Following is the third in a series of open letters to residents of Calgary, and those citizens in other cities who are contemplating Olympic bids.
It’s good to hear that you finally got more information about your potential 2026 Olympic Winter Games bid, complete with an early venue concept and a high-level budget. I managed to find time to read the 80-page document.
And I’ll tell you, I’m a little… disappointed.
I also watched Tuesday’s City Council meeting livestreamed presentation and debate on the bid.
The day played out like a late summer version of Groundhog Day, both in terms of the uniquely North American February 2nd observance, and the whimsical Bill Murray movie of the same name.
City Councillors were debating the future of Calgary’s 2026 Olympic bid for hours into the night, hidden behind closed doors while a small group waited outside, and a bigger group waited patiently (or furiously) next to a livestream. Then councillors emerged with stretches and yawns, surrounded by the media, and declared that there would be at least nine more weeks of bidding.
And as depicted in the movie, it seemed like something that has been repeated again and again, and again.
Thankfully you’ll be able to break the cycle, one way or another, with the scheduled November 13 plebiscite that was also confirmed Tuesday.
But I fear your decision will be difficult to make, because it’s really hard to get past the proposed CAD $5.2 billion price tag. And what’s worse – it didn’t really have to be that way.
In past letters, I wrote that the plans would ultimately reflect a choice between lowered risk and increased legacy – and it’s clear Calgary 2026 went with the risk. Apparently, those who put the plan together didn’t get the memo from the International Olympic Committee (IOC) – the one that pretty much says “don’t build anything specifically for the Olympics.”
And it’s a real memo – I got the statement from the IOC last year that read, in part “We understand that Calgary’s estimated budget has been modeled on the experience of Vancouver 2010, and did not benefit from the new approach of organizing the Games, which emphasizes efficiencies and sustainability in the context of a city’s long-term planning as a part of the Olympic Agenda 2020 framework.”
“Sustainability” is Olympic-speak for “we (at the IOC) don’t want to be blamed for any of your construction projects, so don’t build it.”
That was after the Calgary Bid Exploration Committee (CBEC) last year estimated the bid would cost $4.6 billion (USD $3.5 billion). Now to be fair, the financial guys added a $1.2 billion recoverable contingency to the budget so it didn’t really go up – but it’s hard to say that it went down either.
The IOC followed up by visiting Calgary and explaining that the existing Saddledome will work great for hockey and that faraway venues in Whistler and Edmonton would be suitable for other sports too.
Last year, the IOC awarded the 2024 Summer Games to Paris. But it was so impressed by Los Angeles’ bid for the same Games that it agreed to sign up the American city for the 2028 Games immediately – and advance the city $180 million starting January 2018 to sponsor youth sport programs.
Why? Because Los Angeles won’t be building any new permanent venues to host the Olympic Games. LA already has the facilities – and the youth sports funding is a 2028 legacy that starts now.
Sports venues purpose-built for the Olympics are *so* 2014, and 2016, and 2018… when venues were delivered late, over budget and without a future purpose. The IOC is done with chasing down those problems and explaining them to cities who bid for future Games, only to later drop out when taxpayers revolt. They don’t want it to happen again.
But the two new sport venues added to the Calgary 2026 budget are venues they say are needed anyways. So what’s the problem?
Adding those venues to the budget brings the total price above a sensitive $5 billion mark, and adds risk to the project – things that will cost percentage points at the plebiscite ballot box.
But there’s more. Stay with me.
Mayor Nenshi has said that the new Field House, a multi-sport venue that would host figure skating and short track speed skating at the Olympics, “is a facility that is badly needed” and “on our books” requiring more than $300 million funding.
But the new mid-sized arena, a facility that would be the second hockey rink to the Saddledome during the Games, will not be a suitable arena for the NHL’s Calgary Flames. So what’s the legacy use for that?
This is the creative part that many voters may not fully understand as they head to the polls.
Don’t expect that the “mid-sized” arena will ever get built. I think it’s merely a placeholder. The City and the Flames have been deadlocked in negotiations over a new arena for months, but talks could resume and it would be naive to believe that the Olympic venue and an NHL arena would both get built. And its equally unlikely that the city, while organizing for an Olympic Games, would let the Flames leave town for lack of an arena.
Remember, this is still only a “preliminary budget” – one required by the IOC in January for the city to stay in the race.
So here’s the deal. On Tuesday bid CEO Mary Moran said that while expected revenues will offset the operating costs of the Games, or as she phrased it – “the running of the Games” – $3 billion dollars more public money will be required for the full budget, or “the cost of hosting and getting the house ready.”
