Takeaways from the city’s arena contracts

4 years ago

On Monday night, the City of Calgary quietly published the many, many pages of contracts that papered the arena deal between the city, the Calgary Stampede and the Calgary Flames. We’ve dug through the documents and have a few takeaways.

Breakdowns elsewhere

Our pals at the CBC and Postmedia have done their own detailed breakdowns of the documents. Check out the CBC’s here (by Drew Anderson) and Postmedia’s here (by Madeline Smith and Meghan Potkins).

Via Postmedia, one of the more interesting pieces of intel dug up is regarding insurance (given that Stampede Park flooded in 2013):

The terms see Calgary Sports and Entertainment Corp. pay for the $550-million building’s insurance premiums, but they’re responsible only for the amount they would pay if the arena wasn’t on a flood plain. The city is on the hook for the difference.

Timelines

The contracts provided a bit of clarity in terms of a few key dates.

120 days following the effective date of the agreements (Dec. 5, 2019), the Calgary Municipal Land Corporation will make a recommendation to the project’s steering committee on a project architect. In other words, we’ll know who’s running the show by early April.

The current date for the commencement of the “pre-construction phase” is July 31, 2020 and the construction phase is slated to begin on July 31, 2021. Both dates can be moved by mutual agreement of the city and the Flames, but those are the dates to bear in mind. (“Pre-construction” is site prep and detailed design work, among other things.)

The Saddledome is slated for demolition “as soon as is reasonably practical” following turnover of the new arena to the Flames. But there’s a unique provision in the deal that makes a lot of sense (via Postmedia): “The Flames have retained the right to approve any programming at the Saddledome that could be considered to be in competition with programming offered at the new arena, according to the contract.”

(The milestone dates for the construction phase itself aren’t defined in the documents, and will be hammered out once an architect is in place.)

Building size and comparables

The lot for the arena is approximately 6.9 acres in size. The primary arena facility is slated to be around 18,000 seats, with a maximum potential capacity of 19,000 seats.

The secondary (practice) arena will only be constructed if it won’t cause the project to go over the $550 million budget. If the Flames insist on it being built, it’ll be done (but expenses will be split 50/50 until the point where the city has paid its maximum $275 million towards the project, then it’ll be all on the Flames.)

The deal explicitly notes that comparable event centers are Little Caesars Arena (Detroit), T-Mobile Arena (Vegas), Rogers Place (Edmonton), Nationwide Arena (Columbus) and Xcel Energy Center (Minnesota). Little Caesars, Nationwide and Rogers Place were designed by HOK (or its predecessor firms), while T-Mobile and Xcel Energy Center were done by Populous (or its predecessors). Expect a building that looks shiny and seats around 18,500 for hockey.

Cost overruns

So what if the project runs over budget? Well, there are different provisions. Via CBC:

If the project goes over budget, the city and CSEC will first try to find savings before considering putting more money into its construction. If there is no agreement on a way forward, work on the project would continue “to the extent [it’s] commercially reasonable to do so.”
There is the option for one of the parties to provide up to $25 million for cost overruns, which would force the other party to contribute half that amount in return. The city portion would be subject to council approval.

A weird quirk

Here’s an interesting distinction: The Flames are allowed to default from the agreement in the event the NHL pulls their franchise – there’s a provision in the NHL’s bylaws that allow that to occur, but I cannot recall it ever happening. But the Flames themselves are not allowed to relocate the franchise themselves prior to the new arena opening.

Generally speaking…

There aren’t a ton of big, scary surprises in the documents. The land swap provisions are still wonky and hard to follow, but the financial distinctions in terms of who’s responsible for what are pretty cleanly laid out.

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