Flames, city at impasse again after event centre deal stalls

CSEC president and CEO John Bean explains what went wrong in the new arena deal between them and the city of Calgary, and why they mutually decided not to follow through.

It has been less than three weeks since the Calgary Flames left Anaheim with a shootout win that put them atop the NHL standings.

A monumental moment for an organization in desperate need of a turnaround.

Since then the organization has dropped four games in a row, lost 20 players and 33 staffers to COVID-19, had six games postponed, saw future arena capacity slashed by 50 per cent and have been told those patrons can’t eat or drink at the rink.

Now the city’s event centre deal is dead.


Merry Christmas Flames fans.

Talk about momentum swings.

Mayor Jyoti Gondek broke the latest bad news in a series of tweets Tuesday night, saying a conversation with Calgary Sports and Entertainment Corp. chairman Murray Edwards confirmed the team was “pulling the plug” on the 19,000-seat venue that has been more than a decade in the making.

She added that walking away from a $630 million project for 1.5 per cent of the value of the deal is “staggering.”

Can it be saved?

“I think it’s dead,” said a longtime city employee who has worked closely on the deal for many years. “The city moved the goalpost on the deal, not once, but twice. It’s one party acting in bad faith and the other saying goodbye.”

Just like four years ago when differences between Mayor Naheed Nenshi and CSEC lead Ken King prompted the team to walk away from discussions, we are at a similar impasse.

The straw that broke the camel’s back on the latest deal was the recently-introduced $19 million in sidewalk infrastructure/climate mitigation costs the city wanted CSEC to pay $10 million of.

The team took exception to it being added after the building plans had been finalized and a development permit was approved last month.

As part of the climate emergency Gondek announced shortly after being voted mayor this fall, the city wants solar panels on the new building as part of a cost of $4 million.

Fair enough, as the Flames have pledged all along to make the state-of-the-art building net-zero emissions by 2035.

But that cost, and the added infrastructure cost thrown at CSEC as part of development permit conditions, was not previously identified by the city.

The Flames felt blindsided by it.

Keep in mind, the Flames had already agreed to shoulder the burden of more inevitable cost overruns related to construction moving forward, which is a considerable commitment given the supply chain issues and inflation stemming from the pandemic.

Costs have already gone from $608.5 million in July to $634 million now.

The Flames fired back late Tuesday with a press release outlining the ongoing cost increases they’d previously agreed to shoulder, followed by a Zoom availability with CSEC president and CEO John Bean Wednesday afternoon.

“The accumulated cost increases for CSEC (since the original 50-50 agreement) now total $81.5 million, which represents an increase of 30 per cent relative to the original agreement reached in December 2019,” said Bean, whose club agreed two years ago to split the cost of the $550 million building 50-50 before costs ballooned to $634 million, of which they’d pay $346.5 million. (The city would’ve paid $287.5 million)

“We were prepared to proceed on the basis of the cost estimate that came out of the design development. We got our heads around the $71 million and future risk. So this isn’t us looking for a way out.

“Being asked to pick up the $10 million for a cost we didn’t think should have been on the table to begin with is problematic, and it added to the decision.”

Gondek said Wednesday she was waiting for the Flames to come back to the table.

In the end, who can blame anyone for deciding that with so much uncertainty in the world today, now is not the time to stick one’s neck out on inevitable cost overruns for something of this magnitude?

Besides, a deal like this requires sizable cheques written in advance by owners for a building the city would own.

The CSEC would simply operate it for its teams, while also hosting world-class concerts and events no longer suitable for the 38-year-old Saddledome.

“We’re not looking for villains here -- these are very complicated decisions and complex projects,” said Bean. “No one makes a decision this large on one particular data point. It's an accumulation of issues. It came to a point where you kind of tap out and go 'OK, it's a little too risky.'

“CSEC is determined there is no viable path forward to complete the construction of the event centre project.”

Sure, the implied threat of moving their $680 million asset (according to Forbes) looms over any such impasse, but nothing of the sort was, or will be, uttered by the club.

They’ll continue to play in the NHL's second-oldest building, putting the team at a competitive disadvantage on several fronts.

The long-term reality is that without a new event centre the team can’t stay here long.

If not for an ownership group comprised of several of the city’s biggest philanthropists, one would question why they continue insisting the team stay, instead of cashing out.

History may certainly show this was just yet another bump on the way to eventually building the arena, which was recently slated to break ground in early 2022.

But for that to happen, plenty more damage control and swallowing of pride will be necessary for the two sides to get back to the table.

So much for a four-game losing streak being considered adversity.

When submitting content, please abide by our  submission guidelines, and avoid posting profanity, personal attacks or harassment. Should you violate our submissions guidelines, we reserve the right to remove your comments and block your account. Sportsnet reserves the right to close a story’s comment section at any time.
We use cookies to improve your experience. Learn More or change your cookie preferences. By continuing to use this site, you agree to the use of cookies.