Calgary Flames reveal $275M offer, but say they've scrapped pursuit of new arena

The owners of the Calgary Flames have released details of their offer to the city toward construction of a new hockey arena, saying they were willing to pony up $275 million but no longer plan to pursue it.

Both city and team accused of playing politics over arena in run-up to civic election

Calgary Sports and Entertainment Corporation president Ken King says the company has walked away from negotiations with the city and has no plans to return. (CBC)

The owners of the Calgary Flames have released details of their offer to the city toward construction of a new hockey arena, saying they were willing to pony up $275 million but no longer plan to pursue the plan.

"Basically, we were prepared to put $275 million in — we were, we are no longer," Calgary Sports and Entertainment Corp. president Ken King told CBC News Thursday, after over two years of negotiations with the city.

"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."

The Flames' proposal pegs the cost of a new arena in Victoria Park, just north of the existing 34-year-old Saddledome, at $500 million.

Calgary Sports and Entertainment Corporation (CSEC) says it offered to provide $275 million in up-front funding, which it says is similar to prepayment of rent for 35 years of occupancy.

The Flames also included in their proposal an additional $225 million, which would come from a community revitalization levy.

The levy is essentially a loan from the province, with property taxes generated by new development in a given area — in this case around where the proposed arena would be located — used to repay the money, usually over 20 years, similar to what was done in Calgary's East Village.

The Flames said the arena would provide a $481-million annual economic benefit to the city in the form of things like wages, transit fares, parking and spending in bars and restaurants.

They estimated it would create approximately 5,850 direct and indirect full and part-time jobs.

All part of negotiation posturing, sports analyst says

Sportswriter and analyst Bruce Dowbiggin said the Flames walking away from the table is part of the negotiation process, likely tied to the Oct. 16 civic election in Calgary in which Naheed Nenshi is running for a third term as mayor.

"It's clear they're at an impasse, or they're trying to create an impasse, to try to affect public opinion for the election," he said.

It's clear they're at an impasse, or they're trying to create an impasse, to try to affect public opinion for the election.- Sportswriter and analyst Bruce Dowbiggin 

And the results of the vote could dictate the next steps between the two sides, he said.

"If Nenshi gets a resounding victory — from what it looks like, he's going to get back in — then I think the Flames have to really take stock and say, 'OK, what are we doing?'" he said.

"I think you'll see the dog and pony show where the Flames go to Seattle and they're seen in Seattle looking at the new arena, I think you'll see that kind of pressure put on, and I'm sure [NHL commissioner] Gary Bettman will continue to be the heavy at the NHL level saying, 'If you can't generate revenues from an arena, you're going to have to look at a place where you can do that.'

Moshe Lander, a professor of sports economics at Concordia University in Montreal, told CBC's Calgary Eyeopener it appears the Flames are trying to score a deal similar to the one in Edmonton.

There, the newly opened $600-million Rogers Place saw the city finance a large portion and included revitalization of the area around the new stadium as well as LRT upgrades.

"There's only one real arena comparison that anybody is interested in," Lander said.

An issue in the mayoral contest

The city released its own proposal last Friday, days after King dropped a bombshell by saying the Flames were no longer in talks with Calgary over the arena.

King's comments came a day after Nenshi said his campaign wanted to see the new arena as part of the revitalized entertainment district near the current Saddledome.

Nenshi said Thursday the Flames' proposal was far from a "50/50 partnership."

"In their proposal they pay zero rent, zero property tax, and they get 100 per cent of all of the revenues from all sporting events, concerts and special events," Nenshi said. 

Bill Smith, widely considered to be Nenshi's biggest rival in the municipal election, had refused to comment on the city's proposal until he'd seen the offer the Flames had put forward.

On Thursday, he said it is hard to compare the two proposals since they take different costs into consideration.

While the city proposal included costs of things like the destruction of the Saddledome, the Flames' proposal omitted that cost, and the possibility of a community revitalization levy wasn't included in the city's proposal, Smith pointed out. 

"A stadium is something so complex that it shouldn't be negotiated, it shouldn't be done through the media," Smith told CBC's Calgary News at Six host Rob Brown. 

Naheed Nenshi, who is seeking re-election next month, released the city's offer to the Flames last week. (CBC)

City offered 3-way split on arena costs

In the city's proposal, it said it would supply $185 million in funding — which includes $130 million in up-front funding, land worth $30 million and $25 million to demolish the Saddledome — with the team providing $185 million and an additional $185 million coming from a ticket tax. 

The city estimated the total project cost at $555 million.

But King contended the proposal amounted to the team paying the entire cost, or more, because the team considers a ticket surcharge revenue that belongs to them and because they say they'd pay property tax.

Flames say city's proposal 'not workable'

The city would own the building under the Flames' proposal.

"In a 'small market' city, even one with an NHL team, a privately funded arena is not economically viable," the team said in its release Thursday.

"The city's proposal is just not workable, or even for that matter, 'fair', based on other arena deals in comparable cities. 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."

The team added they will continue to operate in the Saddledome "for as long as we believe it is feasible."

With files from Colleen Underwood, Dave Gilson, Calgary News at Six and The Canadian Press