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With Calgarians incurring half the projected $550 million in costs for the new Flames arena, many are puzzled by the move in light of recent cuts to essential services. Cuts that run $60 million deep.
Yes, incurring $275 million in costs for $400.3 million in revenue is ill-advised, given said revenue will take a whopping 35 years to generate.
Taking inflation into account may leave Calgarians with a $47 million net cost after the fact.
With many of Canada’s teams relying on private funding to build their respective arenas, it seems that city council missed the ball on negotiations.
Corporate welfare is not the solution; it just leaves us wanting more bang for our buck.
The Post Millennial reached out for an exclusive interview with the Alberta Regional Director to the Canadian Taxpayers Federation, Franco Terrazzano, who spoke to Calgary’s problematic arena deal.
CTF is a nonpartisan advocacy group that champions fiscal accountability for its nearly 220,000 members.
TPM: Set to be finalized for Tuesday, why does the CTF reject the current arena deal?
Franco: Well, besides the nearly $300 million given to the wealthy owners of a professional hockey team, I mean, the main issue here besides the dollar amount going to the business is just the lack of public consultation.
Calgary councillors should be ashamed of themselves for trying to ram through a deal with the Flames behind closed doors before taking off for their summer holidays. I mean, the transparency and concentration on this project have been a complete failure.
Now, they have less than a week for the public to provide input for councillors to analyze that feedback. We’re talking about a massive corporate welfare project that will cost the city nearly $300 million. Why are some city councillors in such a rush to push through this deal?
TPM: In the CTF’s most recent press release, you note Mayor Nenshi’s hypocrisies on past and current arena negotiations with the Flames’ ownership. What does the sudden change of heart say to Calgarians, reeling from the economic burdens of high taxes and unemployment?
Franco: In 2017, Mayor Nenshi said that 99.9% of the Calgarians he spoke with were against giving tax dollars to the Flames. Councillor Jeff Davison, he filled out our candidate survey and said he doesn’t support public funds for the professional arena.
Now, they’re leading the charge for the pro-arena deal. So what has changed? I mean, if anything, you would think the circumstances in Calgary would make it less desirable to give taxpayer money to the Flames.
Last month, we had hundreds of Calgarians rallying at City Hall demanding a fix to the property tax debacle. Many were calling for lower spending. Then a few days ago, the city council made cuts to funding for fire, police and transit.
If anything, you would think that circumstances have changed, which would make giving tax dollars to the flames even worse deal. At the end of the day, if councillors believe this is a good deal for Calgarians they shouldn’t be afraid to have proper public consultations.
TPM: With municipal property taxes remaining the same under the deal, does the timing of the agreement exacerbate the CTF’s sentiments further, given the recent $60-million budget cuts?
Franco: With any corporate welfare project, the benefits never turn out as good as the sales pitch. It’s always a real risk for taxpayers. The most frustrating part about this project is that there’s no reason why private business, the owners of the Flames, can’t build their facility with their own money and without tax dollars.
Taxpayers could have their cake and eat it too, in the sense that they could get a new arena without having to fork over any public dollars. This has happened on numerous occasions throughout Canada, where the NHL teams build their arenas privately without relying on taxpayer handouts.
We’ve seen it in Toronto, we’ve seen that in Vancouver, Ottawa, and Montreal. There’s no reason why city councillors have to fork over hundreds of millions of dollars to the Flames to get a new arena. Then you mentioned some of the revenue numbers and the cost numbers, and there are a lot of question marks surrounding the details.
For example, the city documents don’t show whether ticket sale projections are realistic. We don’t get to see those assumptions. Nor is it clear whether property tax revenues in the area will displace income from other areas.
There are other serious question marks, including how are we going to pay for cost overruns? What’s the value of the land subsidy for the Flames? Time is running out for consultations, with many questions left unanswered.
TPM: Some would argue that another 35-years of the Flames generate profits elsewhere, with fans choosing to watch games outside their homes and spend money, rather than stay at home. Furthermore, is there merit to this arena deal outside of the emotional attachment many have for the team?
Franco: Whenever a salesman is trying to sell their corporate welfare pitch, they always claim these substantial benefits, but for taxpayers, the benefits never tend to be as good as the sales pitch.
These corporate welfare projects always come with significant risk for taxpayers. But again, here’s the real frustrating part. Taxpayers can have their cake and eat it too, but they don’t need to use tax dollars to get a new arena built.
Many arenas have been built privately in Canada, and there’s no reason why it can’t be done in Calgary as well. So, Calgary can get the benefits of a new arena without having to risk taxpayer money on it. And I’ll add to that, I mean, a lot of Calgarians are happy to support the Calgary Flames, but with tickets, not taxes.
TPM: For many progressive voters, as well as small businesses, suburban voters who feel the city is not prioritizing correctly, what is your message to them?
Franco: The city isn’t prioritizing correctly. On Monday, Calgary councillors appeared ready to approve a deal that would give the wealthy owners of a professional hockey team nearly $300 million.
Then you fast forward a handful of hours, and you have city councillors talking about and approving cuts. I want to make it clear that the city council did need to trim the fat, but not to essential services.
City council has increased spending by $200 million a year, which, during a downturn, has forced businesses to shut their doors. They’ve cited property tax increases as a reason for closing the doors. So city council does need to cut spending, but trying to ram through a deal that will give nearly $300 million to the Calgary Flames represents a complete lack of prioritization.
I mean, the lack of prioritization and the lack of transparency on this project is mind-blowing.