City of Cal­gary, Flames clash over new arena

The Globe and Mail Metro (Ontario Edition) - - News - CAR­RIE TAIT AL­LAN MAKI CAL­GARY

Coun­cil re­jects hockey team own­ers’ de­mands that it pay for ex­tra po­lice, waive tran­sit fees on game days

The Cal­gary Flames, in ne­go­ti­a­tions with lo­cal politi­cians over a new $555-mil­lion arena, de­manded the city pick up the tab for ex­tra po­lice needed at games and let peo­ple ride tran­sit to the fa­cil­ity for free when the team is play­ing, ac­cord­ing to mul­ti­ple mu­nic­i­pal sources.

The re­quests would put a mul­ti­mil­lion-dol­lar dent in the city’s fi­nances and could re­sult in higher taxes. Waiv­ing tran­sit fares on game days, for ex­am­ple, would mean giv­ing up about $10-mil­lion in rev­enue an­nu­ally, ac­cord­ing to one of the sources. Cal­gary would then have to fill this gap, per­haps by cut­ting tran­sit ser­vices to other parts of the city or rais­ing prop­erty taxes, the source said. Cov­er­ing the cost of ex­tra polic­ing would also amount to an op­er­at­ing sub­sidy, ac­cord­ing to the source who pro­vided the de­tail about se­cu­rity ex­penses to The Globe and Mail.

Cal­gary bu­reau­crats had been pro­vid­ing up­dates to coun­cil­lors through­out the ne­go­ti­a­tions between the city and the team’s own­ers, mu­nic­i­pal sources told The Globe. The up­dates were al­ways ver­bal, frus­trat­ing some coun­cil­lors be­cause it made it dif­fi­cult to keep track of the ne­go­ti­a­tions.

The Flames’ own­ers, ac­cord­ing to one source, also wanted the city to pay for most of the arena’s con­struc­tion. Fur­ther, the own­er­ship group de­manded an ex­emp­tion from prop­erty taxes and rent, the source said.

The Flames’ own­ers and politi­cians have, up un­til this week, kept fi­nan­cial de­tails about their com­pet­ing pro­pos­als quiet. That changed on Tues­day when Ken King, pres­i­dent of the or­ga­ni­za­tion that owns the Flames, told me­dia that the arena dis­cus­sions have been “spec­tac­u­larly un­pro­duc­tive” and the team was done ne­go­ti­at­ing. Mayor Na­heed Nen­shi and coun­cil re­tal­i­ated by mak­ing the city’s of­fer to the Flames public on Fri­day.

“The goal of build­ing a new arena is not to win a Stan­ley Cup,” Mr. Nen­shi told re­porters with five city coun­cil­lors at his side. “The goal of build­ing a new arena is to make more money.”

New are­nas are more prof­itable, Mr. Nen­shi said, be­cause they come with ad­di­tional pre­mium seat­ing and more ef­fi­cient con­ces­sions.

“Our ar­gu­ment is that the city needs to some­how share in the up­side if we’re go­ing to share in the cost,” he said.

The city of­fered to chip in the equiv­a­lent of $185-mil­lion for a new arena in Vic­to­ria Park, near the ex­ist­ing Sco­tia­bank Sad­dle­dome, ac­cord­ing to the pro­posal re­leased by politi­cians on Fri­day. This con­tri­bu­tion has three prongs: Cal­gary would hand over land val­ued at $30-mil­lion and pay the $25-mil­lion it would cost to de­mol­ish the Sad­dle­dome, which is 34 years old. Its re­main­ing $130-mil­lion obli­ga­tion would be in the form of “non-prop­er­ty­tax sources” ac­cord­ing to the pro­posal. Tax­pay­ers would also cover “in­di­rect” costs such as up­grad­ing util­i­ties and other projects, such as a new train sta­tion. Some of these, in­clud­ing the tran­sit stop, are al­ready in the city’s de­vel­op­ment plans.

In ex­change, the Flames would stay in Cal­gary for at least 35 years, the team would pay prop­erty taxes and the fa­cil­ity would be made avail­able dur­ing the Cal­gary Stam­pede and in­ter­na­tional events. The team’s own­ers would cough up $185-mil­lion and the re­main­ing $185-mil­lion would come from a sur­charge on tick­ets. The Flames group would then own the arena and keep all the rev­enue.

Mr. Nen­shi did not re­veal the de­tails of the Flames’ pro­pos­als. He did, how­ever, dis­cuss the con­fi­den­tial­ity ar­range­ment. “They made an ini­tial pro­posal that they took pains to tell us was not con­fi­den­tial and the new one is not par­tic­u­larly dif­fer­ent from that one,” Mr. Nen­shi said.

Nei­ther the city nor the Flames have pub­licly re­leased de­tails about the team’s ini­tial pro­posal. It is un­clear whether the Flames’ de­mand for free tran­sit ser­vice and polic­ing is part of its most re­cent pitch. The Flames’ own­er­ship group would not com­ment on the tran­sit and polic­ing re­quest.

“We will dis­close ev­ery­thing next week,” Mr. King said in a text mes­sage to The Globe. He added that the Flames or­ga­ni­za­tion was dis­ap­pointed at how de­tails of its of­fer were made public when they should have stayed pri­vate.

Cal­gary Sports and En­ter­tain­ment Corp. owns the Flames, Stam­ped­ers and other sports fran­chises. CSEC, Mr. King said in a news press con­fer­ence called in re­sponse to the city’s dis­clo­sure, is wait­ing un­til next week to re­lease in­for­ma­tion be­cause it needs time to pre­pare its pre­sen­ta­tion. In­stead, Mr. King out­lined why the Flames be­lieve the city’s of­fer is un­fair.

“Their pro­posal has us not only pay­ing for ev­ery­thing, but more when you con­sider in­cre­men­tal taxes,” he said at the Sad­dle­dome on Fri­day. Surcharges on tick­ets, Mr. King said, es­sen­tially comes from the Flames’ rev­enue be­cause if fans are will­ing to buy the more ex­pen­sive tick­ets, the team is giv­ing up cash it would oth­er­wise be able to col­lect. The re­pay­ment plan also comes out of the Flames’ cof­fers. The land con­tri­bu­tion is an “ac­count­ing” process, Mr. King said, not­ing the city is not buy­ing land and the team will not own the land.

Cal­gary should con­trib­ute to the arena be­cause that’s “what cities do.” This is public in­fra­struc­ture, Mr. King said.

“Ev­ery mean­ing­ful city in the world has a gath­er­ing place where they can bring en­ter­tain­ment, sports, com­mu­nity events to­gether,” he said, adding he was “in­spired” by a trip to the Ro­man Coli­seum. “From then un­til now, ev­ery city has had a beau­ti­ful and spec­tac­u­lar place,” Mr. King said. “This city will have it. Whether we’ll be par­tic­i­pants fi­nan­cially in it or not, I don’t know.”

JEFF MCIN­TOSH/THE CANA­DIAN PRESS

The pro­posed new Cal­gary Flames arena, a $555-mil­lion fa­cil­ity, has sparked ten­sions between the team’s owner and city of­fi­cials, who say they should not have to com­mit more money to the project.

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