The Katz Group insists a non-competition clause with Rexall Place is a “deal breaker” in any agreement to build a downtown arena, Coun. Bryan Anderson says.
“Katz says the city has to exert some kind of influence on Northlands so they will agree not to compete with the new arena,” Anderson said Thursday.
“There is not the economics in this town for two arenas. If there’s no non-competition clause, then this deal will fall apart.”
The city and the Katz Group, owners of the Edmonton Oilers, reached a surprise agreement in principle late Wednesday on how to fund a new $450-million arena.
This arrangement includes a 35-year requirement to keep the team in Edmonton, along with $350 million from the company, taxes on surrounding development and other city sources, and a ticket surcharge.
Mayor Stephen Mandel says he’ll approach the province to contribute the remaining $100 million.
Premier Ed Stelmach has in the past ruled out putting money into such a facility.
A spokeswoman for Alberta Infrastructure said she couldn’t comment until the department receives a formal request for support from the city.
Northlands won’t run the new arena. It has repeatedly indicated it’s willing to continue operating city-owned Rexall for concerts and other events even if the Oilers and the Oil Kings move out.
But Anderson said it will be up to senior city managers to look at other ways for Northlands to collect the revenue it now receives from Rexall.
“We have to find a way to keep them whole.”
University of Alberta professor Dan Mason, who studies funding of sports facilities, isn’t surprised the Katz Group wants to have the only major Edmonton arena.
“They’re putting their resources into the arena, they have to be the premier entertainment venue in town. The deal the Katz Group has agreed to is one that doesn’t have a competitor,” he said.
“If you look at other cities the size of Edmonton, you cannot have two arenas that size. In the long run, there’s not enough events to keep it sustainable. There’s not enough big acts … they end up cannibalizing each other.”
Oilers owner Daryl Katz has vowed to invest $100 million in development around the 104th Avenue site, which is zoned to include hotels, a casino, apartments, shops, restaurants and related entertainment businesses.
Mandel and other supporters of the scheme see it as a way to revitalize downtown as well as providing a financially stable, long-term home for NHL hockey in Edmonton.
The two sides will now try to negotiate a binding contract, including a design concept for the 18,500-seat facility.
But Coun. Kerry Diotte, one of five councillors to vote against the agreement framework, said it was raised during an in camera meeting with no warning at the end of three long days of hearings.
He wanted more time to study the proposal before making a decision.
“It’s been described as a game-changer for the downtown. It’s a huge deal, as everyone has talked about,” Diotte said.
“Why push through something like this late in the day behind closed doors? Why not just get it out in the open and debate it?”
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