position as the best place in Canada to start and grow a business.”

Donna Spencer, The Canadian Press