EDMONTON – The showdown between the Edmonton Oilers and the city over a new downtown arena became a staring contest Wednesday after the mayor insisted the team appear before council to clear the air on how much public money it wants.
Mayor Stephen Mandel, on his way in to a morning meeting, told reporters he has yet to hear from Oilers owner Daryl Katz, but said “I’m not going to be sitting by the phone.
“I think the deal we’ve given them is quite good to be honest with you.”
What if the Oilers don’t agree to come to council?
“Then that makes a statement, doesn’t it,” said Mandel.
A spokesman for Katz, in an email exchange, would only say they were aware of Mandel’s request.
The standoff has put the $475-million downtown arena in limbo.
Construction was to start in the new year on the 18,400-seat complex, which will replace aging Rexall Place as the new home for the Oilers.
The rink is being funded primarily through taxpayer dollars and a ticket tax.
The Oilers have agreed to pay a portion of the construction costs: $5.5 million a year for the next 35 years. In return, Katz will keep all profits from Oilers games along with trade shows, concerts and other events at the facility. He will pay about $10 million a year to run the facility
The deal went off the rails a week ago when city officials told councillors in a closed-door session that the Oilers were now seeking more public concessions, including $6 million a year to help pay for the running of the building.
Councillors rejected the new concessions and accused Katz of blindsiding them by trying to change the deal at the last minute.
Katz, in turn, accused the city through the media of negotiating in bad faith. He said the $6-million subsidy was always part of the deal and that the city had been tasked with getting it through casino or gaming revenues.
Katz also said that the concessions were critical to keep the Oilers viable in what he called “small market” Edmonton, and that without a new arena soon “all bets are off.”
That led Mandel to clear the air Tuesday and invite the Katz Group to spell out in detail in a full public council meeting what it wants.
“I think everybody’s frustrated. Everybody wants to see us move ahead with this within the parameters of something reasonable for everybody,” said Mandel.
The new concessions have reignited a debate among citizens that burned red hot last October, when city council and the Oilers crafted the original deal to build the arena.
The debate involves those who are OK with public money for the NHL, those who aren’t, and those who are OK with it in principle but want a better deal from Katz.
Under the current deal, the price of the arena was to be $450 million. It has since escalated by $25 million.
City taxpayers would put up $125 million to go with $100 million by the Katz Group. A ticket tax ($5 to $6 a ticket) would pay for another $125 million.
Council has already been told that the city’s ultimate contribution will far exceed $125 million. Officials estimate that when borrowing and land purchase costs are factored in, the number becomes $305 million.
The city would also pay Katz $20 million over 10 years to advertise through the team. It’s not clear what form that advertising would take.
Katz would also keep the profits from naming rights for the building. Comparable estimates put that at $1 million a year.
Even if the latest dispute is resolved, the arena’s future is far from certain.
The project will still be at least $100 million short of funds. It’s money the city hopes to get from the province.
But Premier Alison Redford’s government has said it won’t directly fund a private venture like an NHL rink and also won’t bend or fast-track gaming or casino rules to benefit one specific enterprise.
Edmonton city councillor Kerry Diotte, who has advocated for a new arena but says even the current deal is a poor one for taxpayers, said his office continues to receive calls from angry fans and taxpayers.
“I’m just getting a flood of people who are completely outraged,” said Diotte. “The (Katz Group’s) ongoing asking for more, more, and more has really put Edmontonians off and eaten away at their goodwill.”
Diotte challenged Katz’s assertion that the Oilers are losing money and need the concessions to stay alive in the Alberta capital.
He noted that the most recent valuation of the Oilers, published less than a year ago in Forbes magazine, pegs the Oilers at $212 million—good for 15th in the 30-team league.
Most comments on local websites and Twitter have taken Katz to task for being greedy, but also criticize Mandel and council for dragging the issue on for more than four years without a resolution.
One tweeter tongue-in-cheekily suggested that the new concessions won’t be the last, saying: “Katz’s demands (will soon) include the last Dodo Egg, the last Unicorn, and all the stuff in the warehouse in Raiders of the Lost Ark.”
Built in 1974, Rexall Place is the second-oldest rink in the NHL. The oldest is the arena where the New York Islanders play.
The Oilers are the only NHL team that doesn’t get non-hockey-related revenue from its building.