The Calgary Flames arena deal: cause and effect

It has been a little over a week since the arena deal between the Calgary Flames and the City of Calgary was officially declared dead.  Now that the body is cold and peacefully in the ground, it seems like a good time to take a look at the possible reasons why the deal stalled and speculate about what it means for the team and fans going forward.

The announcement came without fanfare.

Buried among news articles about the anticipation of the Calgary Flames returning to play after 19 days in COVID protocol, the Calgary Sports and Entertainment Corporation (CSEC) made the official announcement.  Since neither the City of Calgary nor CSEC waived the Construction Conditions that the Project Framework Agreement required, the arena project would be terminated.

Long story short: the Calgary Flames will remain in the Saddledome.

How Did We Get Here?

To recap, CSEC’s stated rationale for pulling away from the deal were threefold.  The most controversial issue was a combined  $19 million in costs, introduced by the City, associated with climate mitigation and sidewalk right-of-way adjustments. On top of that, CSEC cited a steady escalation in overall project costs ($634 million, up from $608.5 million) and increased risks of future costs stemming from COVID-related supply chain issues as reasons for their decision.

That’s the official word.

Unofficially, there seems to be more to it.  Appearing on Toronto radio late in December, TSN Insider Darren Dreger used the word “political” to describe the situation.  Dreger didn’t expand on the comment, so we are left to speculate.

It’s possible this is about CSEC’s contribution to the Calgary Flames’ new event centre.  By that, I mean the agreement that CSEC just terminated stipulated 50/50 payment arrangement with the CIty.  Contrast that to the deal for Edmonton’s Rogers Place, in which the Katz Group only put up 27% of the project costs.

Retrospectively, the City of Edmonton is very happy with the arrangement.  This is due to an estimated $2 billion in construction projects, stemming from Rogers Place’s revitalization of Edmonton’s downtown core.  That’s an excellent return on an investment of under $450 million.

It’s also possible that the ownership group is protecting their interests outside of the Calgary Flames.  Shortly after her election in 2021, Calgary Mayor Jyoti Gondek declared during a radio interview that Calgary needed to “move past’ the belief that the end product of energy production must be oil and gas.”  This did not bode well with the oil and gas companies headquartered in downtown Calgary.

There was a bit of an uproar.

Irrespective of your personal position on the energy sector, it is easy to understand why the industry was incensed.  So it’s also easy to understand why CSEC’s ownership group, many of whom have significant financial interests in oil and gas, would feel like taking a step back.  From their perspective, the oil and gas industry is indirectly funding half of a Calgary Flames arena project with a partner that has declared a move away from the oil and gas industry.

So Where Does That Leave Us?

The Calgary Flames will remain in the Scotiabank Saddledome for the foreseeable future.

As of this writing, there is no new deal.  I am not aware of any discussions about a new deal.  And it seems that, if and when negotiations on a new deal do begin, they will not go smoothly.

CSEC has not made any comments about relocating the team.  But that doesn’t mean they won’t.

What is clear to me is that both sides need a new deal.  The City of Calgary may not ultimately recognize the $2 billion in development contracts that Edmonton did.  But the precedent is there.

Calgary City Council is scheduled to discuss the issue on Wednesday.

CSEC and the Calgary Flames, conversely, need a new arena primarily because the Saddledome is a depreciated asset.  Although the lease on the building extends to 2033, there are reports that some $50 million in roof repairs are needed.  Should the team try to play there for any extended period, there is no predictor for what else could go wrong with a facility that old.  Nor is there any thought of what the team would do if the building needed to be shut down for repairs midseason.

There is also the effect on the on-ice product.

Should the Calgary Flames go for a prolonged period with no arena deal on the horizon, their ability to attract top talent could be affected.  Let’s use Andrew Mangiapane as an example.  Mangiapane is eligible for unrestricted free agency at the end of the 2022-2023 season, a year and a half from now.  Let’s further assume Mangiapane remains a Flame until the free agency period in 2023, and is presented with identical contracts from the Calgary Flames and, say, the Seattle Kraken once free agency begins.  Which team is he more likely to pick?  The team with new building, or the team that plays in the dilapidated Saddledome that has no new arena prospects upcoming?

Certainly we don’t know what a player would choose.  But where they spend 41 games out of every season must factor into such a decision.  Putting it together, the absence of a building deal could amount to lost contracts.  Lost contracts could lead to a bad team.  Bad teams don’t sell tickets.

We, the Calgary Flames fans, are the collateral damage here.  We are the young children, locked in our room while we listen as mom and dad fight.  We are powerless to affect the change that everyone knows we need.

Here’s hoping mom and dad get it together.