How does the proposed Calgary arena deal compare to other small market deals?

Photo credit:Sergei Belski-USA TODAY Sports
Ryan Pike
10 months ago
When the initial arena deal between the City of Calgary and Calgary Sports and Entertainment Corporation came together in 2019, part of the justification for the inclusion of public funds was that it’s generally been required for these types of facilities to get built in smaller markets.
In an attempt to wrap our heads around the role of public funds in building arenas, we’ve corralled some deal info regarding NHL markets that are about as small as Calgary’s 1.5 million person metro area.

The logic

So here’s the idea behind “smaller markets need public money”: the amount of potential users of these buildings with disposable income. In larger markets, you have a larger swath of people who could potentially go to events at the facility, which in turn makes for a more compelling business case for a private entity to invest in these types of things. In smaller markets, it’s said to be tougher to recoup a private investment, and so public funds often are drawn in to get these things across the finish line.
That’s the theory behind it, at least.

Canada Life Centre

Winnipeg’s metro area is about 834,000 people.
Canada Life Centre was constructed in 2003 (opened in 2004) at a $133.5 million price tag. $40.5 million was contributed by the local ($14.5 million), provincial ($14 million) and federal government ($12 million) and the other $93 million contributed True North Sports and Entertainment. (At the time, the Manitoba Moose were the primary tenant, but the Winnipeg Jets moved there in 2011.)
That’s 30% of the total construction costs via public funds.

KeyBank Center

Buffalo’s metro area is about 1.1 million people.
KeyBank Center was constructed in 1994 (opened in 1996) at a $127.5 million price tag. $55 million was contributed between New York State, Erie County and the City of Buffalo, with the remaining $72.5 million coming from the Buffalo Sabres.
That’s about 43.1% of the building’s cost being covered by public funds.

Rogers Place

Edmonton’s metro area is about 1.4 million people.
Rogers Place was constructed in 2014 (opened in 2016) at a price tag for the base building itself of $483.5 million. Of that, $226 million was funded directly by the City of Edmonton, another $125 million was funded via a ticket surcharge (levied by the City), and the rest of the funds ($132.5 million) was identified as being from Oilers ownership, via a combination of cash and lease payments. (As noted previously, for the sake of percentages, we’re counting the ticket surcharge as a City contribution and the lease payments as an Oilers contribution, as that’s how they were identified in the City of Edmonton’s literature on the subject.)
That’s 72.6% of the base building construction costs being covered by public funds.

Canadian Tire Centre

Ottawa’s metro area is about 1.5 million people.
Canadian Tire Centre was constructed in 1994 (opened in 1996) at a $188 million building price tag. The building was funded entirely by Ottawa Senators ownership, but it was super messy and only went forward when the provincial government lent them funds to build a required highway interchange. The arena funds were borrowed, and one of the creditors went bankrupt and caused a chain reaction (because of the deal structure) that itself led to the Senators going bankrupt.
Yes, there was no public funds in the building itself. But man, the deal structure was super, super challenging, and the borrowing of funds (and the strings attached related to the related bankruptcy) really handcuffed the Senators. At the time, though, none of the nearby governments (a) had money to offer the Senators or (b) particularly wanted to help the Senators.

PNC Arena

Raleigh’s metro area is about 1.5 million people.
PNC Arena was constructed in 1997 (opened in 1999) at a $158 million price tag. The finances are a bit of a mess on this one and some of the sources are conflicting, but from what we could cobble together, $22 million came from North Carolina State University, $9 million came from the North Carolina state government, $75 million came from the Centennial Authority (a joint venture between the City of Raleigh and Wake County, funds raised via hospitality taxes in the region) and the remaining $52 million came from the Carolina Hurricanes. (The building was originally going to be build for NC State’s basketball team, but the Hartford Whalers’ relocation occurred early during the development and so the project morphed into what it is now.)
Most of the NC State portion was fund-raised, so we’ll call those “private” funds and so 48% of the funds were public.

SAP Center at San Jose

San Jose’s metro area is about 1.9 million people.
SAP Center was constructed in 1990 (opened in 1993) at a $162.5 million price tag. The San Jose Sharks covered $30 million, with the remaining $132.5 million being covered by the city via municipal bonds.
That’s 81.5% of the construction costs covered by public funds.

Bridgestone Arena

Nashville’s metro area is about 2 million people.
Bridgestone Area was constructed in 1994 (opened in 1996) at a $144 million price tag. The City of Nashville covered the entirety of construction costs via municipal bonds. (The Nashville Predators didn’t arrive until 1998.)
That’s 100% of the construction costs covered by public funds.

Our findings

The proposed new Calgary arena, in a metro area of 1.5 million people, would be 61% public funds for the base building. By percentage, among their peer group, that’s more than Raleigh, Ottawa, Winnipeg and Buffalo, and less than Nashville, San Jose and Edmonton.
We noted how Ottawa’s a bit of an outlier among the peer group, in that they were an expansion team in a small market that (a) couldn’t find any help and (b) set up a financial house of cards via their arena deal that eventually collapsed. But for every other smaller market NHL city, to either attract a team or to keep them around, some public money seems to have become the norm.

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