Calgary Flames

Exploring how the Calgary Flames’ new arena could be funded

It is no secret that the Calgary Flames are in desperate need of a new arena to play out of. The Saddledome is the oldest NHL arena in the league that has not undergone a major renovation, and it seems more likely that the team and the city opt to tear it down and build a new barn as opposed to undergoing substantial fixes to the space.

The big hurdle has been—as it seems to always be—in arena funding. Simply, who is going to pay for it? Between the cost of the land, the cost to build the building, tying in to city roadways and utilities, property taxes, and ongoing maintenance, this is a far more complex question than just to say CSEC or the City should pay.

The six other Canadian markets have all gone through the process of building arenas, and each one went through the process slightly differently. Some received lots of public funding, while others received little to none. Let’s start with the original Flames arena, then look at the other six arenas to help determine which models may make the most sense for the Flames.

The original Saddledome arrangement

The Saddledome was completed and opened in 1983 as part of Calgary’s hosting of the 1988 Olympics. The cost of the arena was split three ways between the City of Calgary, Province of Alberta, and Government of Canada, each paying around $30 million. Five million dollars came from the Olympic Organizing Committee

Expected to initially cost $60 million, the drive to get the building completed quickly combined with construction delays, especially around the unique roof designed, pushed the cost up to a total of $97.7 million. The city and province ended up paying the difference, pushing their share in the project’s cost higher than the Federal Governments.

The arena has changed names a few times, and has undergone some renovations over the years. The first was in 1994, to add more luxury boxes and premium seats. This was paid for by city council using federal infrastructure money. The team opposed a ticket surcharge to fund this improvement.

The other big improvement came after the 2013 floods which took out the event level, scoreboard, and the first eight rows of seating. This was an insurance claim, and took over 650,000 man hours to have the arena back up and running for the start of the 2013–14 season.

The now-scrapped Event Centre proposal was estimated to cost $608.5 million, and would have been funded by the city and the team on a split basis, with the team keeping the lion’s share of the revenue but agreeing to cover operations and maintenance of the facility and not have to pay municipal property taxes. CSEC would also agree to keep the Flames in Calgary and donate money to community sports and other programming in the city.

Toronto Maple Leafs

The land on which the current Scotiabank Arena sits was initially home to a postal facility owned and operated by Canada Post. It was initially purchased by the Toronto Raptors in 1993 to be their first official home.

At the same time the Leafs were looking for a new home as Maple Leaf Gardens, originally constructed in the 1930s, was getting to be too old to function. After much back and forth, bad blood, and infighting, the Raptors were bought by Maple Leaf Gardens Limited (MLGL Now MLSE), who then built the arena.

Initially expected to cost $217 million, MLGL upped the budget to $265 million and finished the project in 24 months. The Scotiabank Arena website touts that the project used no public funds in its construction, and the arena pays taxes to the province to the tune of between $2 and $3 million a year. A ticket surcharge helps cover the cost of arena maintenance on an ongoing basis.

Ottawa Senators

The Canadian Tire Centre was opened in 1996 and is owned and operated by the team (albeit as a subsidiary). Unlike any of the other major arenas in this country, the home of the Senators is located in Kanata, once a separate city and now a part of Ottawa, as opposed to in the downtown of Canada’s capital.

The arena funding structure was unique in Canadian arena funding models. The team received a six million dollar grant from the federal government and borrowed the remaining $188 million to fund the arena through a number of banks and other financial institutions. The team actually did not have enough money to pay for the highway interchange to the arena, and had to take a loan from the provincial government for that portion.

Interesting one of the lenders went into receivership in 2001 and as a result Terrace Corporation, the then owner of the team, was expected to pay back the loan, but was unable to refinance the arena debt to pull out the capital to do so. This led to Terrace going bankrupt in 2003 and to the late Eugene Melnyk purchasing the team and arena.

The team has long argued that they need to move to a new location closer to downtown Ottawa. There has been talks to move to a piece of land owned by the federal government in Lebreton Flats, and the Senators have recently won a bid to develop the land from the National Capital Commission.

Montreal Canadiens

The current owners of the Montreal Canadiens, the Molson Family, built and paid for the development of the Bell Centre which opened in 1996. The building cost $270 million to build, but due to heavy operating losses, the family sold the team and arena for major losses relative to the cost of construction.

