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Arena deal: 10 key questions on the proposed $1.2B arena and entertainment district

Transparency on the megaproject hard to come by at this stage of the deal.

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Calgary does love/hate its arena deals. It's practically an industry.

But one thing is clear after this week's announcement by the City of Calgary, the Calgary Sports and Entertainment Corporation and the Government of Alberta about an agreement in principle for funding an $800-million arena and $400 million in related improvements in the entertainment district around it.

The public knows less at this stage than what had been revealed at a similar stage with the last arena deal.

• $1.2B deal reached on Calgary arena project that replaces Saddledome — mostly with public funds
• Taxpayers group questions public dollars in arena deal as supporters hail district revamp

When a funding deal was announced in July 2019 on a new arena, the final wording wasn't actually released until December 2019. And there were actually nine agreements in the whole package.

So don't expect details before the provincial election is held. It will likely be a few months.

For now, let's look at what we know and don't know about this new deal.

1. The City of Calgary is putting up big money on this project. Does it get a return?

In short, we don't know yet.

Officials say this matter remains under negotiation. Under the last arena deal, the city touted the money that would be coming back in return, fronting half of the costs of a new arena.

The city would get money via a charge on every ticket sold for events in the new building. There's no sign of that with this deal. That makes it hard to measure the idea of "public money for public good."

It's going to be a city building that is operated by CSEC, which owns the Calgary Flames and several other local sports teams.

Will CSEC be paying the city rent under the terms of a lease agreement? Again, officials say this remains under negotiation.

No one even knows when construction might start or when the new building will open.

WATCH | Officials announce the new arena project deal on Tuesday:

Calgary's mayor explains the event centre project will go beyond just an arena

2. Who gets money for selling the naming rights for the new arena?

Again, we don't know.

This isn't addressed in the information released this week on the agreement in principle. City officials say it's still under negotiation.

Don't expect this to be the motherlode as Calgary is smaller than places like Toronto, Vancouver, Los Angeles or Chicago. But there will be a few million dollars a year potentially for naming rights.

There's no word on who gets that money or who decides what name goes on this publicly-owned building.

3. Who is responsible for any potential cost overruns?

For this deal, the City of Calgary and CSEC are going to be splitting any potential budget overruns.

The city wasn't willing to talk about this initially, but after CSEC posted information stating that the two parties will equally share any cost overruns, the city amended its website.

What isn't known is whether there is any maximum on acceptable additional costs.

LISTEN | Mayor Jyoti Gondek explains why she thinks this is the right deal for Calgarians:

After costs started escalating on the last arena deal, CSEC leveraged more money out of the city by voluntarily agreeing to shoulder 100 per cent of any additional costs on its own.

This week, Mayor Jyoti Gondek revealed on the Calgary Eyeopener that this was actually what resulted in CSEC walking away from the amended arena deal in December 2021.

"It became untenable for one partner to take on all those cost overruns. So we have learned from that, and we will be managing risk mitigation in a different manner on this one," said Gondek.

As for how the city will pay for any potential overruns, it's proposing to use money from future land sales and investment income from its major projects reserve fund.

4. Does the outcome of the May provincial election affect the province's $330-million contribution?

UCP Leader Danielle Smith said if her party wins the election, the money will be there. NDP Leader Rachel Notley wants more details on the provincial commitment.

No one is saying what happens to the arena deal itself if the provincial money for the surrounding amenities disappears. We don't even know when the province entered the negotiations.

For months, the city called it a two-party negotiation — between the city and CSEC. The city said it was briefing the province on what was going on, even requiring provincial officials to sign a non-disclosure agreement to keep everything hush-hush.

Only now has the city confirmed that, yes, provincial officials were in the room where it happened.

5. What are the infrastructure improvements in the entertainment district that the province is going to pay for?

No precise details yet.

The big-ticket item for the provincial cash is an underpass that will be on Sixth Street S.E. between Ninth Avenue and 11th Avenue S.E., providing another link between East Village and the district. Years ago, it was slated to cost $50-$80 million, but the final price tag isn't known.

The other provincial cash is for roads and sidewalks around the new arena as well as a mysterious LRT connection (to the Green Line? Red Line? Both?).

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Environmental remediation is another mystery item. Past studies on the arena site found no serious contamination as those current parking lots were paved over a former residential area.

There is one heritage building that will either be torn down or taken apart and moved. That would be the Stephenson and Co. building, which has been at the corner of Fifth Street S.E. and 13th Avenue S.E. since 1911. No one is saying who will decide or pay for that.

6. A few years ago, this was a $550-million arena. Now it's estimated at $800 million. What happened?

Like most projects on this planet right now, inflation and higher costs for construction materials are the bad guys. But there's another factor at play.

This isn't the same building that was envisioned in 2019. The arena's footprint is increasing from seven acres to 10 acres.

Not included in the $800-million price tag is that second ice sheet, a new community arena, which will cost another $52.8 million.

