Why Not Fund It Entirely?

There had been quiet whispers coming out of Calgary that the city and the owners of the Calgary Flames were nearing a deal for a new arena to house the NHL team. If you're a regular here at HBIC, you probably aware that I've written a number of articles about the stupidity by the city of Calgary when it comes to spending public funds on a new arena for a billionaire, but you're going to get another one today because it seems the financials have been worked out between all the parties and there will be a new arena in Calgary at some point in the future.

Aside from all the links in the preceding paragraph, there seems to be a lot of people who are quite happy about this development, and I have to ask why they'd feel that way when the Calgary Herald's Brodie Thomas and Jason Herring identified that the "$1.22-billion deal to replace the Saddledome" sees the city of Calgary spending "$537.5 million, representing nearly the entire cost of the deal struck in 2019. It is covering 44 per cent of the new deal."

One has to wonder what caused the costs to rise from $650 million in December 2022 to $1.22 billion in April 2023 - in five months! - when it comes to this deal, and why Calgary Mayor Jyoti Gondek, who was unwilling to spend $19 million on building roads and sidewalks and in remediation for the proposed arena site, suddenly had a turn of heart in pledging $537.5 million of Calgary taxpayers' money to help the Flames get their arena - an amount that is nearly double of the $275 million pledged by former Mayor Naheed Nenshi.

Perhaps what should worry Calgarians even more is that the $1.22 billion price tag is the cost today for the new Calgary event center, but Gondek was quick to remind everyone at the announcement that "[t]here are no preliminary designs or timelines for construction at the early stage of the deal". If there are no timelines or details on what's being built outside of an arena for the Flames, what exactly did the city agree to fund? And how did they arrive at the $1.22-billion figure? This entire deal seems insane at this point.

With the city coughing up $537.5 million from their fiscal stability reserve for the arena - something that the reserve was NOT designed to cover - the remaining $700 million would come from the Calgary Flames and the Alberta provincial government. According to the details, the Flames are spending "$356 million for the deal, with much of that coming yearly over the next 35 years" while the Alberta government will spend "$330 million toward the project" with its money covering the costs of "infrastructure and land costs, as well as demolition of the Saddledome".

In other words, two levels of government are spending monies both irresponsibly and with zero chance of return while the Flames get out of their 50/50 split for the costs of a new arena. Let's not forget that the Flames had already pledged to invest $75 million over 35 years to local sports charities rather than paying the city rent for use of the new arena in the original deal, so their $356-million bill is more like $281 million with more than $2 million in charitable tax write-offs annually. Again, I have to ask why is so much public money being used to fund an arena to make the owners of the Flames richer than they already are?

Danielle Smith, Premier of Alberta, was also quick to point out at the announcement today that the $330 million she pledged was dependent on her UCP party being re-elected in the upcoming provincial election. As written by Thomas and Herring, "Smith presented that as a possible 'hurdle' in getting the deal across the finish line."

"That’s why on May 29, I'm hoping Calgarians give our UCP government a clear mandate to proceed with this arena deal," she proclaimed in a desperate attempt to win Calgarian support for her party. As of last week, the Calgary Herald reported that an "Angus Reid poll, conducted from March 6 to 13, found that among Calgarians, 46 per cent of voters plan to cast their ballot for the UCP, while the NDP have 43 per cent support — a margin close enough to be considered a statistical tie."

The vote will happen on May 29, and it appears that Smith is using an oft-played card from conservative leaders - spend! Spend! SPEND! - to try and sway voters in Calgary, specifically in the 18-34 years-of-age demographic. Perhaps we need a little review of Smith's politics because she doesn't seem to have any issue spending money to gain votes when she's in charge. When she wasn't Premier, though, things weren't as rosy as Smith, leader of the opposition Wildrose Party in 2012, stated to reporters, "We would not provide funding to a new arena in Edmonton," adding she would be open to "working with the teams to develop a branded lottery."

