Flames Proposal for New Arena Falls Apart

Calgary Sports and Entertainment Corporation president Ken King released its new arena proposal Thursday morning as a pure exercise, as negotiations between the group and the city have effectively shut down.

The owners of the Calgary Flames released details of their offer to the city and claimed a willingness to raise $275 million in “up-front funding,” an amount King and Co. are no longer willing to submit.

“Basically, we were prepared to put $275 million in – we were, we are no longer,” King told CBC News. “We have decided not to pursue and, really, that’s the message today. We’re fulfilling our promise that we said we’d tell people how much we were prepared to contribute. We’ve done that and now we’re going to move on and have some fun with our hockey team and football team and other teams and get back to business.”

According to their proposal, the cost of a new arena for the Flames hockey club runs at $500 million.

Along with the $275 million submitted by the ownership group, the proposal included $225 million from a community revitalization levy – a property tax collected from any new development around the proposed arena.

In their application for the new arena, the Flames made their case for a $481 annual million economic benefit to the city. Wages, transit fares, parking, restaurant and bar revenue, and other associated benefits were cited, while job creation was also a significant part of the proposal.

Calgary mayor Naheed Nenshi, running for a third term, has stated a desire to revitalize the area around the Saddledome. The city has therefore submitted its own proposal, which was released last Friday.

That proposal included the supplying of $185 million in funding, including $130 million in up-front funding and $25 million to level the Saddledome. $30 million in land was also included in the city’s proposal. A $185 million ticket tax would be included, with King’s group providing $185 million.

King countered by saying the city’s proposal effectively amounted to his group paying the entire cost in that the ticket tax – a surcharge – is revenue that belongs to the club.

So the city’s three-way cost split met King’s rebuttal and now King’s group has backed out of negotiations entirely.

“The city’s proposal is just not workable or, even for that matter, ‘fair’ based on other arena deals in comparable cities,” King said. “As a result, after over two years of discussions, we see absolutely no basis upon which a new arena agreement can be achieved with the city and we have concluded that there is no point to continue the pursuit of a new arena in Calgary.”

Calgary has “needed” a new arena for some time now, even before the 2013 flood, and there’s actually little that’s out of the ordinary in this negotiating process. Politics always come into play when an organization is attempting to enter a “partnership” with taxpayers and ownership groups always attempt to get taxpayers to foot as much of the bill as possible.

So, what’s next?

If history tells us anything, we’re looking at an extended period of pouting as King and Co. go through the motions of showcasing how they’re “making do” with the Saddledome. Eventually, a new arena will come in Calgary and the parties will return to the table.

And if the price ends up being too high for the current owners? That, it seems, it the cost of doing business.

Published by Dr. Pucksworth

Doctor of Puckanomics.

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