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Would the City work with a private arena development partner?

The City of Calgary and the Calgary Flames are at an impasse. By all accounts, the two sides haven’t sat down to have a discussion about building a new arena since late July and all indications are they probably won’t chat for awhile after a particularly contentious municipal election campaign.

If you’re a pessimistic type, like me, you might be thinking that the Flames’ mindset is that the 2026 Olympic bidding process relies upon a new building for operational efficiencies. If the City wants the Olympics, playing ball on a new arena with the Flames might be in their best interests.

However, the Flames aren’t the only game in town when it comes to partners for a new building – something made apparent by the financial power behind some of the National Hockey League’s most recent arena deals.

Two potential partners

Right now, there are two prominent private backers of arenas: the Anschutz Entertainment Group (AEG) and the Oak View Group.

AEG is a familiar name. Headed by billionaire Philip Anschutz, AEG has its hands in a lot of different things. They own the Los Angeles Kings, the AHL’s Ontario Reign, part of the ECHL’s Cincinnati Cyclones, the DEL’s Eisbaren Berlin and part of the SHL’s Djurgardens IF, the team that’s run by Flames great Hakan Loob.

In terms of arenas, AEG is a trailblazer. Arguably their biggest success story is the development of LA Live, a partnership between them and the City of Los Angeles, but they’ve been involved in both arena development and operation for decades. They own the Staples Center and are partners in T-Mobile Arena. They operate three other NHL arenas: Barclays Center in Brooklyn, Gila River Arena in Glendale, and PPG Paints Arena in Pittsburgh.

Oak View Group is a more recent entrant, but arguably a more interesting one. Co-founded by Tim Leiweke, formerly the CEO of AEG, Oak View has been very active in recent years. They brokered the deal in Seattle for the Key Arena redevelopment, as well as are partners in the Belmont Park arena deal in Queens that will see the New York Islanders in a new home.

A potential deal?

Would the City of Calgary reach out to a private partner to make an arena deal? Sure. If the arena is that important to the Victoria Park redevelopment, they’ll make it happen. But would a private partner invest? Well, yeah, probably.

If you look back to the September back-and-forth between the Flames and the City, here was the gist of the City’s arena proposal:

  • The arena costs $555 million
  • $130 million cash comes from the City via the Infrastructure Calgary funding pot (plus donation of land valued at $30 million, as well as a $25 million contribution via demolition of the Saddledome)
  • $185 million cash comes from a ticket tax, with the City willing to front the money because of their favourable credit rating (e.g., they’d get a better interest rate than the Flames would)
  • $185 million cash comes from the Flames

In other words: for a $185 million cash outlay (plus paying an unspecified amount of rent), the Flames get to operate a shiny new downtown hockey arena. If you were a private company with an extensive entertainment venue portfolio in the United States, this sounds like a fantastic opportunity to gain a foothold in Canada. If they can find some equity partners, that sounds like a fantastic hypothetical opportunity for a group like AEG or Oak View.

A best-case arrangement?

The logic behind the Flames having their lease renegotiated in 1994 and them becoming the operator of the Saddledome was that they were the ones best suited to do it – certainly moreso than the City of Calgary. But that’s probably not the case anymore, with entities such as AEG or Oak View in the marketplace.

If anything, perhaps adding AEG or Oak View as an intermediary between the City and the Flames – whose relationship could charitably be described as “poor” – is a good thing. The Flames would have a deal for dates in the building with the operating entity rather than a direct lease with the City, and the details would probably be easier to iron out than with the City. Rather than hammering out a contentious deal with a partner where there’s a ton of baggage in the relationship, the Flames and the City would get a fresh start and everybody would end up getting what they want.

It’s hard to say how likely this scenario is, but it’s definitely a possibility given the revenue that a downtown Calgary arena could generate for whoever operates it.

  • nikkomsgb

    It’s a great idea with a big flaw.

    The Flames obviously want a new arena, but it seems they equally valued a real estate deal surrounding the arena. Bettman confirmed as much in his interview with Ron MacLean at the ASG. When CalgaryNext was shot down and the city suggested Vic Park, this deal immediately became extremely unlikely.

    The existing East Village CRL encompasses that land already, the extension to it is quite limited and the Flames would have to fight with not only the city on the vision for that area, but the Stampede Board who they have been frustrated with for decades.

    I would contend that the only thing that makes a deal happen is a lot of time to settle all these babies down, and federal money for an Olympic bid/games (which arguably would be worse for the city than just building an arena on it’s own).

    Sincerely one pissed season ticket holder that can’t wait for the next public sit-down with Ken King.

    • Styxx

      An interesting article Ryan but I don’t see it. You make a lot of assumptions – that the city would provide the same deal to a large US conglomerate with no ties to the community, that the US conglomerate would be okay with just an arena and not the surrounding real estate development opportunity (aka like the Flames, Oilers, and Kings) etc.

