Edmonton, Katz spar over arena deal

The feud over a new public-private arena for the Edmonton Oilers escalated Tuesday when Mayor Stephen Mandel announced that if Oilers’ owner Daryl Katz wants taxpayer money, he must now come to city council in person and publicly explain himself.

EDMONTON — The feud over a new public-private arena for the Edmonton Oilers escalated Tuesday when Mayor Stephen Mandel announced that if Oilers’ owner Daryl Katz wants taxpayer money, he must now come to city council in person and publicly explain himself.

“I no longer have any idea what he’s asking for (or) how he’s asking for it,” Mandel told reporters at city hall.

“The time has come for them to come to us in public to explain to council, because (the situation) is unfair to councillors.”

The Katz Group declined to respond to Mandel’s comments.

Mandel was reacting to the latest developments in the deal, which was brokered a year ago but now faces collapse with the scheduled start of construction just months away.

Under the deal, taxpayers would fund the lion’s share of construction of a $475-million downtown arena to replace aging Rexall Place.

The Oilers, in turn, would put up $5.5 million a year for 35 years, would pay operating costs for the arena (about $10 million a year) and keep all profits for 11 months out of the year.

But last week, councillors were told the Oilers are now seeking, among other concessions, a $6-million annual subsidy from taxpayers to offset the arena operating costs.

The Katz Group declined an interview request with Katz, but the pharmacy billionaire told an Edmonton radio sports show Tuesday that the $6-million subsidy deal was part of the agreement from the start, and that the money was to come from gambling or casino revenues.

“To suggest I tried to change the deal at the last minute is really unfortunate,” Katz told the radio show.

“What’s come out of the city over the past several days is really unfair and it’s totally counterproductive.”

Katz said subsidies are commonplace with NHL arena deals in places like Pittsburgh and Winnipeg, and that such financial aid is critical for Edmonton.

Mandel refused to get into specifics of the dispute except to say, “My recollection with the history of this (project) and Mr. Katz’s is substantially different.”

The deal has polarized the public in a hockey mad-city that routinely sells out all Oiler home games. It has also left questions about whether a collapsed arena deal will see Katz sell the NHL team or move it to a new city.

Katz has dropped hints. He has previously said he won’t stay in Rexall Place for long after the current lease deal expires in 2014.

On Tuesday, he told a local newspaper he wants a final deal in the coming months, adding that if the deal collapses “all bets are off.”

He didn’t elaborate.

The deal has left members of the public in three camps: those who believe the public should subsidize a privately run NHL franchise for the economic betterment of all; those who say no public money should be involved at all; and those that say a public-private venture is fine, but the Oilers deal is too lopsided in favour of the team.

Katz, who has said he’s operating the Oilers at a loss, told the radio show that just having the Oilers play in Edmonton is a form of public subsidy given that the team spins off economic benefits to surrounding businesses.

“All we’re really looking for is a model that will sustain the Oilers for the long term and (one) that’s on par with what other small markets have done to sustain their teams, especially given that Edmonton is the smallest of all NHL markets,” he said.

Edmonton councillor Kerry Diotte said he’s been “flooded” with calls and emails from citizens upset with the Katz Group.

“Like a lot of people I want to see a new arena, but not at any cost,” said Diotte.

“It’s got to be good for the taxpayers, not just the Katz Group.”

Diotte said the small market argument is a red herring given that NHL cities like Miami are larger markets but have only a sliver of fan interest or support compared with Edmonton.

“It’s time for Mr. Katz to open his books and make a case that somehow he’s bleeding red ink,” said Diotte.

“Forbes magazine has long said the Oilers are one of the most profitable teams in the league.

“The size of the market doesn’t have anything to do with the bottom line. The bottom line is the bottom line, (so) let’s see it.”

Under the original deal completed last October, the price of the arena was to be $450 million. It has since escalated by $25 million.

Under the agreed terms, 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.

Another $100 million is being sought from the province, although Premier Alison Redford’s government has repeatedly said no tax dollars will directly go to a privately run rink.

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. Another $57 million is earmarked for a light-rail train station and pedway access.

A proposed community rink would add another $21 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.

Diotte said the estimate for concession profits for the Oilers is about $20 million a year.

Katz would also keep the profits from naming rights for the building. Comparable estimates put that at $1 million a year.

The proposed rink is a futuristic structure of wavy lines and curves done over in zinc, masonry and glass in the broad shape of an oil drop.

There would be 18,400 seats.

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