7. Is there going to be a whole new design? Does that mean a new development permit and more delays before construction can begin?

Coun. Kourtney Penner summed up the feelings of many detractors about the November 2021 approved design for the new Calgary event centre. She called it a "hideous box." Uninspired or plain were commonly used words for what's supposed to be a signature building.

Getting a development permit approved is a process. It can take a year or more.

City officials aren't committing to whether a new permit is needed or if a sufficient amount of the already approved elements for this building would be kept. That could negate the need for a new development permit.

8. If the City of Calgary is putting up approximately $500 million for the arena and CSEC's opening payment is $40 million, how exactly do you start building an $800-million project?

If the city has a plan, it isn't talking.

After consulting with various city officials, it seems there are a couple of options.

The city could borrow the additional money and use the annual payments from CSEC to pay off that debt. It could also use other cash on hand to cover some or all of the construction costs.

Presumably the city has a plan. It has a good credit rating, so it gets favourable borrowing rates. The city has been paying down its debt in recent years, and it is said to have good fiscal capacity.

9. Is the city again offering CSEC special deals on land?

CSEC is getting the options to acquire four pieces of land in the entertainment district as well as the right of first offer on potential development opportunities on the city's land that is currently home to the Victoria Park bus barn.

Under the previous arena deal, there were two parcels of land where CSEC was given option of making a first offer to buy them if it chose to do so.

Even though land prices were soft, there was no interest from CSEC to exercise those options. It has no land developments, and its future plans on opening new potential revenue streams are not known.

10. Will there be a public consultation on this $1.2-billion project (arena and entertainment district)?

Whether anyone likes the way the process was run or not, the city says public consultation was done previously for the last event centre deal and also for the Rivers District Master Plan, which contemplated an entertainment district in Victoria Park.

ABOUT THE AUTHOR

Politics Reporter

Scott Dippel has worked for CBC News in a number of roles in several provinces. He's been a legislative reporter, a news reader, an assignment editor and a national reporter. When not at Calgary's city hall, it's still all politics, all the time.

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• Calgary Flames

City official says Flames arena deal to include 35-year commitment to stay

CALGARY — A $1.2-billion deal to replace Calgary's aging Saddledome with a new National Hockey League arena would come with a 35-year lease that includes a commitment from the owners of the Calgary Flames to stay in the city, says a city official.

The City of Calgary, Alberta government, Calgary Sports and Entertainment Corp. and Calgary Stampede reached an agreement in principle in late April.

The $1.2-billion price tag for the event centre project includes $800 million for the new arena in addition to parking, transit improvements, a new community rink and an enclosed plaza.

Council's event centre committee met Monday to get a public presentation from city administration on the project and ask some of the questions that have come up since it was announced.

Michael Thompson, general manager of infrastructure services, said the city continues to negotiate the final agreement and hopes to have it complete by the end of summer.

"The parties have agreed to the major terms: the scope of what's being built, the estimated costs and the financial contributions," he told the committee.

The city, he said, would contribute about $515 million from its reserves and another $360-million from its working capital toward a long-term lease with the Calgary Sport and Entertainment Corp.

Thompson said CSEC would pay $40 million upfront. It would then pay $17 million annually in lease payments, increasing by one per cent each year, for another $708 million over the 35 years.

Coun. Andre Chabot said there are concerns from some Calgarians that a lease could be terminated.

"I know there are other provisions in that agreement that we can't maybe reveal at this point, but … it's a question of certainty from our perspective and risk aversion," he said.

Thompson agreed it's important for the city to consider its risk.

"We've got a commitment from Calgary Sports and Entertainment Corp. that they will be staying in Calgary for 35 years as part of this agreement," he said.

No one from CSEC could immediately be reached for comment. It owns the Flames in the NHL, the Wranglers in the American Hockey League, the Hitmen in the Western Hockey League and the National Lacrosse League's Roughnecks.

The Alberta government is not contributing directly to the arena, but has said it plans to fund up to $300 million on public transit and road improvements, site utilities, reclamation and other supportive infrastructure as part of the deal.

The province would also contribute $30 million to cover half the cost of the 1,000-seat community rink if its share is approved by provincial cabinet and the Treasury Board before the end of summer.

This report by The Canadian Press was first published June 5, 2023.

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City of Calgary releases new arena details, agreements

A new city webpage released Feb. 1 includes 16 separate agreements and contracts for the new event centre

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The City of Calgary has released comprehensive details on the agreements for a new downtown event centre.

The city’s cost-sharing agreement with the Flames ownership group — Calgary Sport and Entertainment Corp. (CSEC) — and the Alberta government was initially announced last spring and finalized in October 2023 .

But on Thursday, the city announced it has published all of the agreements and funding breakdowns for the future event centre block, as well as plans for new public infrastructure in Calgary’s culture and entertainment district.

