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Calgary Flames pull plug on C$634m arena project

Calgary Sports and Entertainment Corporation (CSEC), parent company of the Calgary Flames, has today (Wednesday) exited the project to develop a new arena for the NHL ice hockey franchise, citing growing concern over the rising costs of its side of the venture.

CSEC confirmed the news in a statement today after Calgary’s Mayor, Jyoti Gondek, yesterday said that the Flames’ ownership group intended to exit the Event Centre Project, which has had its share of contentious moments since being first unveiled in 2019.

CSEC said its primary objective in pursuing the Event Centre Project has been to provide Calgarians a first-class facility with an entertainment experience, not only for hockey, but for other events including concerts, comparable to other major cities. It added: “However, at this point, it is clear that the City and CSEC have been unable to resolve a number of issues relating to the escalating costs of the project.

“Accordingly, as the City and CSEC have been unable to resolve these issues, CSEC has determined that there is no viable path to complete the Event Centre Project.”

When the agreements were first executed back in December 2019 the parties agreed to a 50/50 cost sharing arrangement with respect to the design and construction of the new Event Centre. In July 2021, with these costs increasing to C$608.5m (£354.2m/€417.4m/$471.5m), the City informed CSEC they were not able to fund their 50% share which, under the terms of the Project Framework Agreement, would have resulted in termination at that time.

Instead, CSEC agreed to fund a disproportionate share (C$321m to City’s C$287.5m) and agreed to accept the risk of reasonable future design and construction cost increases related to the Event Centre. The project was suspended in April due to a “difference” in the budget estimate and the program requirements for the facility.

CSEC today said the most recent cost estimates place the total cost of the Event Centre at C$634m which means CSEC would be responsible for an additional C$25.5m of cost. The resulting cost sharing would have been C$346.5m for CSEC and C$287.5m for the City and, CSEC would continue to be responsible for further cost increases related to the construction of the Event Centre.

CSEC said: “Unfortunately, there are now C$19m of new cost items related to infrastructure and climate being insisted upon by the City for which they are seeking an additional C$10m in funding from CSEC.

“While CSEC was prepared to move forward in the face of escalating construction costs and assume the unknown future cost risks, CSEC was not prepared to fund the infrastructure and climate costs that were introduced by the City following our July agreement and were not included in the C$608.5m and are not included in the current cost estimate of C$634m.

“The failure of the City and CSEC to find a viable path forward was not based upon simply ‘the last dollar’ on the table; but rather was based upon the accumulated increase in CSEC’s share of the costs, including the infrastructure and climate costs, the overall risk factors related to the project and the inability of CSEC and the City to find a path forward that would work for both parties.”

New renderings of Calgary’s Event Centre had been released in August. The Flames have played at the Scotiabank Saddledome since it opened in 1983, but have long been seeking a new arena.

CSEC added today: “While not ideal for Calgarians nor competitively for the Flames, the people of Calgary should understand that nevertheless CSEC’s intentions are to remain in the Scotiabank Saddledome. We are deeply disappointed with the outcome.”

Gondek, who was elected as Calgary’s new Mayor in October, staged a press conference on Tuesday night announcing that the Event Centre deal would not be going ahead. She said: “There was additional funding that had to be taken on by Calgary Sports and Entertainment Corporation.

“It appears that they are unable to make that financial commitment, following the approval of their development permit, so it would appear that they are ending the deal.”

Gondek later expanded on the reasons behind the collapse of the project in a series of tweets on Twitter. She wrote: “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.

“Plus the value of the land. I supported that deal. In July 2021, CSEC asked to make changes to the above deal. CMLC removed as devel manager, both parties added $12.5m for potential cost overruns & City added up to $10m in event management costs. Total value: $307.4 + land.

“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.

“The City came to the table to assist with $6.4m in roadways leaving $9.7m for the Flames. Based on this gap, CSEC informed me they are walking away from our deal. On a project worth over $650m, to have one party walk away for 1.5% of the value of the deal is staggering.

“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.”

Image: Jeff Davison