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.