CALGARY—A new arena could boost annual operating revenue for the owners of the Calgary Flames by an estimated $48.7 million — if not more — according to a confidential economic analysis obtained by Star Calgary.

The analysis, commissioned by the Calgary Municipal Land Corp. (CMLC), was conducted by U.S. sport management expert Mark Rosentraub in 2016 and 2017, while the city and the Calgary Sports and Entertainment Corp. (CSEC) were eyeing a new venue in either Victoria Park or the West Village.

The CMLC contracted Rosentraub, the director of the Center for Sport and Policy at the University of Michigan, in 2016. He consulted with the CMLC and gave several presentations, including a closed-door briefing to city council, offering insight into considerations for the city and the Flames as they negotiate and plan for a new arena.

Rosentraub has served as a consultant for numerous sports teams and cities as they consider new sports and entertainment venues. For his work in Calgary, he wasn’t given the financial information of the CSEC, which also owns the CFL’s Stampeders, the Western Hockey League’s Hitmen and the Roughnecks of the National Lacrosse League.

On Friday, CSEC’s vice-president of communications Peter Hanlon said they’re aware that Rosentraub prepared a report, but disputed the accuracy of his estimates.

“Mr. Rosentraub’s estimates were put together without the benefit of financial data from CSEC,” Hanlon said. “It is our understanding from the limited information we have on his report that his estimates are grossly inaccurate.”

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Last week, city council announced it had reached a tentative deal with CSEC to build a new arena just north of the aging Scotiabank Saddledome. The deal sees the city and CSEC split the $550-million construction costs for the facility down the middle, with taxpayers footing an additional $15.4 million for Saddledome demolition and land transaction costs.

In an October 2016 presentation, Rosentraub estimates a new arena in Calgary could generate $151.8 million, in 2020 dollars, of annual operating income — increased by new sponsorship packages and luxury products “that do not exist in the Saddledome.”

In another presentation dated June 26, 2017 — Planning, Monetizing, and Designing a New Arena for Calgary — he estimates that that number means CSEC would see $48.7 million of additional operating income compared to what it gets from the Saddledome. That number doesn’t account for the annual payment the Flames might be making to pay for its share of a new arena.

Rosentraub’s operating income estimate doesn’t take into account the CSEC’s operating expenses — which aren’t publicly available — so it doesn’t represent the profits the Flames’ owners might net.

His presentations were never made public, and he declined to comment on them due to contractual obligations to the CMLC.

Rosentraub’s estimate comes from his own economic modelling, which includes publicly available pricing data and information from 10 other NHL teams. He also met with CSEC, which contributed some additional information, according to one of his presentations.

However, “we have not received audited financial statements from CSEC,” the same presentation notes, and “some unknowns remain.”

Rosentraub’s estimate is likely the only public insight into what the Flames might stand to financially gain from a deal for a new arena, with a city council vote to approve $275 million in public money for the building set for Tuesday.

In 2018, city officials denied Star Calgary’s freedom-of-information request for the release of Rosentraub’s presentations over concern the disclosure would be harmful to business interests of a third party and harmful to economic and other interests of a public body.

Earlier this year, CMLC spokesperson Clare LePan told Star Calgary that the research is part of the “due diligence process,” but releasing it would disclose information of a private corporation.

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On Friday, LePan cautioned that while Rosentraub’s work “speculates” on potential gross and net revenue for CSEC, the company didn’t provide its financial information to CMLC or Rosentraub.

“(The reports) drove our thinking, but it’s not one that was used as part of decisions or negotiations on the event centre,” LePan said.

But building a new, modernized venue for professional hockey and other big events undoubtedly opens opportunities for CSEC to generate more income.

Brad Humphreys, an economics professor at West Virginia University in Morgantown, W.Va., said new arenas, like Edmonton’s Rogers Place, have luxury packages and “experiences” that old venues, like the 1983-constructed Saddledome, weren’t built for and can’t accommodate.

“The way they build new arenas now, they generate way more revenue than old arenas,” he said, pointing to larger concourses that can accommodate more concession stalls, as well as luxury boxes and premium seating that give venue operators the opportunity to charge much more than they could in an older building.

“The value of that franchise ... it’s related to how profitable the team is going to be in the future. Getting a new arena increases team profitability tremendously.”

Under the current deal on the table in Calgary, the city would own the new arena, but CSEC would operate the venue, collecting revenue from the events that happen there.

The arena — which the city officially refers to as an “event centre” — is part of a larger Rivers District redevelopment plan in Calgary’s east Victoria Park neighbourhood. CMLC envisions it as a “cultural and entertainment district,” with the event centre as a “catalytic” project for more development.

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Humphreys isn’t in favour of public money going toward arena projects, and he said it’s “pretty unusual” to see a proposed deal for a venue like this move through the approval process in just a handful of days.

“Every public dollar that goes toward construction of the arena, absent that subsidy, would have to be provided by private dollars,” he said.

He was previously a professor at the University of Alberta, and he was living there when Edmonton struck the deal for its new downtown arena.

“I predicted at the time, if you’re going to give the subsidy to the Oilers, the Flames are going to want their share as well eventually.”

City council is scheduled to discuss the arena deal, and vote on whether to approve it, on Tuesday.

Correction - July 29, 2019: This article was edited from a previous version that misstated the construction cost of the arena as $55-million.

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