For Calgary’s brand-new arena deal, the devil will be in the details

In December 2021, the original deal to construct a new home for the Calgary Flames went up in smoke with little fanfare as a budget deadline came and went. On Tuesday night, a new deal was announced in a windy parking lot during a press conference with much fanfare and ballyhoo.

The City of Calgary, Province of Alberta, Calgary Sports and Entertainment Corporation and Calgary Stampede have reached a deal in principle for a $1.223 billion project. Let’s dive into the details, shall we?

The City of Calgary has committed $537.3 million, the Flames $356 million*, and the province $330 million.

The Flames’ contribution is over 35 years – $40 million up-front and then $17 million per year (and escalating by 1% per year) – and the City’s cited present value of the funds is $356 million. Presumably either the City or the province would need to front the Flames’ contribution and then the team’s repayment would off-set that over time.

The City’s contribution is said to be from the leftover cash from the previous incarnation of the deal, as well as funds from the City’s Fiscal Stability Reserve and Budget Savings Account Merged Reserve. The source of the provincial funds wasn’t detailed.

(In the previous deal, the City was spending $287.5 million on direct construction costs, with the remainder covered by CSEC. As of the July 2021 budget update, CSEC’s commitments were estimated at $321 million. The City was also on the hook for another $40 million in associated costs, such as transportation upgrades, land swaps and Saddledome demolition.)

A lot of stuff, probably a response from the deal-makers regarding things that weren’t included (for budgetary or other reasons) in the 2019 deal.

Let’s break things down!

An arena is pretty straight-forward. The high-level 2019 estimate was $550 million, and prices had escalated to $634 million by the time the prior deal evaporated. An escalation of the budget to $800 million might be enough to build what they scoped out in the first place, or something pretty similar. The City and the Flames will contribute funding to this.

The attached parking structure is… a parkade attached to the facility. The City and the Flames will contribute to this.

There wasn’t much detail provided regarding the enclosed plaza, but a reference in the media packet to “indoor gathering spaces” makes us think it’s something similar to the enclosed plaza that was built within Detroit’s Little Caesars Arena. The City and the Flames will contribute to this.

The community rink is a 1,000 seat ice sheet, designed to be a practice facility for the Flames (and other CSEC teams) and available for local groups to rent, similar to the rink attached to Rogers Place in Edmonton. All three funding bodies will contribute to this – 25% apiece from the City and Flames, 50% from the province.

Transportation improvements, infrastructure and other district benefits is where the majority of the provincial funds come in. This includes a new underpass below the CP rail right-of-way at 6th Street SE, outdoor gathering spaces, public realm improvements on 5th Street, 15th Avenue, 17th Avenue and 25th Avenue. (This wasn’t well-articulated within the media packet, but 5th Street will be moved to create a new 5A Street on the east side of the arena parcel. 15th Avenue is a block south of the arena parcel. 17th Avenue likely refers to the work being done to bring that road into Stampede Park. 25th Avenue likely refers to potential upgrades to the south entrance to Stampede Park on the south side of the Elbow River.) This may also include demolition costs for the Saddledome, though that wasn’t explicitly stated in the media packet.

(An observation: a lot of these expenditures appear to be a lot of things that the City wanted to tackle as part of the Rivers District Master plan anyway. Heck, the 17th Avenue work is already happening to some extent.)

Other costs aren’t particularly well-defined, so it’s tough to say what’s in here and who’s paying for it.

(The Stampede is involved primarily via a land swap.)

They have an agreement in principle. So now, it goes to the lawyers, who will paper this thing in coordination with the Flames, City, province and the Stampede. Last time they announced a deal, things were announced in July 2019 and the contracts were approved by December 2019. This project is larger and more complex than the previous incarnation, so thinking that contracts could take until the end of the summer (and potentially spill over into the fall) is probably a reasonable expectation.

After that, then it’s design, budgeting, hiring contractors and actually getting shovels in the ground. It seems probable that we could have shovels in the ground sometime in mid-to-late 2024, but a lot of that depends on a lot of factors. Does the design change substantially? (If so, they have to redo the permitting process.) Do costs escalate at all when they go from a high-level concept into an actual design, as we saw happen last time?

Do we see a government change-over after May’s election, and would an NDP government honour this commitment?

Quite simply, there’s a lot we don’t know, and probably won’t know until contracts are all hammered out for this thing and it goes back in front of council for final approval.

For most NHL arenas, construction takes about three full years before the building is ready to host events. If things go especially quickly, maybe the arena could be ready for the 2027-28 season. The 2028-29 season might be a more realistic target. But again: it’s incredibly early, and there’s a lot we don’t know and won’t know for awhile.

This is the question we heard the most on Tuesday. The short answer is “it depends.”

The previous arena deal was… a deal to build a single building. This one is more ambitious, aiming to fast-track the build-out of the entire Stampede Park area, and so a lot more things are bundled into it. It’s a big swing. But it’s hard to really say how good the deal is until the details emerge as the related contracts are finalized.

We’re seeing about $342.8 million of present value cash being spent by the Flames on an arena, parkade and enclosed plaza that’ll cost around $845 million (~41%), and they’re putting another $13.2 million towards the community rink (25%). The City is covering about $502.2 million of the arena/parkade/enclosed plaza (59%) and $13.2 million (25%) of the community rink. Much of the provincial contribution is for transportation and public realm upgrades, at least based on the information provided as the press conference.

It’s a lot of public dough to lay out. Yes, it’ll help build out the district, and quickly. And yes, it’ll help to take other leisure spending from elsewhere and redirect it to the downtown area. But until we see the exact mechanics of how things will work and the various bells and whistles involved for the various parties, it’s difficult to trumpet this agreement (in principle) as a success or otherwise.