ARENA IMPASSE DEEPENS

Flames pres­i­dent, mayor dig in de­fend­ing cost-shar­ing po­si­tions

Calgary Herald - - FRONT PAGE - BILL KAUFMANN

The city’s lat­est of­fer to pump $130 mil­lion in cash and $55 mil­lion in other ben­e­fits into build­ing a new arena in Victoria Park is ex­tremely gen­er­ous, Mayor Na­heed Nen­shi said Fri­day.

But Cal­gary Flames pres­i­dent Ken King, in a Fri­day morn­ing news con­fer­ence, said the city’s of­fer is mis­lead­ing be­cause what­ever the city com­mits would even­tu­ally be paid back by the club.

That city of­fer — which would leave own­er­ship of a $555-mil­lion arena with the Flames, along with rev­enues gen­er­ated from it — was re­jected by the own­ers of the NHL club.

In what the city is call­ing a three­way cost split, the city would in­ject $185 mil­lion in cash and other value into the project; the club would pay $185 mil­lion in cash; and the re­main­ing $185 mil­lion would come from a fa­cil­ity ticket sur­charge.

Nen­shi said the city’s po­si­tion is so at­trac­tive, “some will say the city is giv­ing away too much.”

Along with the $130 mil­lion in cash, to be re­couped in fu­ture prop­erty taxes and pos­si­bly other means, the city agreed to pay the $25 mil­lion cost of de­mol­ish­ing the Sad­dle­dome and the $30 mil­lion value of land north of the ex­ist­ing arena.

Where the city’s $130 mil­lion would come from is still “to be de­ter­mined ... It could come from pub­lic sav­ings, from other projects or in sep­a­rate debt,” said Nen­shi. “We’d al­ways have to spec­ify how we’d pay that back.”

The mayor also laid out the no­tion the city could be an eq­uity part­ner in the Flames op­er­a­tion.

“The city some­how needs to share in the up­side, if we want to share in the costs,” said Nen­shi, adding all but two city coun­cil mem­bers sup­port the cur­rent city deal.

King noted the city’s $130-mil­lion cash in­fu­sion would be paid back by the Flames in taxes, an eq­uity share or some other mech­a­nism.

He added the pro­posed ticket sur­charge would come from the Flames oper­a­tions, and thus would ac­tu­ally be rev­enue from the team.

“We’re not only pay­ing for ev­ery­thing but more, given the in­cre­men­tal taxes, so it’s all Flames rev­enue,” said King. “If we thought that model would work, we’d save ev­ery­one’s time and get on with life.”

The Flames’ own­er­ship group will un­veil de­tails of its pro­posal some­time next week, said King, who added he doesn’t know what it’ll take to get both sides talk­ing again.

“Their mes­sage is loud and clear: they’re not in­ter­ested in our deal and we’re not in­ter­ested in theirs,” he said.

Talks be­tween the two sides stopped at the end of July.

Last Tues­day, the Flames par­ent com­pany, Cal­gary Sport and En­ter­tain­ment Corp. ( CSEC), sur­prised the city by say­ing it was no longer pur­su­ing an arena deal due to frus­tra­tion over months of non-pro­duc­tive talks.

A source has told Post­media that CSEC had sought a deal that would see the city fund 52 per cent of the cost of a $500 to $600 mil­lion arena, and had at one point asked for a veto on what type of de­vel­op­ment could oc­cur in its vicin­ity.

King has said such a cost-shar­ing pact would be “very fair” and added the club had sought a sim­i­lar fifty-fifty shared deal on the pro­posal to build a sports com­plex in the down­town’s west end — the so­called Cal­gar­yNEXT project.

King also said it is not true there was a pro­posed re­quest for a de­vel­op­ment veto, but he added his or­ga­ni­za­tion would want to par­tic­i­pate in de­vel­op­ment de­ci­sions.

The club wasn’t threat­en­ing to leave Cal­gary, King added, say­ing the Flames are de­ter­mined, in­stead, to make the best pos­si­ble use of the Sad­dle­dome.

The Flames, the NHL and many oth­ers be­lieve the 34-year-old Sco­tia­bank Sad­dle­dome is ob­so­lete, non-com­pet­i­tive eco­nom­i­cally and needs to be re­placed.

NHL com­mis­sioner Gary Bettman has made sev­eral vis­its to the city in re­cent years to push for a new build­ing, in­clud­ing last Tues­day when he sug­gested Cal­gary vot­ers should de­liver that mes­sage in the Oct. 16 civic elec­tion.

He’s said the club “has op­tions” in the ab­sence of a new arena.

Nen­shi said he was skep­ti­cal the club would leave such a lu­cra­tive hockey mar­ket like Cal­gary, even to Seat­tle, which has just reached an agree­ment for a pri­vately-funded sports com­plex that could host an NHL team.

“You’d cer­tainly sell more tick­ets here than you would in Seat­tle,” he said, while flanked by city coun­cil­lors Shane Keat­ing, Druh Far­rell, Gian-Carlo Carra, Peter De­mong and Richard Poot­mans.

One of Nen­shi’s may­oral chal­lengers, Coun. An­dre Chabot, said re­veal­ing the de­tails of the city’s arena pro­posal was ne­go­ti­at­ing in bad faith and he ques­tioned where the city’s $130-mil­lion cash con­tri­bu­tion would come from.

“Is there an in­tent for that to be paid back? It doesn’t say that,” said Chabot.

PHOTOS: LEAH HENNEL

“They’re not in­ter­ested in our deal, and we’re not in­ter­ested in theirs,” Cal­gary Flames pres­i­dent Ken King, left, said Fri­day about the on­go­ing di­vide be­tween the team and city hall over a new, $555-mil­lion arena to re­place the Sad­dle­dome. Mayor Na­heed Nen­shi de­fended coun­cil’s po­si­tion, say­ing the city needs to share in the up­side of any new build­ing. Talks be­tween the two sides broke down in late July.

PHOTOS: LEAH HENNEL

Mayor Na­heed Nen­shi floated the idea on Fri­day that the city become an eq­uity part­ner in the op­er­a­tion of the Cal­gary Flames.

Cal­gary Flames CEO Ken King said Fri­day the team will present a new arena pro­posal some­time next week.

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