Calgary, UCP and Flames ownership agree to MOU on new arena deal

The $1.22 billion price tag nearly doubled the 2019 cost, tabled initially at $550 million before escalations increased the price tag to $634 million.

Calgary, UCP and Flames ownership agree to MOU on new arena deal
Facebook/ Jyoti Gondek
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The City of Calgary has agreed in principle to build a new arena complex for $1.22 billion to replace the aging Saddledome. According to a joint statement, the United Conservative Party government and Calgary Flames ownership will provide partial funding.

The events centre site is Victoria Park — close to the Saddledome — which officials announced on Tuesday. The Calgary Stampede agreed to transfer and sell the land to permit development.

The $1.22 billion bill — the Calgary Sports and Entertainment Corporation (CSEC) will cover $356 million — includes funding for a new arena, a smaller community rink and a “suite of public amenities and public infrastructure.” 

After concluding a closed-door meeting, Calgary city councillors unanimously approved the event centre.

“A new event centre in Calgary is more than just a building. It’s foundational infrastructure,” said Calgary Councillor Sonya Sharp, committee chair of the arena task force.

“It’s not a single venue or a single building. This is a district and one that will serve every member of our community,” she said. “The completed district will attract new people, more events and greater investment.”

Mayor Jyoti Gondek said Tuesday there had not been any preliminary designs or timelines for construction.

The $1.22 billion price tag nearly doubled the 2019 cost, tabled initially at $550 million before escalations increased the price tag to $634 million. In December 2021, the CSEC abandoned negotiations, with Flames ownership on the hook for $346.5 million and the city covering the remainder. 

The Flames ownership walking away from the deal at the time came due to rising costs, mere weeks before both sides officially were set to announce the project. The boondoggle cost Calgarians $16.8 million.

Official Opposition leader Rachel Notley voiced concerns Tuesday over the increased cost of the amended deal since 2019, especially the share covered by taxpayers.

“The commitment has increased,” said Notley. “We believe all voters would expect their elected representatives to do due diligence on the economics and fiscal value of a capital project this size.”

Premier Danielle Smith involved her government in the negotiations last year after appointing Calgary MLA Ric McIver to represent the province in the talks.

The UCP will contribute $330 million to cover demolition costs for the Saddledome, including $30 million for the new practice rink. They will also cover related infrastructure work — roads, bridges, reclamation, land, etc.

“We made it clear from the start that although the province would not invest in the actual construction or operation of the arena itself — that was the responsibility of the city and the Flames — the province would be willing to invest in supportive infrastructure for the arena, the Stampede and the expanded BMO Centre,” said Smith.

Calgary city councillor, Dan McLean, told Rebel News the province’s money helped get the puck across the goal line.

“That was the icing on the cake,” he said. “That was what got the deal to be done. So I am grateful the province stepped in to make this happen.”

He alluded to the secondary fiscal reward of the arena deal for the surrounding businesses, claiming it would solidify their bottom line and “revitalize” the downtown core.

According to the proposal, the city agreed to pay $537.3 million to build the arena, parking facility, enclosed plaza and practice rink. 

City councillor Sharp said city reserves are covering its portion of the deal on top of the money already designated for the 2019 deal. Gondek promised no property tax increase for homeowners owing to the costly project.

Under the initial terms, CSEC will pay $40 million upfront, then $17 million annually — increasing 1% each year — for 35 years to “offset” costs tied to the arena, parking, enclosed plaza and practice rink.

Should the proposed deal exceed the allocated budget, Calgary taxpayers will have to partially fork up the cost overruns. According to details disclosed Wednesday by the city administration, the burden of extra costs would be shared between Calgarians and CSEC.

“Cost overruns are something that will have to be worked out between the Flames and the city of Calgary,” Smith told reporters on Wednesday. “They know what our maximum investment is.”

As part of the deal, Flames ownership is only liable to cover extra costs for the arena, practice rink and parkade, leaving it relatively shielded from unexpected expenditures.

Rebel News asked McLean if he could divulge further specifics of the deal as of writing. He said he could not but referred the publication to comments by the city administration.

“Additional funds for the city’s share of potential cost overruns are proposed to be set aside from revenues from future land sales and future anticipated investment income from the major capital projects reserve,” said the city in a statement, adding that further details about overruns would be “considered part of the next phase of work” included in the definitive agreements.

The city then wrote the next step is to “nail down the formal agreements that will set the fulsome course” for the project’s design and construction. “These are all details that will emerge in the definitive agreement discussions,” they said.

Notley asked Smith to reveal specifics of the deal ahead of the May 29 election to assess support for the plan. 

Smith pivoted, stating the corporate subsidies her government pledged are “respectful to provincial taxpayers” and that she expects a decision from cabinet to approve the plan by the end of summer. 

“That’s why on May 29, I’m hoping Calgarians give our UCP government a clear mandate to proceed with this arena deal,” continued Smith.

Regardless of the election result, Sharp expects the UCP or the NDP to approve the funding.

“I think that we all realize that the money is coming from the Government of Alberta regardless of the party,” said Sharp. “We’re talking about a government, and we as a committee and as a city and as a council would expect that the next party, if they're in place, would honour that.”

CSEC president and CEO John Bean spoke with NHL Commissioner Gary Bettman on Tuesday, confirming the Flames would be added to a hosting rotation for the NHL draft and all-star game events upon completing the prospective arena.

“While there are many ups and downs to professional sport, there can be no doubt that our ownership group wants to win championships for all of our fans in Calgary,” said Bean. He added the deal represents their desire to bring a championship team to Calgary.

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