Calgary report: Combined stadium-arena would cost public $1.2B, Flames should give up and start over

Calgary Mayor Naheed Nenshi is not your average mayor when it comes to sports subsidy deals: He’s insisted on evaluating the Flames owners’ arena plan on whether it’s good for the public, not just good for the team, openly called out NHL commissioner Gary Bettman as being a paid shakedown artist, and promised a public debate about any arena decision. Now the Calgary city manager’s staff has completed a hard-eyed analysis of the plan for a combined Flames arena and Stampeders stadium, and determined that it would cost $1.8 billion, double the total that the teams had estimated, with the public cost coming in at between $1.2 billion and $1.4 billion.

That’s a hell of a lot of money, even in devalued loonies. According to the city report, the extra $900 million would go toward “land, municipal infrastructure, environmental remediation, and financing.” Most of that isn’t even the long-worried-about creosote contamination cleanup (which comes to around $65-110 million), but other items: New transportation infrastructure is down for another $166 million, for example, and finance charges would be an additional $371-390 million. (It’s not immediately clear if these are present value or nominal figures — if the latter, then it’s not really fair to count them as an added public cost, since it’s just the cost of paying later instead of now, like the additional money you pay on your home mortgage over time compared to what your mortgage is actually worth.)

The city council is scheduled to discuss the report on Monday, but it’s likely to be a short discussion — the CBC says the $1.2-billion-plus price tag “effectively scuttles the proposal as it stands.” And the report itself recommends as much, indicating that “the CalgaryNEXT concept is not feasible in its present form or location and alternative development concepts, locations, and financial models should be investigated.” In particular, it suggests looking at building a new arena near the site of the current Saddledome (which the Flames owners previously rejected as not ambitious enough) and putting a new football stadium and field house at the current site of the Stampeders’ stadium at the University of Calgary.

There’s still some concern here that by focusing on alternative sites, this could end up becoming a battle of where to build the new arena and stadium, not whether to fund one with public money — though given that the report repeatedly indicates that the city government’s first priority is that “public money must be used for public benefit,” and Nenshi has said the same, probably not too much concern. Mostly, instead of taking the team owners’ demands and price figures as a given, Calgary sat down and trying to figure out if it made sense financially from the city’s perspective — and the answer came back “hell, no.” Now they’re kicking it back to the team to come up with a plan that makes sense. It’s all eminently logical and responsible, and only remarkable because so few city administrations do anything like this.

So far, Flames CEO Ken King is insisting on keeping CalgaryNEXT alive: “I realize we may sound simplistically optimistic, but we still think there’s some room here,” he said yesterday, which is definitely either the first or third Kübler-Ross stage. There’s still many months or years of haggling to go here, almost certainly, but Calgary has set an excellent example for other cities on how to go about tackling the first round.


20 comments on “Calgary report: Combined stadium-arena would cost public $1.2B, Flames should give up and start over

  1. With this kind of approach, Mayor Nenshi will never be elected to public office in Cincinnati, Glendale or any other municipality where governments understand that their primary function is to transfer tax dollars from the poor to the rich.

    Bravo, Sir.

  2. Mayor Nenshi might do well in Glendale, where a lot of the locals seem to have caught on to the con game that is subsidized sport.

  3. Off topic, but speaking of ridiculous stadiums built mostly on the public dime:

    http://www.sandiegouniontribune.com/news/2016/apr/21/chargers-stadium-renderings-acee/

  4. Ironically up here in Canada it would be worth it to subsidize the move of an NHL team (presumably to Quebec) because the government would make that investment back in terms of ticket sales and merchandize etc. This would obviously depend on the revenue sharing agreement and is not the same as suggesting building new facilities for existing teams. But it is a bizarre stark contrast between unsuccessful American teams where governments want to lavish them with money and Canadian franchises where for example their season tickets (at higher prices) sell out within a few days.

