Calgary and the hockey barons

On November 18th of last year, Calgary held a plebiscite which attracted an impressive 305,000 voters. The question on the ballot was whether or not the city would host the 2026 Winter Olympic Games. The answer was a decisive no, despite the Olympic opponents having far less money at their disposal than the bid committee promoting the games.

Next up on the sports agenda is whether or not the city should split the costs of building a new hockey arena with the Calgary Sports and Entertainment Corporation (CSEC). The CSEC is a private company that owns the Calgary Flames and the Calgary Stampeders among other teams. On Monday of this week, the city announced a proposed deal with the sports barons which city council would vote to finalize in one week.

Public feedback would be accepted only until noon Friday, i.e Calgarians would have only three days to comment. The city had apparently learned from the Olympic experience—it wasn't taking any chances by allowing taxpayers the opportunity to take a good look at the deal.

So is it a good deal? To summarize, the city puts up $275-million for its share of the construction plus $12-million to demolish the Saddledome (the current arena) for which it receives $400-million in various goodies over the 35-year term of the deal. The city would own the arena and CSEC would maintain it. Owning the arena after 35 years isn't exactly a prize for the city. The Saddledome is 36 years old and if this deal goes through it will be torn down, i.e. it will become a $12-million dollar liability, not an asset.

The proposal suggested that after discounting the revenue to present value the city would suffer a $47-million loss. It appeared to me this was discounting at the inflation rate. I suggested in a letter to my councilor, Evan Woolley, that the city could do better than that with its money and ran out my own numbers. I discounted the $400-million revenue at six per cent over the 35-year period and got a present value of $166-million. Subtracting this from the city’s $287-million for construction and tearing down the Saddledome results in a loss of $121-million. Financially, this looks like a very bad deal for Calgarians.

The mayor justified the loss by explaining “It's about bringing community together. It's about uniting people.” Uniting who? Not me. I’m not a hockey fan. If the idea is to unite hockey fans, perhaps they could add an appropriate surcharge to the ticket prices.

I emphasized to Mr. Woolley that I am by no means opposed to spending public money on culture. For example, I strongly support providing facilities for amateur hockey. But this deal isn’t about funding culture; it’s about funding big business. The CSEC pays its players (employees) millions of dollars a year. It doesn’t need a handout.

Furthermore, Calgary's economy remains sluggish because of low oil prices. The city announced the arena deal practically in the same breath as it announced a budget cut of $60-million that will result in 100 layoffs of city staff.

The fact is the future economic health of Calgary is uncertain. It continues to depend heavily on the oil industry and we have just elected a provincial government that is doubling down on oil. If good sense prevails and the world moves rapidly towards renewable energy, the city's future could be further threatened. Obviously this is a time for financial caution. It is not a time for bold expenditures.