On Tuesday Canada’s Sport Minister Kirsty Duncan wrote in a letter to Nenshi explaining that her government would provide matching funds to those committed by both the Province of Alberta and the City of Calgary – that’s up to 50 percent of the total required, or potentially $1.5 billion.
The field house and mid-sized arena together make up about $400 million (more if you include contingency allowances) of the “getting the house ready” budget. If Ottawa kicks in half, and the province contributes 35 percent – the city will get its $300 million field house, and extra cash to contribute to a new NHL arena deal – for only $60 million (if Calgary is responsible for 15 percent of the bill, as expected.)
And the extra cost of the city’s portion of the new, bigger, NHL arena? That’s where the generous contingency fund comes in.
“If we can get that money from other places and also get all the benefits of an Olympic Games, that starts to sound really interesting to me,” Nenshi said Tuesday.
Similar math could be used to rationalize the spending on needed upgrades to eight existing venues so that Calgary can remain at the forefront of Winter Sports for more decades to come. Ditto for much-needed affordable housing. Add security costs, the Paralympics and a contingency and you’ll see how the $3 billion stacks up.
It all sounds pretty awesome, right?
Nenshi added “I am not as much pro-Olympics as I am pro-a-great-deal for Calgary.”
So then, why hasn’t it worked in the past? Why were the total costs for PyeongChang, Rio, Sochi, London and Vancouver all much higher than bid-time estimates?
Running the Olympics is typically profitable. Broadcast deals are lucrative, sponsorship programs are productive and merchandising brings in the cash.
But getting the house ready, the larger capital cost side of the budget, has no offsetting revenues attached – but several risks.
The days of using an Olympics as a catalyst for urban development are done.
At bid time “rough order of magnitude” (ROM) estimates are usually provided for the large construction projects that are in pre-planning. These are high-level estimates typically based on past similar projects, and come with variances that could be anywhere from 15 to 100 percent.
With eight years until planned deployment, so many other factors can impact the cost of these projects including currency fluctuations, labour disputes, changes in material costs, inflation, weather and natural disasters. Final capital costs are predictably unpredictable.
I believe that the Calgary 2026 bid committee is doing a good job with responsible accounting while baking in a solid contingency fund. But time-boxed high-profile Olympic venue projects are extremely vulnerable to cost fluctuations.
Interestingly, many Calgarians are already complaining that there isn’t enough legacy attached to the project. Some are asking for more transport infrastructure including an airport light rail connection.
And it doesn’t stop there. It’s not uncommon for politicians to later tack-on additional small projects that may seem Games-related, but probably aren’t. The costs go up.
I’ll be very clear. The days of using an Olympics as a catalyst for urban development are done. As I’ve said before – the Olympics won’t get you a shiny new arena or new cutting-edge transportation infrastructure. You still need to pay for that.
That’s why Sion’s 2026 Olympic bid proposed no new venues, instead choosing existing facilities across the region. Ultimately the Swiss voters rejected that project in a referendum over the funding of USD $100 million.
Italy’s three-city joint bid is also deliberately a spread-out plan, and two of those cities are former Olympic hosts just like Calgary – Turin in 2006 and Cortina d’Ampezzo in 1956 – along with Milan. No new venues are being proposed in Italy, but final plans and budgets have yet to be released.
And that’s why I’m disappointed.
Calgary had the opportunity to do the same.
A preliminary planned site for hockey 2 could have been Edmonton’s Rogers Place Arena – and if a deal with the Flames was made separately, Calgary 2026 could have made adjustments and included it as an existing arena. If the field house is already on the books, as the Mayor suggests, then it could have been completed separately too.
I get it though, my proposal would mean that less money would flow from government partners. But it could significantly cut risks, lower the cost and give the project a better chance at the ballot box.
The venue upgrades could still happen, so how does Calgary’s continued involvement in international Winter sports, and the associated financial benefits of that, for another 38 years sound?
Add to that another generation of Calgarians who can be inspired by the Games; further reinforcement to the culture of volunteerism; improvements to the accessibility of the city as a result of the Paralympics – and more.
And it wouldn’t cost $5.2 billion.
If more cities, like Sapporo did on Thursday, drop out of the running – Calgary just may be in a position to negotiate a pre-legacy cash advance deal like LA did. Maybe not, but Calgary would then be in control and not the IOC.
Others have asked about the story of the Calgary 2026 bid, the ‘why’. I’d call it ‘renewal.’
So what will you do? On October 8 in Buenos Aires the IOC will invite your city to become an official candidate and appear on a final ballot next September. On November 13, you’ll decide whether you want to accept.
Until then, let’s stay in touch.