Let It Burn

As you may have heard over the last couple of days, the green-lit Calgary arena project has thrown itself off the rails after the group representing the Flames and all its associated ventures decided that the rising costs in building an arena should be split with the city of Calgary after the city made it very clear that they had a finite budget for this project. If that last sentence made your head spin, you might live in Calgary where residents are furious that the Calgary Sports and Entertainment Corporation (CSEC) has all but killed their own deal with the city of Calgary after new Calgary mayor Jyoti Gondek informed the CSEC that the costs for building the arena had gone up.

I'm not dancing on the grave of this deal just yet, but the fact that the city of Calgary told the CSEC to pony up more dough to cover the rising costs at which the CSEC balked only reinforces the idea that public money should never be used to fund arenas and stadiums for private professional sports franchises. Let's dig into this calamity because this is a case of billionaires being cheap when it comes to wanting more for less.

On Wednesday, John Bean, President of CSEC, made the announcement that there "wasn't a path forward" when it came to the new slate of $19-million costs that the city of Calgary identified when it came to building roads and sidewalks and in remediation for the proposed arena site. What should be made clear is that the climate-change costs that were bundled into the $19-million price tag are entirely what remediation is. It's actually defined as "the action of remedying something, in particular of reversing or stopping environmental damage".

According to CTV Calgary,

"Gondek adds that the climate resilience expectations of the project — the renewable and low carbon energy study requirement — were laid out in December 2020, months before the arrival of the current council in October. She says the CSEC knew of this requirement, as well as the need for roads and sidewalks, and there were several conversations in the year that followed centred on the energy efficiency and climate resiliency of the project."

As Mayor Gondek makes clear, these provisions were made by the previous council and mayor who did much of the negotiating on this deal with CSEC. When she presented the bill for these items to CSEC, it sounds as though they were less than receptive with regards to the actual figure of $19 million.

Bean told CTV that "the CSEC was 'awfully close' and there was a deal to be had, but they couldn't get it 'across the line'" which is a peculiar way to describe costs that were bound to emerge since they were forecasted one year ago. While the CSEC said that it was willing to pay for cost overruns in the construction of the arena, the increase of $16 million over the $650-million price tag forced the CSEC to reconsider despite the city agreeing "to pay roughly $6.4 million of the $16 million to address roadways and climate mitigation".

If you're doing the math, the CSEC killed the arena deal over $9.7 million - roughly what Matthew Tkachuk's next contract will be worth annually after this season. The problem is that the cost of the remediation won't get any cheaper if the CSEC thinks it can play hardball with the city when it comes to splitting these costs. As we've seen in other arena and stadium deals, the costs to be environmentally-friendly both in the cleanup and the construction can swing wildly depending on each city's situation.

In saying that, I present to you the case of Tempe, Arizona and the Arizona Coyotes. As you may recall, the Coyotes are in all sorts of arena trouble this year and beyond, so they've proposed an idea to build an arena in Tempe that they would call home. Tempe has looked over the plans for the arena and the land where this arena would need to be built, and they tabbed the cost of remediation back in June at $70 million.

A large part of this cost is because the area where the arena is projected to be built is a former landfill. There are all sorts of environmental issues that can arise from digging up landfill items, so the cost of putting an arena in that very location in Tempe is expensive. The clean-up and regulations for clean soil, clean water, and a host of other environmental issues are always expensive because disposing of things in an environmentally-friendly way is more expensive than just burying it in the sand.

The Phoenix Business Journal, linked above, went and found experts on the remediation process when it comes to building new arenas and stadiums, and the financial forecasts weren't optimistic.

"Tim Kellison, a professor at Georgia State University who concentrates on sport in the urban environment, said going over budget is 'inevitable' for this kind of project. He cited examples including Tropicana Field, which nearly tripled in land costs compared to its original estimate, according to a 1990 article in the Tampa Bay Times.

"'What tends to occur is an underestimation of just how badly the land is contaminated,' Kellison said, 'and as a result, how much it will cost to actually do a good job cleaning up the site in a way that conforms with numerous environmental regulations.'"

Again, I struggle with CSEC's claim of being prepared for additional costs when they couldn't come up with $10 million to push this project forward. They knew about the costs associated with moving forward. There's even a quote about the CalgaryNEXT project in the same August 3, 2021 Phoenix Business Journal article that reads, "... the proposed CalgaryNEXT development was forecasted in 2016 to require between $85 million and $103 million in Canadian dollars ($68 million and $83 million in U.S. dollars), putting it right in the neighborhood of the Tempe site."

I keep linking these arena construction articles back to the John Oliver rant I dissected in 2015. On top of that, there were all sorts of new details that came to light in 2019 as to how much this arena could end up costing the city of Calgary once everything was done, and it would appear no one recalls this information as Calgary could lose in this deal in a big way. Don't forget that, in 2019, this arena was originally "projected to cost between $550 million and $600 million, according to estimates provided by CMLC", and we've already seen those costs go up as the new total was sitting at $650 million.

I don't want to be the one to break this news to them, but the CSEC probably should have been prepared for more cost increases too.

I've said it before and I'll say it again right here and now: if billionaires want million-dollar toys, then billionaires had better be prepared for millions of dollars in maintenance. Otherwise, stop buying things you're not willing to maintain, and stop begging for handouts when you want that fancy, shiny new toy. The fact that you got more than a quarter of a billion dollars out of the city of Calgary already means that's $250 million of available money you have to spend on other things. And if costs go up, that's $250 million of contingency money.

You won't see me shed one tear over the CSEC walking away from the very deal they proposed, but aren't willing to finance when higher costs emerge. If they truly walk away from this deal, the next one they seek starts not where this one died, but at zero dollars of support from the city of Calgary. Times have changed, people are struggling, and that $250 million can be used in a number of ways to make the lives of the citizens of Calgary better. While there's a tab for $10 million needing to be paid if this deal is moving forward, one shouldn't take for granted every other dollar that was already covered by public funds in the deal that could have been used for a myriad of other civic purposes.

This may be one burned bridge that won't be rebuilt any time soon.

Until next time, keep your sticks on the ice!