Winners and losers: Calgary’s $1.2B event centre deal
Posted Oct 6, 2023 9:44 am.
The deal is done.
Calgary is one step closer to building a brand new $1.2 billion event centre, but according to Concordia University economics professor Moshe Lander, not everyone is coming out of the deal a winner.
“Big losers of course are taxpayers. They’re going to be on the hook for a lot of money,” he said. “And of course with construction not beginning for another 12 months, give or take, there’s any number of cost overruns that can happen.”
When it comes to upfront costs, the city is on the hook for $537 million, and according to the agreement, the city will also split any cost overruns with Calgary Sports and Entertainment (CSEC).
“Is this truly the final number? And who’s going to make up the difference? I can guarantee you taxpayers are going to be on the hook for that,” Lander said. “There’s cost overruns when I redo my kitchen, there’s cost overruns when you redo your bathroom. So are you really telling me you’ll be able to construct this entire arena and demolish the existing one at no extra cost to the numbers that were given today?”
Read more: New event centre in Calgary gets official approval, construction to begin in 2024
But further questions come with how the city will generate revenue from the project. CSEC is expected to pay the city $40 million upfront, followed by annual lease payments of $17 million for 35 years — even with an increase of one percent annually, Lander says money down the road isn’t the same as money today.
“At some point in 35 years they’re going to say ‘Well we were able to recover $800 million from the Flames,’ but in present value terms it’s way, way off,” he said.
But even in Lander’s eyes, the deal still has its winners.
“Calgary Sports and Entertainment is the big winner today. They’re going to get their new arena, that’s going to increase the value of the franchise substantially,” the economist said. “Flames fans are winners. Hopefully this means the story is over, the Flames are going to be here for another generation and so forth.
“Hopefully sometime in those 35 years they can win a Stanley Cup or two,” he added.
