The City of Calgary’s deal with the owners of the Calgary Flames on a new downtown arena has officially been terminated.
Construction was supposed to start on the $600-million arena in Victoria Park in early 2022 — but on Dec. 21, Mayor Jyoti Gondek said she had been informed by the Calgary Sports and Entertainment Corporation (CSEC) that it would not be proceeding with the project.
Both had decided earlier that there needed to be a decision by Jan. 1 on whether or not to begin construction.
According to a Jan. 1 memo from city manager David Duckworth to city council, the arena deal has now been terminated due to unresolved issues, and there is no opportunity to resurrect the 2019 agreement that was amended by council last summer.
In that amendment, council approved putting an additional $12.5 million into the arena project, and the Flames agreed to cover all additional costs.
With the termination of the deal, all work on the project has stopped. It’s estimated that the two parties together had spent $20-$25 million.
The CSEC has said the Calgary Flames will continue to play at the Saddledome.
Meanwhile, city council is set to discuss the situation further next week.
Rising risks and costs muddied deal, CSEC said
In 2019, the city and the Calgary Flames agreed to terms on building the event centre to replace the Scotiabank Saddledome, the home of the NHL team since 1983.
The original estimate of $550 million to build the 19,000-seat arena was to be split between the city and CSEC, which also owns the Western Hockey League’s Calgary Hitmen, the Canadian Football League’s Calgary Stampeders and the National Lacrosse League’s Calgary Roughnecks.
In July 2021, however, it was revealed the deal was close to $60 million over budget, and the arena was projected to cost $608.5 million.
During the summer, both the city and the CSEC agreed to pay an additional $12.5 million for the arena — and agreed that the Flames owners group would cover any more cost overruns.
However, after costs for climate mitigation, such as solar panels, and right-of-way issues for road and sidewalks were identified, new costs totalled $16.1 million.
Mayor Gondek said the city asked the CSEC to contribute $9.7 million of that amount, in addition to what had already been agreed on.
But on Dec. 21, Gondek said she had spoken with Murray Edwards, primary shareholder of the CSEC, who informed her the event centre deal would not be going forward.
“It appears that they’re unable to make that financial commitment following the approval of their development permit, so it would appear that they are ending the deal,” she said at the time.
CSEC CEO John Bean said in a press conference on Dec. 22 that the corporation was unwilling to take on additional risk and rising costs, which were largely related to surrounding sidewalks and climate change initiatives.
“This isn’t us looking for a way out,” Bean said.
“We genuinely believe that the right-of-way costs and the climate costs … really should not be for the account of CSEC. And we tried our best to convey that to the city.”