OPINION: No enviable position for Calgary in negotiations with NHL Flames

'Media silence' doesn't provide taxpayers a gateway into ongoing Calgary arena deal, perhaps until it's too late

The Scotiabank Saddledome in Calgary. BERNARD SPRAGG / Flickr

No one thinks the Saddledome is state-of-the-art. Its position at the base of our skyline triggers not pride, but nostalgia. It won’t hold the concerts we want to see, and it apparently doesn’t much inspire the teams who play there.

The push to build a replacement event centre largely stalled after the last municipal election. The Flames’ owners, Calgary Sports and Entertainment Corporation (CSEC), initially proposed the CalgaryNEXT deal in the West Village. The next option considered was a plot of land in Victoria Park, not far from the existing rink.

Councillor Jeff Davison, the new chair of the event centre assessment committee, has now reached out to Flames brass for a meeting, to potentially restart negotiations.

Flames CEO Ken King’s tepid response included an ask that should concern all Calgarians.

“…if we are to proceed, a simple and pre-emptive imperative is media silence. Public and/or media involvement must only be rendered in the event of an agreement.”

That’s a problem. When King asks to keep reporters out, he’s really asking to keep their audience out. In other words, the taxpayers of Calgary. King is asking the majority funders of the project to to be removed from the bargaining table.

The CSEC and the city have proposed a number of formulas to pay for the event centre. One is a 3-way split between the Flames, the city, plus a ticket surcharge. This means taxpayers would foot two thirds of the bill.

Another proposal saw a fourth revenue stream coming from a revitalization levy. This is a fancy way to describe the city chipping in more, but charging it back to some Calgarians on their property taxes, with the claim that the “revitalization” has direct benefits to property values. This was how the city paid to revamp the East Village.

The problem with justifying taxpayer spending on an event centre, is that there is quite a bit of difference between adding amazing public use spaces and other amenities to a run-down neighbourhood, and building an arena there.

There’s no good evidence that building an arena provides substantive economic development.  A 2008 study found that there was no income growth or permanent job creation in cities that subsidized sports facilities. The “ripple effect” often used to justify public dollars for a private building is far from a guarantee.

So basically King is asking the people of Calgary to pay for the balance of the facility, without participating in the negotiations, and with no guarantee of local improvement beyond the event centre itself.

The problem with this request is that one party is negotiating with money that isn’t theirs. Ultimately, the people of Calgary elected their representatives as stewards. We have empowered them to make decisions, but most of us still have questions that require answers before an agreement is made.

For example, who gets the proceeds from naming rights, concession revenue and the big name concerts the arena will bring to town?

The common refrain from those who don’t want any tax dollars spent on a new arena is they don’t want to “buy a building for billionaires who pay millionaires.” This was a popular argument against Detroit’s (admittedly spectacular) new arena. Taxpayers shelled out $280 million dollars, or two thirds of the cost. Meanwhile, the city filed for bankruptcy just days after the deal was struck.

The owner of the Red Wings at the time was the late billionaire pizza magnate Mike Ilitch, owner of Little Caesars. Like Illich, Calgary’s owners could certainly afford to finance an event centre themselves.  However, that scenario is so unlikely, it isn’t really productive to consider it.

What might help the parties decide what’s fair is to have a look at the Flames’ financials. The team has an estimated value of $430 million, but the city is unlikely to get a more comprehensive look at the books from the CSEC.

So to recap, it seems as though Ken King wants taxpayers to underwrite at least two thirds of the arena. He doesn’t wish to share the Flames’ financials publicly, and he doesn’t want those pesky taxpayers following along with the negotiations via the media.

He might feel he’s entitled to all those concessions because of the tacit threat underlying all of the arena discussions. Without an attractive deal, the CSEC will just move the team to sunnier climes. We watched from afar as Daryl Katz took Edmonton City Council through this blackmail-like bargaining process, even going so far as touring Seattle to see if they’d offer a better deal.

This is almost a guaranteed boondoggle for Calgary City Council, and its choices aren’t enviable. Either shell out for a new arena, and take the heat for funding this squad of poorly performing millionaires, or choose not to, and be the administration that let the Flames sputter out and leave.

 

  • Bridget Brown is a Calgary-based freelance writer and marketing consultant. Prior to that, she spent 15 years as a reporter, producer and assignment editor in TV newsrooms across Canada. As a reporter at CTV Calgary, she covered the announcement and reaction to CalgaryNEXT. Her Twitter handle is @bridget_brown_
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