Source: Public domain

A deal to build a new hockey arena in Calgary has been struck. After years of negotiations, the ageing Saddledome will be replaced with a new, modern arena, thanks to the intervention of Premier Danielle Smith. But while the Flames’ owners—led by billionaire oil baron Murray Edwards—are toasting their success, not everyone is happy. The deal has been criticized on social media as a corporate handout.

One Reddit user wrote, “This has been the worst arena deal in the history of arena deals, maybe ever.” Opinion polls also confirmed the impression given by online discussions. A recent poll showed that the deal is, unsurprisingly, reviled in Edmonton and unpopular in the rest of Alberta. In Calgary, 50 per cent were in favour, while 45 per cent were opposed.

Looking at the details, this anger is clearly justified. This is one of the more expensive arena projects in recent memory. Edmonton’s controversial arena deal, signed in 2012, which had the Oilers’ ownership paying just 27 per cent, ended up costing $613 million. The City of Calgary and Flames owners Calgary Sports and Entertainment Corporation (CSEC) had also reached a deal in 2019 to build an arena. That deal had the city and CSEC splitting the $550 million cost of the new arena 50-50, with the city taking a measly two per cent of ticket revenue. CSEC later walked away from this deal, citing unexpected costs.

If that sounds bad, the new deal is even worse. Renegade Calgary city councillor Jeromy Farkas called it “ten times worse than the previous one.” The $1.22 billion project will include construction of an arena, a retail area, a parking structure, some improvements to nearby roads, and a smaller rink for amateur hockey and Flames practices. All this will be built on a block of land just down the street from the Saddledome. The Saddledome will be torn down when the new arena is finished. This makes it one of the most expensive arena projects in recent memory. 

To fund it, millions of dollars are coming from public funds—the same public funds that Danielle Smith said will be “bankrupted” by health care. To construct the arena, the city will pay $537.3 million, with another $300 million coming from the province. CSEC will pay $356 million for the rest of the project, plus some extra, totalling around $700 million. 

Many people rightfully see this deal as a handout to the wealthy Flames ownership, part of a pattern of capitalist governments handing out billions to the rich, while attacking the working class with vicious austerity. This arena deal is a textbook example. At the deal announcement, Smith said the equivalent of “vote for me to get a new arena.” Meanwhile, if she wins the election, it will be “austerity” and “pain” for public sector workers. So if she wins the election, an oil billionaire gets millions while workers get privatized health care and austerity.

And it gets worse. The city will actually front most of CSEC’s share. The Flames ownership only pays $40 million upfront. The rest will be paid in yearly instalments, starting at $17 million and increasing by one per cent per year. Because inflation rarely drops below one per cent per year, this yearly payment will actually be decreasing in real terms.This is a huge favour to CSEC. For billionaires, putting off large payments like this is profitable, because they can use that money to speculate and play the stock market, making them more money in the long run. 

On top of this, there’s the issue of how the city and Flames ownership will share the ticket and concession revenue from the arena. This is a major question in most arena deals. In Calgary, officials have kept their mouths shut about this question—so they probably have nothing good to say. Indeed, Councillor Farkas claimed on Reddit that the Flames ownership will collect 100 per cent of the revenue for the arena. Normally when you own something, you get to profit from it. If Farkas is to be believed, not so in this case.

But complaining about the cost is selling the project short, we’re told. Smith called it “respectful to provincial taxpayers”. And Councillor Sonya Sharp painted quite the picture: “A new event centre in Calgary is more than just a building. It’s foundational infrastructure … It’s not a single venue or a single building. This is a district, and one that will serve every member of our community. The completed district will attract new people, more events and greater investment.”

This idea that the arena will be the centrepiece of a new district was reflected in a diagram from the City of Calgary. It depicts the new arena, surrounded by new buildings, forming a bustling new district. This is a stretch. These buildings, though not part of the project itself, are labelled “to be developed”. Unless they plan to fund half a dozen new skyscrapers, city council is hoping corporations will swoop in and build them, thanks to the economic growth stimulated by the new arena. This is doubtful in any city. It is still more doubtful in Calgary, a city where 27.2 per cent of offices are empty, meaning any new office development would probably be empty too. Why would corporations build more with no demand?

