Calgary Flames refuse to pay more for rising costs of a new arena

Calgary Flames refuse to pay more for rising costs of a new arena

CALGARY — A new home for the NHL’s Calgary Flames hit the ditch, again, over money and risk.

The deal didn’t fall apart over the city demanding the Flames share in the cost of solar power and additional road and sidewalk work, but it was the tipping point for Calgary Sports and Entertainment Corporation to pull out of an the agreement the two sides reached over two years ago.

“There was a deal to be had here,” CSEC president and chief executive officer John Bean told reporters Wednesday during a video news conference. “We can’t get it across the line. So it’s frustrating, it’s hollow, it’s disappointing.”

The city and the Flames agreed on an arena deal over two years ago with the initial estimate of $550 million split between the two.

Shovels were scheduled to hit the ground in 2022 for a 19,000-seat arena and concert venue replacing the Saddledome, which has been the home of the Flames for 38 years.

The cost estimate for the project has risen to $634 million, however.

Bean says not only would CSEC’s share be $346.5 million compared to the city’s $287.5 million, but the Flames also bear the risk of rising costs in the future.

Since the two sides agreed to an amended deal in July, the city added an additional $19 million in roadwork and climate mitigation to the project, and wants the Flames to pay for $10 million of that.

Bean says the extra, accumulated $81 million CSEC would incur represents a 30 per cent increase on the team’s original financial commitment, plus the team is on the hook for increased costs in the future.

“While CSEC was prepared to move forward in the face of escalating construction costs, and assume the unknown future construction cost risk, CSEC was not prepared to fund the infrastructure and climate costs that were introduced by the city following our July agreement … and are not included in the current cost estimate of $634 million,” Bean said.

“No one makes a decision this large on one particular data point. It’s an accumulation of issues. It came to a point where you kind of tap out and go ‘OK, it’s a little too risky.’”

He wouldn’t say what the city must do to return to the negotiation table — “It’s not our style to negotiate in public” — and said the Flames will remain in the Saddledome, which is the second oldest NHL arena behind New York’s Madison Square Garden.

Arena talks between the city and the Flames abruptly broke off in 2017 when it became a fractious civic-election issue.

Naheed Nenshi, Calgary’s mayor at the time, and the late Ken King finally shook hands on a deal in July, 2019.

CSEC, which also owns the Western Hockey League’s Hitmen, Canadian Football League’s Stampeders and National Lacrosse League’s Roughnecks, is at arena loggerheads again with the city headed by a new mayor and council elected in October.

The Event Centre was designed to meet silver certification by LEED (Leadership in Energy and Environmental Design) which is an international green building rate system.

Solar panels and the goal for the Event Centre to be operating carbon neutral by 2035 is desirable, but not necessary to obtain silver certification, according to Bean,

“While we’re supportive of both, what we struggle with is being asked to fund those additional requirements,” he said. “We suggested perhaps they could find funding for those two elements.”

The Flames weren’t asked to help pay for solar panels, but for a $3.8-million photovoltaic film upon which solar panels will be installed, Mayor Jyoti Gondek said.

“It was well known to Calgary Sports and Entertainment Corporation what the climate mitigation expectations were on this project were before this council ever formed,” Gondek said Wednesday. “It as been asked whether the city is insisting on some of these improvements that come attached with costs? Absolutely.

“We are insisting on things like sidewalks because you need them for a good public realm experience.”

Gondek and CSEC chairman Murray Edwards spoke Tuesday, when the mayor was informed the Flames’ ownership group was withdrawing from the deal.

“In my conversation with Mr. Edwards, it was abundantly clear that there was not an interest from the partnership group to carry forward with more costs,” Gondek said.

“I asked him several times, and he reiterated several times ‘we do not have the additional dollars to move forward.’ I asked him if this was it? He said ‘yes.’

“It’s an unreal sense of loss right now. If there is a desire to come forward with those funds on behalf of Calgary Sport and Entertainment Corporation, we’re happy to listen, but the deal is those cost overruns are taken on by that organization.

“We have not closed the door. We’re simply waiting for them to come back and say that they’ve found the money. If they haven’t, as was said to me yesterday, we have to look into what next steps are.”

This report by The Canadian Press was first published Dec. 22, 2021.

Donna Spencer, The Canadian Press

Calgary Flames

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