Does anyone in politics in Alberta have a clue what they're doing?

Let's review this deal as it was announced in point form:

• The Flames and the city of Calgary agreed to a $1.22-billion deal for a new arena and events center that has neither a timeline nor a construction plan. Where this figure came from is hard to determine, but it's nearly double the $650 million price tag on the arena deal back in December 2022.
• The city of Calgary agreed to pay $537.5 million of this made-up figure of $1.22 billion which is precisely 195% of the $275-million amount at which former Mayor Naheed Nenshi said the city would cap its maximum investment. This $537.5-million figure is just $262.5 million more than what Nenshi had pledged, and it's considerably more than the $19-million cost overrun in infrastructure and remediation that Gondek balked at paying in the original deal.
• The Calgary Flames, originally on the hook for 50/50 in costs in the previous deal, pledged $356 million in this new deal - LESS THAN THE AMOUNT they were supposed to pay in the $650-million deal that fell through. The billionaires are actually paying a smaller percentage than they were before when they'll have three teams - the NHL's Flames, the AHL's Wranglers, and the WHL's Hitmen - playing in the arena they'll be using almost exclusively and benefitting from entirely.
• The province of Alberta, who committed nothing in the previous deal, will spend $330 million in the new deal. I know people in Edmonton, Fort McMurray, Medicine Hat, and Lloydminster will grow to appreciate their investment in Calgary's new arena they may never see or use.
• Danielle Smith, currently in charge at the provincial level in Alberta, has decided to toss $330 million at Calgary as a political football in the hopes of winning votes when, in 2012, she was completely against using provincial monies for Edmonton's new arena.

If this entire deal sounds idiotic, you and I are thinking the same thing. Personally, I'd be voting against Danielle Smith just to scuttle this deal and her $330-million commitment because I firmly believe that there should be no public monies used to build arenas, and having both the city double their investment while the province jumps in with both feet is so far past stupid that it's bordering on ludicrous. This might be the stupidest deal in all of sports.

$867.5 million of public money will be used to build an arena and events complex in which the Flames' owners will largely benefit. N. Murray Edwards, chairman of the Flames, is worth $2.6 billion and is the 32nd wealthiest Canadian, and he and his partners will only pay $356 million for their shiny new arena in which three teams will play while the people of Calgary and Alberta pour nearly a billion dollars into this project. I don't care what your feelings are towards the Flames because this deal is only a deal for the owners of the Calgary Flames. As stated many times on this blog, the return-on-investment that cities see after dumping public monies into stadium deals are never realized.

With the ink still fresh on the deal tonight, it seems that the fate of $537.5 million of monies earmarked as a "contingency fund for operational emergencies, urgent or contingency capital expenditures, and to compensate for unplanned revenue reductions with significant financial impacts" along with $330 million contributed to Alberta's coffers from people across the province will be decided by voters on May 29. The chances of my vote ever landing in a UCP box for Danielle Smith just went from laughable to not-on-your-life, but I don't live in Alberta.

Kill this deal by voting Smith out of office, Albertans. And when the time comes for Gondek's mayoral campaign, vote her out with the same vitriol, Calgarians. This deal is one of the worst I've ever seen since I started writing this blog, and the nearly-$900 million your elected leaders have chosen to spend on this project will never be recouped in your lifetime, your kids' lifetimes, or their kids' lifetimes. Fiscal responsibility simply isn't en vogue, it seems.

For a province that has cut teaching positions, plunged healthcare into a two-tiered system, and allowed infrastructure projects to either pass by or remain crumbling, you have a chance to use your vote to send a clear message to the elected leaders in Calgary and in Alberta. If nothing else, you have a chance to save nearly a billion dollars in tax monies from being spent on a billionaire's new toy, so it's time to call "BULLSH*T" and do what's right in this case.

Even if it seems unpopular.

Until next time, keep your sticks on the ice!