Calgary Mayor Jyoti Gondek says Flames intend to pull plug on Event Centre project

Tuesday’s news comes after several stop-and-start years around the project. The city and the Calgary Flames originally agreed to terms in 2019 on the Event Centre that would replace the Scotiabank Saddledome, the Flames’ home since 1983.

The original estimate of $550 million to build the 19,000-seat arena was to be split between the city and the corporation, which owns the Flames, the Western Hockey League’s Hitmen, Canadian Football League’s Stampeders and National Lacrosse League’s Roughnecks.

But Gondek said some costs, including “climate mitigation” of $4 million and “road/sidewalk right of way issues” of $12 million were still being negotiated.

“The City came to the table to assist with $6.4m in roadways leaving $9.7m for the Flames,” Gondek posted. “Based on this gap of $9.7m, I am told CSEC is walking away from our deal.”

Gondek said she is disappointed that “on a project worth over $650m, to have one party walk away for 1.5 per cent of the value of the deal is staggering.”

“I wanted Calgarians to be the first to know. I am as disappointed as all of you that this is the way things are ending.”

The Flames did not immediately respond to a request for comment from The Canadian Press. Later on Tuesday evening, the team did release a statement, which can be read below.

A city website says the Event Centre will be a year-round, gathering place for Calgarians.

“It will be home to the Calgary Flames, Hitmen and Roughnecks and all who cheer them on. The venue will attract major sport events as well as some of the world’s leading performing artists, creating a hub for connecting community, entertainment and sport.”

The statement from the Calgary Flames

In response to numerous media inquiries this evening, Calgary Sports and Entertainment Corporation (“CSEC”) provides the following update to the citizens of Calgary regarding the Event Centre Project.

CSEC’s primary objective in pursuing the Event Centre Project has been to provide Calgarians a first class facility with an entertainment experience, not only for hockey, but for other events including concerts, comparable to other major cities. However, at this point, it is clear that the City and CSEC have been unable to resolve a number of issues relating to the escalating costs of the Project.

Accordingly, as the City and CSEC have been unable to resolve these issues, CSEC has determined that there is no viable path to complete the Event Centre Project.

When the agreements were first executed back in December 2019 the parties agreed to a cost sharing arrangement of 50%/50% with respect to the design and construction of the new Event Centre. In July 2021, with these costs increasing to $608.5 million, the City informed CSEC they were not able to fund their 50% share which, under the terms of the Project Framework Agreement, would have resulted in termination at that time. Instead CSEC agreed to fund a disproportionate share ($321 million to City’s $287.5 million) and agreed to accept the risk of reasonable future design and construction cost increases related to the Event Centre in spite of our original 50%/50% agreement.

The most recent cost estimates place the total cost of the Event Centre at $634 million which means CSEC would be responsible for an additional $25.5 million of cost. The resulting cost sharing would have been $346.5 million for CSEC and $287.5 million for the City and, CSEC would continue to be responsible for further cost increases related to the construction of the Event Centre. Unfortunately, there are now $19 million of new cost items related to infrastructure and climate being insisted upon by the City for which they are seeking an additional $10 million in funding from CSEC.

While CSEC was prepared to move forward in the face of escalating construction costs and assume the unknown future cost risks, CSEC was not prepared to fund the infrastructure and climate costs that were introduced by the City following our July agreement and were not included in the $608.5 million and are not included in the current cost estimate of $634 million.

The failure of the City and CSEC to find a viable path forward was not based upon simply the “the last dollar” on the table; but rather was based upon the accumulated increase in CSEC’s share of the costs, including the infrastructure and climate costs, the overall risk factors related to the Project and the inability of CSEC and the City to find a path forward that would work for both parties.

In summary, the primary reasons for this difficult decision include:

1) Introduction by the City of significant infrastructure costs ($15 million) and climate mitigation costs ($4 million); costs not previously identified as project costs by CMLC or the City nor included in the $608.5 million target budget in July 2021.

2) Continued cost escalation experienced since the approved budget of $608.5 million in July 2021. It has since grown to $634 million based upon design development that was completed in October 2021.

3) High level of risk associated with future project cost increases in part due to supply chain issues and commodity price escalation as a result of the impact of COVID.

While not ideal for Calgarians nor competitively for the Flames, the people of Calgary should understand that nevertheless CSEC’s intentions are to remain in the Scotiabank Saddledome.

We are deeply disappointed with the outcome.

This report by The Canadian Press was first published Dec. 21, 2021.

The Canadian Press

by Canadian Press

Calgary Mayor Jyoti Gondek says Flames intend to pull plug on Event Centre project

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