      Also adding a 3rd entrant into the mix who have a profit focus would squeeze the already micro-thin economics of operating an arena.

      • Purple Hazze

        Actually adding a 3rd entrant into the mix wouldn’t squeeze profit margins, it would remove the Flames from the equation altogether and they would be reduced to being nothing but a tenant in the building.

        In regards to your first point of the why the city would provide the same deal to a large US conglomerate with no ties to the community. That’s simple, because under the deal offered by the city, that group would have to offer a return to the city on its capital invested whereas the Flames ask from the city is put up the cash but we get all the profits.

    • Parallex

      … so why don’t they develop Vic park? The leaked development plans from CMLC show desired development in the area (hotels, mixed use res). Fact is the Flames didn’t offer to do any of that.

      • Styxx

        In fact Parallex they specifically asked for the rights to do just that, essentially to develop the area around an entertainment district around the stadium just like LA Live and Edmonton Ice districts, which would include residential towers and business complexes.

  • Seattle_Flames

    “Pessimistic type, like me”, huh? Wha?
    Pike, you & your nenshi propaganda are the furthest thing from pessimistic. You are the one who said don’t be surprised if a new arena deal is announced by March. You continually write articles based on the assurance that the Flames aren’t going anywhere & based on what? Good attendance in the sad old dome. This deal will get done similar to something up north or they’ll move. These owners want something similar to what Katz got and they don’t want to be crowbarred into Victoria Park. Too many cooks in that kitchen. They will make nenshi look like the lying fool he is by not taking part in his vision, the same way he wanted no part in the arena/stadium/ fieldhouse vision.

    • BringtheFire 2.0

      Thanks, Seattle. I was thinking the same thing and was actually preparing an email asking Ryan if he was still optimistic about a deal since the one he predicted by the All Star break didn’t happen, if maybe he could write another article.

      Maybe next time he goes back to optimist?

    • Purple Hazze

      The west village arena/stadium/ fieldhouse vision is non-starter due to the whole environmental remediation problem. With a clean up time line of anywhere between 5 – 10 years before construction can even begin at the site will not work for the Flames, not to mention the fact of who will actually pay for the cleanup efforts.

      • PrairieStew

        Why would it take 5-10 years to remediate those lands? Where did you get that ? The Creosote plant hasn’t been there for years. What’s involved – some soil removal some subterreanean impermeable barriers installed, and put some new soil back.

    • BurningSensation

      “You continually write articles based on the assurance that the Flames aren’t going anywhere & based on what?“

      They aren’t going anywhere because:

      A. They are already in one of the best places a team could be. A million plus people, rabid fan base, and no other major sports competition.

      B. There is nowhere else to go. Quebec? Please. Anybody who thinks you can make more $ in Quebec City than in Calgary is dreaming in technicolor.

      “These owners want something similar to what Katz got and they don’t want to be crowbarred into Victoria Park.”

      They simply aren’t going to get anything like the deal Katz did. Katz was able to bully a legislature panicked by a possible move to Seattle (or Vegas), and backed by moderate public support. Seattle is already getting a team, so that is a dead threat, and Calgary voters made it clear they backed the City’s mayor and legislature by re-electing them.

      Time for Flames billionaire owners to pony up some cash and build themselves an arena without soaking the taxpayers to do it.

  • Justthateasy

    While they’re at it why not make it Olympic size with movable bottom of five rows so that they can play on little ice whenever they want.
    If you watched Canada-Swiss hockey today you will see that the big ice surface allows for a much better game with everything that the small ice offers plus plus plus.

  • class1div1

    I can’t see the owners entertaining this idea,Why wouldn’t they just sell the team to one of these businessman.I’d bet they are talking with the NHL regarding all options that don’t include Nenshi.All 3 levels of Govt are socialist’s that have driven off investment in Alberta.Bad for everybody.

    • Parallex

      So all three levels of government are “socialist” because refusing to spend taxpayer money on a deal that will cost the city hundreds of millions of unredeemed dollars is the “socialist” thing to do?

  • Stu Cazz

    Mr Pyke…your leadersless mayor is already on record as saying if Calgary bids for the Olympics a new arena is not required and the primary and gold medal games will be played in Edmonton….

      • Stu Cazz

        Parallex…you obviously missed the interview…rather than defend the socialist governments why don’t you check the facts both about what Nenshi said and the inability of these governments to embrace and work with private business. Breaking news…. that does not mean the tax payer pays the bills…that’s what you socialists have dreamed up.

        • BurningSensation

          You guys make me laugh
          Capitalism: the owners buy the land and build the arena themselves, keep all the revenue, and pay taxes

          Socialism: the city donates the land, keeps none of the revenue, and collects no taxes

          Remind me again which position is closer to the Flames owners? Hint, it’s not Capitalism

          • Stu Cazz

            I see you socialists are good at developing your own definitions…meanwhile the mayors of Edmonton, Regina, Winnipeg, Hamilton etc etc all got it done….hmmm….