The idea that corporations will develop the area reflects the idea that arenas stimulate economic growth, the same idea that had Calgary officials predicting $400 million in economic returns for ordinary Calgarians.

Trevor Tombe, a University of Calgary economist, called this “extremely misleading.” The words “magical thinking” might be closer to the mark. “Sports teams do almost nothing for cities,” as The Globe and Mail described. Arena deals rarely cause big economic returns. This is especially true for the type of economic growth that benefits the working class. Even the National Post agreed, writing: “Even as the Danielle Smiths of the world talk breathlessly of the ‘billions in economic activity’ taxpayer-funded arenas and stadiums generate, study after study has found that they rarely (if ever) live up to the hype.”

Anyone who’s been to Edmonton’s “Ice District”, the site of its new arena, which opened in 2016, will understand this. As with Calgary’s planned arena, early renders of the Ice District showed it as the centrepiece of an attractive new district. Today, it is the centrepiece of a district of parking lots, a dying mall, a few luxury condos, and a renovated (but decades old) casino.

Smoke and mirrors aside, all the city is really getting is an arena and some new roads. This hardly benefits “every member of our community.” Regular working people will have to pay obscene ticket prices just to step foot in the arena—the one their city government owns and their tax dollars paid for, but which makes a billionaire a lot of money.

This deal is just one example of a common strategy from sports team owners to make cities pay public money to build new arenas for private sports teams. The Globe and Mail describes the formula:

First, complain about how hard it is to get a decent return out of an antiquated venue that doesn’t generate enough cash for the team to stay competitive. Then dangle a few carrots like downtown revitalization, job creation, higher tax revenues and other important economic gains. And finally wield one big stick—a credible threat to relocate the beloved franchise to another city if the financing package isn’t up to snuff.

And the threat to leave isn’t just blowing smoke. The city of Oakland has lost its NBA, MLB, and NFL teams since 2023 because the city wouldn’t offer good enough deals to the owners.

Flames ownership followed this formula to a tee, starting with promises that a new arena would help them build a competitive team. John Beam, CEO of CSEC, said “while there are many ups and downs to professional sport, there can be no doubt that our ownership group wants to win championships for all of our fans in Calgary.”

Flames management demanded a new arena for years. They bailed on the 2019 agreement because of costs. They made sure to threaten to move the team too: “We’re not going to make the threat to leave. We’ll just leave,” said one senior Flames manager. Even the fastest hockey player, Connor McDavid, would be jealous of these manoeuvres. Danielle Smith called the deal a “slam dunk.” This could only be true if she thinks giving in to blackmail is a slam dunk.

If CSEC wanted to win so badly, and needed a new arena to do it, they could finance it themselves, especially because an arena does not have to cost $1.22 billion. Just the chair of CSEC, Murray Edwards, is estimated to have a net worth of $2.7 billion. Undoubtedly the ownership wants to win, but not for the fans—for the bottom line. Winning championships increases merch sales. People like to watch successful teams, so winning also raises demand for tickets, raising the price.

That’s really what all this is about—profits, which are expected to skyrocket with a new arena. And it’s not just profits. Arenas also tend to explode the value of teams. This increases ownership’s net worth, and makes the team sell for more when they do sell it. Edmonton is a perfect example: the value of the Oilers nearly doubled in 2013, the year their new arena deal was approved.

The Calgary arena deal is just one example of capitalist governments’ typical approach: “privatize the profits—socialise the losses.” This deal will balloon the profits of a billionaire, and it comes at the expense of life-saving social programs. Health care is crumbling. The province is burning. The cost of living is exploding. Much of this is thanks to UCP cuts.

The working class should not have to foot the bill for billionaire owners, but neither should workers have to lose their beloved team. If the owners refuse to keep a team in town, it should be nationalized and run for the entertainment of all. Sports should not be controlled by the interests of billionaires. They should be controlled by the people who actually care—the fans.