  5. “But it is a bizarre stark contrast between unsuccessful American teams where governments want to lavish them with money and Canadian franchises where for example their season tickets (at higher prices) sell out within a few days.”

    This comment makes no sense whatsoever.

  6. Yes this mayor hasn’t sold out ! Yet. I on the other hand can already see hockey in Canada being at the same point where baseball was in this country in the 80’s. Participation and TV ratings have fallen off a cliff. The old guys running government are the NHL & Canadian football demographic. They will start building those teams amusement parks located in the best part of town before basketball & soccer get any bigger. Perhaps the opposite happens and they put their voters first ?

  7. Neil deMause on April 21, 2016 at 10:43 pm said:
    How would the Canadian government make money from ticket sales and merchandise?
    – – – – – – – – – – – – – – – – – – – – –
    Sales tax.
    Not enough to make this worth it, but hey, you asked the question.

    The Quebec government already subsidizes dairy farmers, the hydro-electric sector, Bombardier – hell, just about everything already. Why not the Neo-Nordiques?

  8. I’m a big fan of Mayor Nenshi, but let’s not give him too much credit: the collapse of oil prices has devastated Calgary and the surrounding area.

    Two or three years ago, dropping taxpayer dollars to build a shiny new arena for the Flames seemed like a great idea.

    Today, it’s simply a non-starter – for any mayor.

  9. Thanks, Ben, for uncovering the dog-bites-man angle on a man-bites-dog story.

    The interesting piece here isn’t that a city staff report matches the mayor’s perspective. (Though I think the staff are under the council technically — Canadian governance always confuses me.) It’s that a city government conducted a study that tried to find all of the potential hidden costs of a deal, rather than just taking the developer’s word for it. That shouldn’t be news, but sadly, it is.

  10. Come on, Neil. Roads are a “hidden cost”? Is that really what you’re trying to say?

    To me this reads like the city council’s attempt to back the mayor. If the mayor was pro-stadium, you can be darn sure that road construction wouldn’t have been included as a “hidden cost”.

  11. The report doesn’t itemize the “transportation” costs, so I don’t know whether those are roads or public transit. Either way, though, why can’t roads be a hidden cost? If the development doesn’t happen, the city doesn’t have to build the roads. Even if you consider this the job of government, it’s still a cost — not a subsidy, but a cost. And if the question here is what the project would mean to the city’s bottom line, it has to be included.

  12. Edmonton is about to open their new arena (oh, sorry, Mr. Katz’ arena which the taxpayers will pay for but from which all revenues will accrue to Mr. Katz’ businesses while the city derives no property tax revenue whatsoever…) in an area of the city where road access was appalling even before an arena district was planned and STILL haven’t included any meaningful funds for transportation upgrades… or even acknowledged that this will need to be done and cost money.

    I hope Taylor Swift and the Wiggles don’t mind hauling their own equipment by hand from the old arena district (which had excellent access to major transport routes) to the new….

  13. Ben’s really reaching today.

    The associated costs are indeed important because it’s money that could be spend on things, transportation projects, elsewhere in the city if it doesn’t subsidize this project.

    Repeat after me: Opportunity cost, Opportunity cost, Opportunity cost…

  14. It won’t be long until you see Calgary officials touring Seattle and Quebec. If I remember correctly, there were rumors back in the 90s about the Flames relocating to Houston.

  15. That was the Oilers, James. 1998 as I recall.

    But sure, King might do a flying visit to Seattle or Quebec City. Or Atlanta or Long Island or Kansas City (I hear they have arenas there too…)

  16. I just found the earlier comment about unsuccessful US teams vs Canadian teams funny given that ZERO Canadian teams made the playoffs. Maybe the difference is there are successful vs unsuccessful US teams, and then Canadian teams…

  17. Doug – Perhaps the success they’re referring to is financial. A losing Canadian team has a license to print money that a successful American team can only dream of. Look at the Oilers; they’re 10 years out of the playoffs (tying the record) and they just keep selling out, year after year.

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