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A new web page posted on the city’s major projects website on Feb. 1 includes download links for 16 separate agreements that were finalized in October. The agreements include hundreds of pages of legal documents that outline CSEC’s guarantee, a facility fee arrangement, payment covenants, an event management and road use agreement, and land exchanges with the Calgary Stampede, among other contracts.

“Calgarians who review these agreements will see a lot of familiar information,” general manager of the city’s infrastructure services Michael Thompson said in a news release.

While the city stated that releasing the information is a commitment to be as transparent about the arena deal as possible, some details have been redacted to “protect sensitive and proprietary information” about the project’s partners.

The city’s web page also includes previously reported details on the event centre block — a facility the city claims will be 40 per cent larger than the previous deal, which included a building and outdoor plaza.

The new event centre will sit on 10 acres and feature an 18,000-seat arena that replaces the Saddledome. The arena will be complemented by indoor and outdoor community plazas, an attached parkade, a future redevelopment site and a new community rink that will be available for community sports groups and events.

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The project will cost $926.4 million. The arena accounts for the bulk of that, at $800 million, while the community rink will cost $52.8 million, the parkade will cost $35.4 million, the outdoor community event plaza $28.7 million and the indoor plaza $9.5 million.

The city is taking on 56 per cent of the costs, or $515 million. Its contribution will be funded by transfers from the city’s Major Capital Projects Reserve, the Fiscal Stability Reserve and the Budget Savings Account Merged Reserve.

The city has claimed the nearly billion-dollar project will not result in an increase to property taxes, and the municipality will not take on any additional debt.

CSEC — which owns the Flames, Wranglers, Hitmen and Roughnecks — will contribute 38 per cent of the project’s funding, or $356 million.

The Alberta government is chipping in six per cent of the cost, just over $55 million, for public infrastructure improvements.

The province will also contribute nearly $300 million to support public infrastructure and transportation improvements in the area, including the 6th Street S.E. underpass, public gathering spaces, and upgrades to streets, sidewalks and accesses to the arena.

Though Transportation and Economic Corridors Minister Devin Dreeshen announced last October that the province would pay for the demolition of the Saddledome, the documents released Thursday indicate the municipality will be responsible for that expense. 

“The city shall be responsible for all costs in respect of such demolition and the reclamation of the lands on which the Saddledome is situated,” page 20 of the agreement states, adding those costs will not apply toward the city’s maximum budget contributions for either the event centre or the community rink.

In an email to Postmedia, a city spokesperson said the city is responsible for the Saddledome’s demolition, as the agreement is between the city and CSEC, but that the province is funding the work.

CSEC will pay the city $40 million upfront, followed by yearly lease payments of $17 million, compounded one per cent annually for 35 years. By the expiration of that lease — which requires the Flames to remain in Calgary for its duration — CSEC will have paid the city 748.3 million to lease the facility.

“This approach means CSEC assumes the operations and revenue risk, in exchange for any potential upside returns,” the city stated. “It minimizes risk to the city that’s associated with being exposed to multiple variable and unpredictable revenue streams over a longer 35-year term.”

The agreement also stipulates the Flames ownership group will provide additional funding to community sports groups, to the tune of $1.5 million annually, during the 35-year lease.

The Calgary Stampede is also included in the agreements, as the organization enabled land transactions to increase the size of the event centre block by almost 40 per cent, the city stated.

“They also made land available for future redevelopment opportunities, in exchange for land that they would require for their annual exhibition,” the city said.

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• SI SWIMSUIT

Flames Agree to Trade Goalie Jacob Markström to Devils

Patrick andres | jun 19, 2024.

In their bid to shake off a down 2024, the New Jersey Devils have reportedly acquired a red-letter goalie.

The Devils have traded for Calgary Flames goalie Jacob Markström, they announced Wednesday morning— confirming reports from a number of media outlets.

According to New Jersey's release , the team sent defenseman Kevin Bahl and a conditional 2025 first-round pick to the Flames in return.

Markström, 34, has spent the last four seasons with Calgary. He posted the most successful season of his career in 2022, when he went 37-15-9 with a league-high nine shutouts and finished second in the Vezina Trophy voting.

The Swedish national has also spent time with the Florida Panthers and Vancouver Canucks, registering a fourth-place Vezina finish with the Canucks in 2020.

After exploding to a 52-22-8 ledger in 2023—their best record by point percentage in franchise history—the Devils regressed to 38-39-5 in '24 and missed the playoffs. The team's goaltending situation this year was a mess, as five different players started in net for New Jersey.

The Flames, meanwhile, missed the playoffs for the second straight season—the first time they've done that since missing five straight postseasons from 2010 to 2014.

PATRICK ANDRES

Patrick Andres has been a Staff Writer on the Breaking & Trending News Team at Sports Illustrated since 2022. Before SI, his work appeared in The Blade, Athlon Sports, Fear the Sword, and Diamond Digest. Patrick has covered everything from zero-attendance Big Ten basketball to a seven-overtime college football game. He is a graduate of Northwestern University.

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