Calgary had been served for 30 years by the Stampede Corral when the Calgary Flames arrived in 1980. With a total capacity of 8,700, the Corral was the largest arena in Canada west of Toronto in 1950, but had fallen below major league standards by the 1970s. The Corral was deemed insufficient for the National Hockey League (NHL) in 1977, leading the World Hockey Association's Calgary Cowboys to fold rather than hope to be a team selected to merge with the NHL.

Calgary's bid to host the 1988 Winter Olympics, coupled with the arrival of the Flames, drove the need to build a new arena. City Council debated the merits of several locations for the city's new Olympic Coliseum, and narrowed their choices down to two areas in the Victoria Park neighbourhood on the east end of downtown. Two other sites, one on the west end of downtown, and a late bid by several businessmen pushing to build the arena in the northern suburb of Airdrie were also considered.

The Victoria Park Community Association fought the bid to build the arena in their neighborhood, threatening to oppose the city's Olympic bid if necessary. City Council voted on March 3, 1981 to build the proposed 20,000 seat arena on the Stampede grounds, immediately east of the Corral and south of Victoria Park. The community continued to fight the city over rezoning the land to allow for the new arena amidst fears of traffic congestion in their neighbourhood which resulted in numerous costly delays to the start of construction. In a bid to end the battle, Mayor Ralph Klein asked the provincial government in July 1981 to take over the land designated for the arena to bypass the appeals process and force approval. The province supported the city amidst protests by community associations and invoked rarely used powers to overrule planning regulations, allowing construction to begin. The following day, on July 29, 1981, builders began construction of the arena. The International Olympic Committee was impressed that the project was underway, as noted in the XV Olympic Winter Games official report which stated "The fact that this facility was already being built added credibility to (Calgary's) bid and proved to be a positive factor in demonstrating Calgary's commitment to hosting the Games".

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