Calgary shares details of controversial Flames arena deal

The City of Calgary has revealed further details concerning its contentious agreement with Calgary Sports and Entertainment Corporation (CSEC) to develop a new arena for the city’s NHL ice hockey team, with Mayor Naheed Nenshi maintaining that the deal is a fair one for Calgary.

Plans for the new NHL arena were formalised last month after an agreement was signed between the Calgary Flames’ owners and city authorities. The 35-year agreement between CSEC, the City of Calgary and Calgary Stampede will keep the NHL team in the city for that time at a new C$550m (£323.4m/€377.3m/$421m), 19,000-seat arena.

December’s agreement came on the back of the City voting in favour of the project in July, just eight days after it was first unveiled. The scheme represented the third attempt to broker such an agreement in the past four years. The Flames have played at the Scotiabank Saddledome since it opened in 1983, but have long been seeking a new arena. However, the nature of the process led to criticism from certain quarters that it was rushed through without proper scrutiny.

December’s announcement had specified that the City and CSEC would split the costs of developing the arena, with city officials stating that further details would be made public at a later date. Plans for cost overruns, insurance and the long-term future of the Saddledome were among the details revealed yesterday (Tuesday).

It was announced that the City will receive 2% in ticket revenue for all events held in the arena, capped at C$3m per year for the first five years of the lease. The City is also projected to receive C$250,000 per year over a 10-year period for its share of the naming rights.

CSEC will be liable for the building’s insurance premiums, but only the amount it would pay if the arena wasn’t on a flood plain, with the City liable for the difference. Councillor Jeromy Farkas, who voted against the agreement last summer, said that while he’s happy the deal has been made public, he is concerned about the possible unknowns of those costs.

“There are significant risks and I think one of the biggest blank cheques that taxpayers have written in this deal is on the flood file,” he told Canadian broadcaster CBC. “When it comes to the flood insurance, we still don’t know what that difference in premiums is going to be, or even if the city may have to self-insure the building.”

If the project runs over budget, the City and CSEC will be obliged to seek savings before considering putting more money into the construction. An option exists for either party to provide up to C$25m for overruns, which would oblige the other to contribute half that amount in return.

The City will retain the right to use the new arena for major international events such as the Olympic Games, while it has agreed that the Saddledome will not be used to stage potentially competing events to those at the new arena. However, it is envisioned that the Saddledome will be demolished “as soon as is reasonably practicable” after the new arena is complete. The CSEC will pay 10% of this cost up to a maximum of C$1.5m, with the City funding the remainder.

Commenting on the release of the specifics of the deal, Nenshi said: “If anyone had ever met our former city manager, Glenda Cole, who is retired now, you would know that the very last thing Glenda Cole would ever do is sign a blank cheque. So I actually am very, very confident that the agreements that have been signed reflect exactly what city council approved.”

Image: City of Calgary