The City of Abbotsford has paid the owners of the Abbotsford Heat another $5.5 million to end the Calgary Flames' farm team's contract with the city, capping off years of financial losses for the city.

Abbotsford Mayor Bruce Banman joined CEO of the Calgary Flames, Ken King, and president of Abbotsford Heat, Ryan Walter, at the announcement on Tuesday morning.

Banman said in total the contract with the team has cost the city more than $12 million since 2010, when then-mayor George Peary signed a ten-year deal with the Heat to guarantee $5.7 million a year in revenue.

The Abbotsford Heat left in April after the city bought the team out because it was suffering millions in financial losses due to poor attendance. (CBC)

The Heat has had a tough time filling the city-owned 7,000-seat Abbotsford Entertainment and Sports Centre and faced major hurdles winning fans, including a lack of local interest — as most AHL franchises are located in the east — and the team's affiliation with the Calgary Flames, a rival of the Vancouver Canucks.

With the team pulling in around 2,000 fewer fans per game than the minor hockey league average, taxpayers in Abbotsford have covered $7.2 million in losses in five years, plus the costs associated with owning and running the stadium.

Calgary Flames CEO Ken King said it is not yet clear where the team will go, but confirmed rumours that Glens Falls, N.Y., is one option under consideration.

Banman said the arena will be renamed the Abbotsford Centre, and there are no plans yet for a new AHL team.

Last year the owners of the Vancouver Canucks failed to reach a deal with the city to move their Utica Comets farm team from New York to Abbotsford.