Decision looms for new Calgary arena and home for NHL Flames
CALGARY — A new home for the Calgary Flames will be debated Tuesday in city council chambers.
The city and National Hockey League’s Flames owner Calgary Sports and Entertainment have a tentative agreement to equally split the cost of a $550-million event centre which would replace the 36-year-old Saddledome.
City councillors can approve the deal, vote it down, or delay by asking for a longer period of analysis and consultation.
Mayor Naheed Nenshi intends to vote in favour of the project, calling it “a good deal for Calgary.”
In the agreement unveiled last week, the city says the projected return to Calgarians is $400.3 million over the course of the 35-year agreement with the Flames.
That figure incorporates revenues from ticket sales, a portion of naming rights, retail property taxes in the building, CSEC donations to amateur sports programming and tax generation in the district where it will be built.
But a Calgary economist disputes that figure, saying inflation wasn’t taken into account.
“That number is unquestionably wrong,” University of Calgary associate economics professor Trevor Tombe told The Canadian Press.
“A dollar in 35 years is worth a lot less than a dollar today. Inflation alone eats away half the value of that dollar over the course of three and a half decades.
“They’re not at all incorporating these issues around the time value of money. It is just Finance 101. This is not how you do it.”
He also points out a $47-million net loss on the project wasn’t made public at the news conference last Monday, and that information only came to light when administration was pressed by councillors later that night in chambers.
But a loss of $47 million over 35 years isn’t necessarily a dealbreaker, he said.
“It’s a money loser, but that’s OK,” Tombe said. “We don’t fund the zoo because we think it will make money. We do it for other reasons and there are those noneconomic considerations here too.”
The event centre is part of revitalization plan for the east side of downtown near the Stampede grounds.
Calgary’s mayor acknowledges the optics of committing to a new arena right now are poor in the wake of last week’s $60 million in budget cuts.
“Let’s be real. This timing stinks,” Nenshi wrote Saturday in social-media post.
“It is one hundred per cent reasonable to ask what the heck council is thinking, bringing forward an agreement on a new arena, talking about spending on other projects, all while reducing the budget by $60 million.