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The Calgary Flames pulled out of an arena deal with the city because team owners were no longer willing to shoulder a disproportionate amount of rising costs or more risk.HO/The Canadian Press

The owners of the Calgary Flames have walked away from a partnership deal with the team’s host city for a new arena after sparring over which party is responsible for climate mitigation costs and expenses tied to infrastructure such as sidewalks.

The city and Calgary Sports and Entertainment Corp. (CSEC), which controls the Flames and other sports teams, first struck a deal to split the cost of a new events centre in 2019, after years of acrimonious negotiations. The original $550-million budget has since grown and while CSEC said it was prepared to cover additional expenses, it scoffed at the city’s demand it pay part of the $19-million cost for solar-power technology for the building and infrastructure near the site.

The collapsed deal marks the first major test for Calgary Mayor Jyoti Gondek and the city’s new council, who were elected in October. The proposed entertainment centre anchored Calgary’s redevelopment plans for the city’s East Village, just outside the downtown core. The politicians will either have to hammer out a new deal with CSEC or rework the city’s redevelopment strategy. Calgary was financially strained when it signed the original cost-sharing partnership in 2019, and its budget remains precarious. Meanwhile, the city’s residents never united behind the idea of using taxpayers’ money to fund a new sports and entertainment facility that would be controlled by a privately owned company.

John Bean, CSEC’s chief executive, said that while the organization was prepared to absorb rising costs tied to supply chain constraints, the deal fell apart when the city asked it to pay for expenses the ownership group considered unreasonable.

“This isn’t us looking for a way out. We genuinely believe that the right-of-way costs and the climate costs, notwithstanding [whether] they were on the table, really should not be to the account of CSEC,” Mr. Bean told reporters Wednesday. “And we tried our best to convey that to the city.”

“Where the rubber hits the road is who is going to pay for what,” he later added.

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Could Calgary Event Centre be too big to succeed?

Under the original deal, CSEC and Calgary agreed to split the $550-million price tag, with the city also providing the land, covering flood mitigation expenses, and paying 90 per cent of the cost to tear down the Scotiabank Saddledome, where the Flames currently play. By July, 2021, the revised budget hit $608.5-million and CSEC agreed to take on a greater share of the costs and cover future price escalations. The amended deal also allowed CSEC to bring in its own developer to replace city-owned Calgary Municipal Land Corp. Ms. Gondek, who was then a councillor, did not support the revised deal.

Rendering of the Calgary Event Centre.Handout

Now, CSEC estimates the project would cost $634-million, with its share totalling $346.5-million. This, CSEC said, is before the city’s $19-million demand for infrastructure improvements and climate mitigation efforts. CSEC said the city asked the firm to chip in $10-million to cover these expenses.

Ms. Gondek, along with councillors Raj Dhaliwal and Terry Wong, insisted on Wednesday that CSEC was aware, via the approval process and other discussions, of Calgary’s expectations. They said, for example, that CSEC was on board with making the facility net zero by 2035.

CSEC, which is led by billionaire Murray Edwards, said its intentions are for the Flames to remain in the Saddledome, the concave facility that has defined the city’s skyline for 30 years.

Deborah Yedlin, president of the Calgary Chamber of Commerce, said she was disappointed with the news about the event centre and hopes the city and the Flames revive negotiations.

“This is not helpful as we’re trying to rebuild, revitalize, attract a new generation of talent,” Ms. Yedlin said in an interview.

“This project was an important signal to people thinking about Calgary as a place where they want to come work and live – that things were changing, that we’re moving ahead.”

With a report from James Keller

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