Calgary Flames, City of Calgary, announce termination of deal for new arena

By: Ryan Pike

Since 2005, the Calgary Sports and Entertainment Corporation, owners of the Calgary Flames, and the City of Calgary have been in discussions about building a new arena. But a disagreement over cost escalations just days before reaching the construction phase of the project led to the collapse of their agreement, it was announced on Monday.

The pact was officially terminated on New Year’s Eve, putting the two sides back to square one – at least for the time being – and leaving the Flames playing in the second oldest building in the National Hockey League, behind only Madison Square Garden, which was heavily renovated within the last 10 years.

The arena deal, born out of the ashes of the ill-fated CalgaryNEXT proposal, became official in July 2019. The agreement split an estimated construction costs of $550 million – based on the expenses of a handful of comparable arenas – 50/50 between the City and CSEC, with each contributing $275 million and the City covering expenses related to land rights and demolition of the Saddledome.

CSEC would manage the facility and the City would own it – similar to their arrangement with the Saddledome’s operations – and the City would receive revenue back from CSEC, via a ticket tax and a portion of the naming rights of the new building. HOK, the designers of Rogers Place in Edmonton, were hired as part of the design team of the new building.

As design work progressed, costs began to creep up and in the spring of 2021 the two sides announced that the project was on hold. In July 2021, they announced a slightly revised deal with a new estimated cost of $608.5 million. Invoking a provision in the original agreement, the City agreed to contribute an additional $12.5 million, but capped its financial contributions at that level in exchange for CSEC taking on any additional costs — the City agreed to CSEC managing the construction rather than a city subsidiary doing so.

In July, CSEC was responsible for $321 million in construction costs. But as planning progressed and the project worked through the local permitting process, additional costs kept piling up, combined with a worldwide pandemic wreaking havoc on construction material prices and supply chains.

Contractually on the hook for any additional cost overruns and likely facing some challenges to get the building open in time for the 2024-25 season, it appeared there were just too many financial risks for CSEC to move forward with the project. Similarly, it was unlikely that city council would approve any additional funding for the project given the City’s many financial challenges.

For now, CSEC has declared that the Flames will stay in the Saddledome – they have 11 years remaining on their current lease. But the Saddledome is currently 39 years old and requiring repairs to keep it operational, so it seems likely that CSEC and the City will be chatting soon about how to extend the life of the club’s current home.

And you never know, the costs related to the Saddledome’s refurbishment could lead to the two sides resuming talks regarding a new arena.