Duane Bratt is a political science professor and chair, Department of Economics, Justice, and Policy Studies, at Mount Royal University in Calgary.
On Tuesday, Calgary City Council approved the deal for a new National Hockey League arena. It was a three-way partnership between the City of Calgary, Calgary Flames owner Calgary Sports and Entertainment Corp. and the Calgary Stampede Board. The cost of the project, estimated at $550-million, would be evenly split between the City and the Flames, with the City retaining ownership of the building, and the Flames operating it (and getting most of the revenue from it) for 35 years. There are also some side deals, involving land options for the Flames. There has been plenty of economic analysis, from supporters, opponents, and economists.
But the arena deal was as much about politics as it was about economics.
There have been four fundamental political variables at play.
First, the decision to spend $275-million (or more) of taxpayer’s money on the arena, occurred in a time of a lingering economic downturn in Calgary. Last week, City Council voted for $60-million in spending cuts that affected fire, police, transportation, and other services.
In addition, more than a month ago, a property-tax revolt led City Council to rollback an expected increase in small-business taxes outside of the downtown core. Finally, there have been prominent business people, and the new provincial government, who argued that the city should pause the construction of the new multibillion Green LRT line because it was too financially risky. Monday, City Council approved the Green LRT line with some conditions. Even proponents of the arena, such as Mayor Naheed Nenshi and Councillor Jeff Davison (who chaired the negotiations committee), recognized that the timing presented really bad political optics for signing off on a new arena.
Second, was the decision to limit public consultation to only a week at the end of July. The lack of public consultation was surprising, given the amount of consultation for other high-profile infrastructure projects, such as the new downtown library, the airport tunnel, and the Green LRT line. Supporters of the deal argued that since Calgarians have been debating the idea of a new arena since 2015, there was nothing more to add. A replacement for the Saddledome, jointly funded by the City and the Flames, was always the project, but the devil was in the details. (Even now, there exist many unanswered questions: Who is responsible for cost overruns, who is responsible for major renovations, what is the penalty if the Flames break the 35-year lease, what is the economic impact of the land options, etc.?)
The real reason for the rush to decision, is that all negotiating parties, and especially the Flames, did not want time for opposition to the deal to coalesce. This had occurred over previous arena proposals (such as CalgaryNext in 2015) as well as the bid to host the Olympics in 2026. It was felt that time would allow critics to poke holes in the project and mobilize opposition.
A third political variable concerns the 2021 mayoral election. It is widely anticipated that Mr. Nenshi, whose popularity has dropped to below 40 per cent in his third term, will not run for re-election. This has meant jockeying from a number of Councillors. Whether they are for or against the new arena, many have been using this high-profile decision to raise their stature, get media attention, raise money, and acquire supporters.
And the rivalry with Edmonton cannot be dismissed. In 2016, Edmonton got a nice shiny new arena, and corresponding redevelopment in its downtown Ice District. Calgarians looked at Rogers Place in jealousy because the Saddledome had become the oldest arena in the NHL. The iron law of Alberta politics is that if Edmonton gets something new, then Calgary must, too.
In addition, Rogers Place received significant public funding from the City of Edmonton. When the Vancouver Canucks, Toronto Maple Leafs, and Montreal Canadiens all built their current arenas, it was done with 100-per-cent private funding. But those comparisons did not register with Calgarians. What mattered is what Edmonton got. The fact that Edmonton had a much greater need to revitalize its downtown than Calgary needed to revitalize the East Village was irrelevant. The fact that economic times were good when the Edmonton deal was ratified, and times were bad in Calgary, was also irrelevant. What mattered was ensuring that Calgary would get whatever Edmonton got, and it had to be better, too.
Ultimately, it was politics, not economics that drove the arena decision. If there are no surprises in the numbers and the Calgary arena is better than Rogers Place, then opposition will disappear (as it did with the Peace Bridge and downtown library).
But if damaging economic details emerge from the deal or the Calgary arena is worse than Rogers Place, then there will be political hell to pay for the Councillors who supported the deal.
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