As Yukon Joe said, BMP is pretty much up to current - and foreseeable future - arena design standards. It's owned by TNSE and has all the streams of revenue you could ask for (except parking, but that's not likely with a downtown arena in any event). The cost of buying and demolishing City Place or Portage Place and then building a new arena for a marginal gain (more cheap seats, more legroom, more concourse room, more concession variety) just doesn't make financial sense...even if government is footing a big part of the bill.
Winnipeg Arena needed to be replaced in 1979. It was a retrofitted mess that was owned by the City of Winnipeg, not the team. There was no chance for them to ever turn a decent profit there. Ironically, if they'd built a new arena in 1979 it would've been before the luxury suite revolution, and the city would've needed a new one by now anyway.