The Calgary Flames arena deal is dead – what happens now?
By Ryan Pike1 year ago
On Monday morning, we confirmed what many suspected: the City of Calgary and the Calgary Sports and Entertainment Corporation, the corporate parent of the Calgary Flames, were unable to reach an agreement on some current cost increases (and unknown future cost increases). They couldn’t solve all of their issues in 10 days and the deal was terminated at midnight on Dec. 31.
The arena deal, in its current form, is dead. Long live the arena deal.
So what happens now?
So there’s two things we think we know right now:
- The Flames will not be playing in a new building in 2024-25.
- The Flames will be staying in the Saddledome for the foreseeable future.
If they’re staying in the ‘Dome for awhile, it requires some repairs, per a CBC report from a little while ago:
A building condition assessment report from December 2018 obtained by CBC News under Alberta’s Freedom of Information legislation concluded the Saddledome needs $48.7 million in repair work over the coming decade.“The recommendations in [this] report are provided based on keeping the building in an acceptable standard for the people using the facility,” states Entuitive, the engineering consulting firm which wrote the report for the City of Calgary.The list of repairs is extensive.
The estimates in the CBC report don’t include roof repairs, because you need to physically get into the roof structure to figure out how extensive the damage has been over the years. A preliminary estimate was that the building’s non-roof structures need around $1.4 million in repairs by 2024. The longer the Flames intend to stay in that barn, the higher that figure will grow.
The Flames operate the Saddledome right now and the City owns it. So here’s what probably happens next: the two sides will sit down and come up with a plan to determine how extensive the work required for the Saddledome’s extended lifespan will really be. (And how much it will cost.) And then they need to discuss who pays how much of the expected costs.
From an outside perspective, the aspect of the deal that would make me the most uncomfortable was CSEC being on the hook for untold cost escalations on the back end of this project, in addition to likely sinking a ton of money to get the building done on time for the 2024-25 season. If we’re spitballing here, my thought is “Hey, it makes sense to revisit this deal in a year or two when the supply chain is more stable and costs less crazy.”
But how much will prices come back down to Earth, and how long will that take? And how much will it cost to maintain the Saddledome until the building opens in a revised timeline? (If they punt on this deal for a year or two, the new building might not be open until 2026 or 2027.) Will the costs of keeping the Saddledome viable off-set the construction costs savings?
(For what it’s worth, the city manager says the deal won’t be “resurrected.”)
The two sides not only had the financial framework of a mutually beneficially deal, but they also had a lot of the nuts and bolts figured out, too. The City got a shiny new anchor piece for the entertainment and cultural district (a key strategic fit), and the Flames got a new building that drastically improved their economic fundamentals in this market, and both sides got a commitment from the Flames to be in town for another 35 seasons. It met the needs of both sides.
Unfortunately, a once in a century pandemic mucked it all up, and neither side is to blame for being hesitant to sink more resources into a pricey project right now. But if they can figure out what the alternative future looks like – how exactly do the Flames operate in the Saddledome for the remainder of their lease, for example – the next steps will become much, much clearer.
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