After a three-hour meeting that was closed to the public as promised, the Calgary city council did end up releasing some details last night of its deal with Flames owners for a new arena, to be built on current Calgary Stampede parking lots, to replace the Saddledome — at just after 7 pm Calgary time. Let’s sift through the various news reports to try to piece together just exactly what the council agreed to:
- The new arena would cost $550 million, with construction costs being split evenly between the city and the team, $275 million apiece.
- The Flames would pay all operating and maintenance costs for the arena.
- The city would own the arena, which often isn’t a good thing for the public because it can mean a building gets out of paying property taxes, but this is Canada so that isn’t necessarily the case. The city’s presentation, however, just mentions $158.1 million over 35 years ($74 million in present value) in incremental property taxes from new development around the arena, so it’s unclear whether the arena itself would be tax-free or not.
- The city would collect a 2% tax on every ticket sold, amounting to a projected $155 million in revenue over 35 years, which amounts to about $72.5 million in present value.
- The city would also get a unspecified percentage of naming rights revenue, amounting to only $2.5 million over 10 years, which is present value of a little under $2 million.
- The city will pay $12.4 million toward demolition of the Saddledome, 90% of the cost.
- No word on whether the Flames will pay any kind of rent of ground lease beyond the ticket tax and naming rights share, or who would cover cost overruns, or whether there would be additional infrastructure costs or who would pay for them.
That’s a little hard to put a final number on, but if we take the city’s $275 million construction cost plus $12.4 million demolition cost, then subtract out the $72.5 million from ticket tax revenues and $2 million from naming rights (property taxes are just what any development of the land would normally pay to help fund all the city services that new development requires, so they’re not really a net plus), we get: $212.9 million in public costs, plus any potential public share of cost overruns or land cost breaks. Or, to put it another way, the city and the Flames owners would be splitting construction costs down the middle, and the team would be collecting all revenues on the place except a thin trickle of ticket taxes and a sliver of naming rights money.
Compared to the last Flames arena proposal, which was projected to cost taxpayers at least $1.2 billion, this one does seem to involve lighting less public money on fire. That’s about as much positive as we can say about it, though, and $212.9 million–plus toward a $550 million arena is still an awful lot of money — pretty close in percentage terms, in fact, to the $311 million in public money toward a $676 million arena that Edmonton spent on the Oilers, to much popular consternation. “It could have been worse” is extremely faint praise for any sports venue deal, especially when the median outcome for cities in such deals is “pretty awful.”
There are still a lot of unknowns about the deal — it’s tough to analyze a proposal that is just a single page of summary numbers with some clip art thrown in — but hopefully more details will emerge before the council votes on the plan … I’m sorry, did you say next Monday?
The reason for the rush is, apparently, “momentum”:
If you’re interpreting that as “if we gave people more than a week to think about it they might stop being so excited and ask actual questions” … actually, I’m pretty sure that’s the only way to interpret it.
And now, the question I’m sure you’re all wondering, which is: What did Calgary Mayor Naheed Nenshi, he of the vow that the city would have to be made whole on any arena spending, say after the announcement of a deal that, even if you count new property taxes from ancillary development (which you shouldn’t), would leave the city stuck with at least $138.9 million in losses? Nenshi said this:
“Let’s cut to the chase. This is a good deal for Calgary,” said Calgary Mayor Naheed Nenshi. “This deal makes sense on its own merits.”
(Nenshi did add that, given the city is currently looking to cut $60 million in fire, police, and transit spending thanks to a city budget crunch, giving hundreds of millions of dollars to an oil billionaire is maybe not the best look: “The optics of this stink. It’s really terrible timing.”)
It’s really hard to see any of this as anything other than an attempt to overcome public opposition to subsidies for a Flames arena by rushing a plan to approval without public scrutiny, which is exactly what the Flames owners have been angling for. And Nenshi, who was largely cut out of the arena talks, has folded completely on his opposition to the plan, which could be tactical — in Calgary the mayor is just one vote on the city council, so if it looked like this plan was a shoo-in he may have decided it was better to retreat and declare victory — but is still a far cry from promises like this one from 2015:
“It’s not going to be a deal that gets presented to the public with a ribbon on it,” Nenshi said Monday in an interview at Bloomberg’s New York headquarters. “We will actually engage the public in discussions about what they think is right.”
Discuss really fast, people of Calgary. The ribbon gets tied on Monday.