EDMONTON – Northlands CEO Richard Andersen says he’s already in talks with a top international architect to renovate Rexall Place so it can continue to host concerts after the Oilers move out.
The comments came one day after city council agreed to a deal with the hockey team owner to build a new downtown arena with no involvement from Northlands, the operators of the current facility.
Andersen says Northlands will compete in the concert business and he “likes their chances.”
“We hoped it wasn’t going to come out this way, but in the end it’s probably going to work out better for us. I sincerely mean that,” he said. “We free up our building, we have the ability to truly control everything.
“We have a 160-acre campus here that has all kinds of potential for development and it’s all been waiting on this arena debate to be decided.”
The new downtown arena will eliminate a major tenant for Rexall Place, but it will also free up about 110 days in their schedule for programming.
Northlands will also gain additional revenue from advertising and naming rights, which currently all go to the Oilers.
It will lose a $2.4-million annual subsidy from the city, but that money isn’t helping the bottom line anyway, said Andersen. It is an indirect Oilers subsidy, given to Northlands to cover costs such as paying staff on game nights in exchange for charging the Oilers only $1 a year in rent.
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The big question will be the ticket tax.
During negotiations, the Katz Group dropped its demand for a non-compete clause to shut Northlands out of the concert business. But in exchange, the city agreed to enforce the same ticket tax on both arenas, about seven per cent. While the tax at the new downtown arena will go to paying off $125 million in debt and covering $1.5 million in annual capital maintenance, tax from Rexall Place will go directly to the city’s general operating funds.
“It will be used for capital improvements, not at Rexall Place, but just capital improvements in the city,” said the city’s chief financial officer Lorna Rosen. “It’s about evening the playing field.”
That means when the new arena opens, Northlands will lose the roughly $2 million a year it gets from the current ticket tax, and continue to be responsible for all its own capital maintenance and improvements.
“They are basically on their own and that was made really clear during the discussions,” said Rosen. “The city was pretty clear at the beginning of the discussions that we really only have the capacity to support one arena. … Why would we support two buildings that serve the same purpose?”
Andersen said he hasn’t had a briefing yet from the city giving him the details, but he still hopes the ticket tax dollars will be reinvested in Rexall Place.
“Logically, why would it not (be reinvested in Rexall),” said Andersen.
“Great, build a downtown arena, but don’t do it at the penalty of the existing building you already have. That’s almost like beginning to create an unfair playing field. If you want an equal playing field, then you have to treat each party the same way. That’s all we want.”
Northlands’ lease on Rexall Place runs past 2050.
It’s a 39-year-old building with an estimated 50-year lifespan. It was built in 1974 with a $3.7-million grant from the province, a $10-million low-interest loan from the federal government, $2 million in federal lottery money and $3.7 million from the city to buy the land.
Andersen says the structure itself is sound, and there are great opportunities to open it up and improve the acoustics for concerts.
“We have taken a deep dive with a major international architect to evaluate opportunities at Rexall,” he said, declining to name the firm or the estimated cost of renovations.
“The bones of the building are terrific. Our intent would be to spruce it up, to make it more accessible, to enhance the amenities around food and beverage and washrooms and the flow. Without hockey, we’re able to eliminate lots of suites and create a much more open flow. Then it’s just a matter of Edmonton having yet another great option for concerts and events.”
“It’s not at all unlikely that both buildings can just be zinging.”
At least one councillor is giving Northlands a fighting chance of success.
“The reputation that they’ve built with the promoters goes a long way. They can be trusted to deliver the facility and deliver the infrastructure to make these concerts work,” said Coun. Tony Caterina.
“You’ve got to remember, (Andersen) is very, very well known in the concert and convention industry all over the world. He’s got 30 to 40 years behind him in relationships with all these promoters.”
“Life will go on for them,” Caterina said. “Northlands has run one heck of an operation for 130 years. They are a huge contributor to the quality of life and economy of Edmonton.”
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