          • class1div1

            For sure,but i will add the negative for both sides and why i think it’s a very difficult situation

            All 3 levels of govt have failed to attract new business investment ,specifically to Alberta.They are trying to phase out our resource based economy and replace it with the Globalist, AI,gender friendly Identity politics complete with a Marxist socialist platform.So far ,none of it has attracted any new investment,jobs or got people spending money.It has been nothing .but Fail.

            The Capitalist owner’s are acting like capitalist owners investing in a small market.Paying for there own Arena in the current political and economical climate is probably not a sound financial plan.They would prefer the socialist’s kick in for half the cost’s.They have been told to F k off and they taken it to heart.

            Can’t see a solution to this one.Neither party is going to give up what it would take to get this done. Sad ,I love this team.

          • Styxx

            OR
            Socialism: force private interests to pay 100% for a piece of community infrastructure ($185 cash; $185 tickets your activity generates; $185 loan from city repayable in full; plus pay annual city taxes; requires annual block booking of arena during Stampede). City gets a civic infrastructure, puts in $0, has private interests assume 100% of risk; then profits from arena as centrepiece to develop rest of land around it to develop massive tax revenue streams while private interest have no upside profit potential and high downside risk.

            So as usual…socialist governments love masquerading as capitalists…which economic history has proven never works. One of the main reasons why Saskatchewan’s development was held back for 30 years ….

          • Stu Cazz

            I don’t have the link..it was an interview in response to the IOC confirming the Saddledome was acceptable for the Olympics. Rather than Nenshi say that the Olympics are an opportunity to build new he confirmed the approval of the IOC and reiterated that the games can be shared and the primary games can be played “in the new arena just north of us”…typical Nenshi arrogant fashion!

          • Styxx

            Parallex…it was in the news. While the IOC wouldn’t “require” a new arena as part of a winning Calgary bid (as they are now desperate to get a non-US North American bid for 2026 and Calgary remains last city still interested) …it was strongly suggested that Red Deer and Edmonton would host events, including hockey (given the poor Saddledome venue)

  • buts

    While this arena issue gets tossed around our city has an old arena, super old football stadium and no field house. Buts most of all it has creosote leaking into the bow river. Hey Notley I wonder what the bc tree huggers would do about that. I don’t care how it gets done buts I think calgarynext with a lot of tweaking is a good idea. Maybe AEG or Oakview could take on the Next project with minimal or no tax to the citizenship.

      • Honkydonk

        I really shouldn’t say as it’s currently being hashed out but it is a fact. Again I will emphasis you ain’t gonna like the location.

        Furthermore additional intel will shock you if you knew the truth versus media and mayor portrayal.

        Example

        – Nenshi never ever attended a meeting directly with the flames to discuss or negotiate any of the project options. Yet the mayor sure had a lot to say in front of the cameras

        – another is that no one in the media covered the truth about why Bettman actually came to Calgary last year. It was because flames ownership requested for future consideration the approval of possible relocation to allow them to seek offers as an alternative although they have yet to explore it.

      • Honkydonk

        I will further add just for some more intrigue.

        All of the flames owners except for one voted for selling. It is that one owner you all like to nag on for living in London who said that is a non starter ever

  • loudogYYC

    I’m sure arena operators would listen to a proposal from of a city of over a million, but like any private business of that size they’ll be looking for incentives to put their millions to work here. Sound familiar??

    I think Nenshi has too much pride to be pushed around by large corporations (except the IOC for some reason) so I doubt he’d be more welcoming to an outside group than he’s already shown to not be to the Flames.

  • Greg

    What I don’t understand is, unless the Flames are on board with any 3rd party proposal, why would an independent builder/operator want to get involved? Like even if you can construct and own a $550M building for only $185M, where do you ever recover that cost without an anchor tenant paying rent and booking 40+ events a year? And that’s disregarding the other $185M in ticket taxes you wouldn’t be recovering without those events either.

    Not a rhetorical question at all, I really don’t understand the economics of how an independent arena operator functions without also owning the major tenant. Can anyone explain?

      • loudogYYC

        Free building just off of Sarcee Trail can only mean the Tsuu T’ina lannd development along Glenmore/Sarcee. The whole area is supposed to be a shopping and entertainment district so the arena would basically pay for itself with the tax-free revenue generated by surrounding businesses.
        It’s great on the money side but it’s at least 10kms away from mass transit and the city would collect zero revenue from the whole thing.

        Sounds cool and all except it would likely be a Kanata/Glendale setup but with inner city traffic to boot.

      • buts

        So contradictory that a possible group would build at no tax payer expense yet people say it has to be downtown…. where it would be at tax payer expense. You can’t have both ….unless the flames owners build on there own dime….then they can pick the location they want. If a group built a private arena the flames owners would probably sell to them.. Ladies and gentlemen your Tsu Tina flames!