Interestingly, the family bought back both assets in 2009 for $500 million together. This was funded privately except for a $100 million loan from the Quebec Finance Minister.

The family pays both property and business taxes to the municipality while also paying rent annually on the use of the space.

Winnipeg Jets

Newly-renamed, the Canada Life Centre was opened in 2004, a full seven years before the NHL team returned to the city in 2011. It is owned and operated by True North Sports & Entertainment, who own the Jets.

Located right in downtown Winnipeg, the arena is a public-private partnership, which saw $40 million contributed collectively by the three levels of government. The remaining $93 million came from Truth North. The municipality also offered tax breaks to the team and the province gives the team up to $4 million in VLT revenue annually. On top of all of this, the province pledge $1.5 million a year for 20 years to help the team minimize its debt on the arena.

Edmonton Oilers

One of the newest arenas in the league, Rogers Place in Edmonton was built both to house the Oilers but also to help revitalize the area now known as the Ice District.

Its funding model reflects this. Of the $613.7 million it cost to build, $145 million came from a community revitalization levy, a mechanism which allowed the city to borrow against future property tax revenue to help fund this project. A further $25 million from this levy funded the land, while $61 million funded other parts of this project including the LRT connection, community arena, and more.

The team also imposed an arena surcharge for events, which added $125 million to cover the cost of the arena. Incremental revenues such as parking and new taxes covered $81 million of the arena.

The Oilers through the Edmonton Arena Corporation added $136.48 million to cover the cost of building the arena. They also gave a million dollars for the land, and additional funding to build the Winter Garden and community arena.

Collectively, the City of Edmonton gave $312.5 million to cover the cost of the arena while the Oilers paid $166 million and then the remaining $125 million will come from the ticket surcharge.

The Edmonton Arena Corporation pays property taxes on the space while also covering the cost of operating expenses. They keep all earned revenue on events in the space, but the owner of the arena is the City of Edmonton.

Vancouver Canucks

Rogers Arena was opened in 1995, and was built for about $160 million. It was paid for in full by the owners of the team at the time, Arthur Griffiths and John McCaw. The land for the arena was purchased in 1993 for $12 million by the owners.

Originally planned to be home to both the Canucks and Vancouver Grizzlies of the NBA, but both were sold in bankruptcy in 1997. The only public funding as part of the arena were for transportation routes in planning for the 2010 Vancouver Winter Olympics by the province, fifteen years after it opened.

What makes most sense for the Flames?

It would be very easy to say that the team should bite the bullet just like the Maple Leafs, Canadiens, and Canucks did and build their own arena and pay for it themselves. The reality on the ground is that the team quite simply won’t go for it and the precedent has been set in the city for it to be some sort of public-private partnership. Call it cheap, call it fair, it is what it is.

The Oilers model probably makes the most sense for the Flames. Assuming they build the arena on the north side of Stampede Park, the city can use that as an anchor to help develop that side of the city more substantially the way they did with East Village over the last decade. This may also allow them to utilize a community revitalization levy like the Oilers did with their arena.

While the team has resisted in the past, the model should also include a ticket surcharge. While many in the city are fans, it’s unfair to split the city’s portion of the building with the entire city. As an amenity, just like a recreation center or arena, those who use it should pay a portion towards the development of the building. How the team chooses to build this into the cost of the ticket, explicitly or implicitly, it should definitely be included.

There will almost certainly also be an upcharge in parking and other services on site, which would also go towards funding the new arena.

The municipality and province should also explore providing low interest loans to the team to cover the cost of the arena as opposed to just funding the cost of the development like how Ottawa’s Canadian Tire Centre was built. This would minimize the cost of the arena to the city’s taxpayers, and would be far more economical for the team than having to spend their own capital on developing the new arena. It would also be at a very minimal interest rate, which is likely cheaper than borrowing from anywhere else on the market.

It seems unlikely that either side will walk away from this deal. The Flames know that they need a new arena and the City would like to keep the team in town. Both sides know the financial impacts of not building a new home for the Flames and should work together to make this happen. Other Canadian teams provide a welcome starting point for how the Flames could fund their new arena, but it all comes down to how both sides negotiate to develop this deal.

For Flames fans, we can all hope that the new arena produces as many magical moments as the Saddledome did. An iconic part of this city’s heritage and skyline, when the new arena does get built, its ever-present spot in our city’s skyline will not soon be forgotten.

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