Professor doubts Calgary’s need to publicly fund new Flames arena

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Dan Mason can see the benefits for both sides. The Edmonton Oilers have their new arena and the city has the downtown revitalization kick-start it was hoping for. Better still; the finances look to be holding up, thanks to the hard-scrabble negotiations between a wealthy team owner and city council.

But while Rogers Place is succeeding, Mr. Mason, the University of Alberta professor who consulted on the arena plan for the city, isn't sure the same thing can work in Calgary, where negotiations between the team's wealthy owners and Mayor Naheed Nenshi have turned spectacularly sour.

Read more: Calgary Flames owner eyes more than just a new arena

"In Edmonton, the rationale for using public money was always about relocating economic activity from one part of the city to another, to make the downtown more vibrant," Mr. Mason said. "In Calgary, there isn't the same incentive, as Calgary's downtown doesn't need the same kind of boost … This makes it much more difficult to justify the use of public funds in Calgary."

When it comes to competitiveness, Calgary and Edmonton have squabbled for bragging rights in sports, politics, the size of their shopping malls, even the weather. Then Edmonton green-lighted a much-needed downtown renewal project that included a new home for the city's NHL Oilers. Calgary took a keen interest in the proceedings, knowing it would soon need a facility to replace the Scotiabank Saddledome.

The overall cost of Edmonton's arena project ended up being close to $614-million, which included the land, a connection to nearby light-rail transit, a community rink as well as the glass-covered Winter Garden located outside Rogers Place. The cost of the 18,347-seat arena was $480-million.

The funding details had team owner Daryl Katz contributing $166-million in cash and lease payments to the city, which owns Rogers Place. Mr. Katz agreed not to move the Oilers from Edmonton for 35 years. There is also a tax on Oilers' tickets that is expected to produce $125-million over 35 years.

The city is in for $313-million, with $231-million coming from a community revitalization levy and increased parking revenues. Property owners within the designated boundary are paying the same amount of tax they normally would, except the money is going towards repaying what was spent on infrastructure within the arena boundary.

In December, 2014, almost two years before Rogers Place officially opened, Edmonton announced the arena had prompted $2.5-billion in new development. In November, 2015, the city estimated the community revitalization levy would produce $984-million over its 20-year term. In September, 2016, the city noted the levy had already brought in close to $9-million. City officials said it was a good indication the plan was delivering as advertised.

"I think the arena and overall development in Edmonton is working," Mr. Mason said, "in the sense that the development is occurring as projected, and the economic activity the city wanted to target in the downtown core is happening."

In Calgary, the city's proposal called for $185-million from the Flames, $185-million from a ticket surcharge and $185-million from the city. The Flames' countered by asking for $225-million from the city and its East Village community revitalization levy, with the hockey team contributing $275-million ($100-million in cash, $150-million from a ticket tax and $25-million from a "source that was not clarified.") There was no accounting for the $30-million needed to purchase the land.

The Flames had been pushing their CalgaryNext plan – an arena, football stadium and field-house built in one location on the western fringe of downtown. The city wants an arena in Victoria Park, where it would be situated among shops, restaurants and condos. But the community revitalization levy that presently exists for Victoria Park and the East Village is not enough to finance a new arena – and there won't be any provincial help, either.

Although Edmonton's council had campaigned for some measure of provincial funding, there was no direct contribution.