Is the new Calgary event centre in the public interest? No one knows
The Calgary Flames recently made a marquee signing. Of course, the new contract is not for a player, but a new event centre.
Like last year’s big signing by the Flames of right-winger James Neal, who was lauded as a huge acquisition and then traded away after a disappointing season, everyone is wondering if this will be the “real deal” or another bust.
The Calgary agreement to build a new event centre came about gradually, then suddenly. In 2017, negotiations resembled a nuclear winter — a blast followed by a freeze. Despite the official silence, negotiations carried on quietly. The city created a committee to look into an “event centre” — not an “arena” or “stadium,” but an “event centre.” On July 22, 2019, a deal was announced.
Economic discussions about the deal are well-worn, with many commentators weighing in on the new venue. Most agree, and city council heard, that the economic benefits will probably be minimal. Regardless, Calgary city council has approved the event centre in an 11-4 vote.
In my opinion, there are two more important questions than how many dollars will be generated by the arena.
First, did the people of Calgary have a meaningful say on the deal? Second, who really benefits?
Limiting public participation
In a piece for The Conversation Canada almost a year ago, I pointed out that stadium deals are frequently undemocratic.
City councils often vote on stadium deals with little to no consultation with the public. They use a similar justification that Calgary Mayor Naheed Nenshi used at the vote to approve the event centre:
“In times when the public is split, elected officials have to look at everything, in which public input is one aspect, and make the decision they think is right for the community and we do that every day.”
I agree with Nenshi’s broad point. Elected representatives are there to make decisions on behalf of the people. But stadium subsidies for hundreds of millions of dollars are a big deal. At a minimum, any stadium deal should be transparent and allow for public participation in the process.
This deal is not fully transparent. After all, following the collapse of the 2017 negotiations, the Flames said they would only resume negotiations if the media and public were not informed until an agreement was reached. The team got its wish.
The agreement presented to the public was not a final contract, but more of a framework deal. That’s to be expected. It’s common to agree on the main points of a major deal before hammering out the final contract. But, even during the short time frame for consultation, significant questions had yet to be answered, and more details, such as who will cover cost overruns, were only trickling out.
Compounding matters, Calgary’s city council allowed only limited public participation. While it allowed a non-binding plebiscite over hosting the Olympic Games, no such vote would be forthcoming on the event centre deal.
The extending of the consultation deadline seems to be part of a pattern of a “will we or won’t we” approach to public participation in major city decisions. The $60 million in municipal budget cuts, made the day after the event centre agreement was announced, was initially going to be made without public input, before council changed its mind.
When city council met to approve the stadium, they were informed that more than 5,200 residents made their views known. How much consideration did public input receive in council’s decision? Did anyone go through the comments? Surely it would be difficult for city council and staff to sift through thousands of comments and meaningfully address them only one evening after the deadline.
Counc. Jeff Davison dispensed of any pretense that public input would be seriously considered when he opened the meeting by saying: “Now is not the time to amend a signed multi-party agreement.”
Mayor Nenshi, meantime, had tweeted that the city should not expect “untold economic benefit” from the new event centre.
This is not a “magic beans” approach to city building, where we expect untold economic benefit from the construction of an event centre.
This deal makes sense on its own merits.
Calgarians will have a new, exciting gathering place where memories will be made for generations. pic.twitter.com/qx5HEwzfWY
— Naheed Nenshi (@nenshi) July 23, 2019
This is a sober, and likely correct, take by the mayor. And it leaves open the question: How will the city of Calgary benefit from its investment? What is the “public good” being created?
On the “event centre” section of the city of Calgary’s website, there is mention of some vague improvements in civic pride and “social impact.” There are no concrete benefits listed. There’s no mention of, say, job placement programs for vulnerable populations. Or a community benefits agreement that was part of the Edmonton Arena deal.
An announcement of these types of initiatives might be forthcoming, but it’s unlikely. If they already existed, they likely would have been announced before the agreement was voted on by council. If the initiatives don’t exist, it will probably be impossible for council to amend the agreement now that it’s been signed.
Just as the benefits are unclear, so too is the pricetag. The true costs of stadium subsidies are a notoriously complex business. The Calgary deal is being presented as the city chipping in a few hundred million dollars to help the Flames build a place to play. But stadium deals often contain other hidden subsidy mechanisms, such as reduced rent, tax breaks and the like.
One hidden subsidy appears to be in the naming rights agreement. The city is claiming a victory in getting “$250,000 per year for 10 years in recognition of the naming rights for the Event Centre.” It seems like the Flames are buying from the city the right to sell naming rights.
But how much do naming rights sell for? The Maple Leafs/Raptors sold the naming rights to their arena for $40 million a year in 2017 to Scotiabank. The Montreal Canadiens sold their naming rights for $5 million annually back in 2002.
Let’s say the Flames sell these naming rights for $5 million a year. If they are only paying the city $250,000 per year for that right, this leaves the Flames with a profit of $4.75 million per year for the 10 years. That’s money that isn’t going to the city. If the city sold the rights themselves, could they have used that money for other public initiatives?
Another outstanding question remains: What happens to this naming rights deal after 10 years? The overall deal is for 35 years, after all. Will it be renegotiated? Does it simply end? How can we know?
Public money should mean a public process
None of this is to suggest Calgary and the Flames should not have a new arena.
The Saddledome is old and needs replacing. It’s also common practice for cities to subsidize arenas, against all economic sense. So it’s almost inevitable that Calgary would foot at least some of the bill for a new event centre.
But Calgary had a chance get a better deal for the city than the Edmonton deal — not in dollars and cents, but in process and public benefit.
Based on the limited information provided by city council, and the decision to ram this deal through so quickly, it’s hard to say that’s been accomplished.