SBD/January 24, 2013/Facilities

Oilers' Downtown Arena Deal Approved By Edmonton City Council; Facility To Open In '16

Construction on the arena could begin as early as August, with opening in '16
The Edmonton City Council yesterday approved the Oilers' proposed downtown arena by a 10-3 vote "following a last minute agreement" with team Owner Daryl Katz, according to a front-page piece by Gordon Kent of the EDMONTON JOURNAL. Construction on the new arena is scheduled to start "as early as August and open in 2016, not 2014 as originally scheduled." Negotiations on the project "broke off last fall after Katz, arguing the economics weren’t as good as they appeared when an agreement framework was approved in October 2011, asked for changes" that included a $6M (all figures Canadian) annual subsidy. Edmonton City Manager Simon Farbrother said that a summary agreement he and Katz signed Tuesday is "95 per cent similar to the 2011 framework." Kent notes the "major difference is cost." The maximum price of the 18,559-seat facility now is $480M, up from $450M, and the two sides "have agreed to split the difference." The city also is going ahead with a $21M, 1,000-seat community rink attached to the arena, "an addition originally slated to proceed only if the provincial and federal governments provided two-thirds of the budget." With no direct subsidies in the 35-year lease, Katz Group Exec VP & General Counsel John Karvellas said that the company "doesn't intend to come back for more money in the future." Kent reports the Katz Group and partner WAM Development Group are planning $2B worth of "development on land around the new facility"(EDMONTON JOURNAL, 1/24).

FUND RAISING: In Edmonton, Angelique Rodrigues reports the new design will cost $601M "once all surrounding infrastructure is tallied up." The city of Edmonton "in total" will provide $219M in funding for the project, including the $140M "for the arena itself." Katz will "ante up $143 million -- and cover all costs exceeding $50 million for the Winter Garden -- and a proposed ticket surcharge will net in $125 million" (EDMONTON SUN, 1/24). Also in Edmonton, Paula Simons reports the city will "assume the costs and responsibility for all the major building rehabilitation and structural repairs, things like the pipes, the air conditioning, the escalators." Those costs will be funded with a $1.5M annual ticket tax, "which could be hiked as needed." The money will be "placed in a reserve fund -- but any surplus will go directly back to the Katz Group." The updated deal also gives the Edmonton Arena Corp. a "guaranteed tax agreement." The Katz Group under the old framework had to "pay all property taxes on the new arena." The EAC now will "pay $250,000 a year in city property taxes -- for the next 35 years" (EDMONTON JOURNAL, 1/24). The GLOBE & MAIL's Josh Wingrove writes questions regarding the deal "remain, including a missing $100-million from the province and no plan about how to cover cost overruns, but arena advocates celebrated the deal as long overdue." The Oilers "pledged not to reopen the contract over its term" (GLOBE & MAIL, 1/24).

CHEERS, BUT A FEW JEERS: In Edmonton, Terry Jones writes yesterday "should have been a great day." But in "exasperated Edmonton, after half a decade of dragging the deal through the mud, with an owner holding Edmonton’s feet to the fire while running farce fakes to move the team to Hamilton, Quebec City and most recently Seattle, there was no dancing on the snow-covered streets." Until there is a "hole in the ground in August, nobody is likely going to totally, 100% completely, believe they'll be watching the Oilers play in the place in 2016." Katz "wanted his legacy to be the arena and downtown entertainment district," But it "might be more" Edmonton Mayor Stephen Mandel's today. Having had "enough," Mandel "called the bluff and said no to the billionaire owner." The "second star" of the deal is NHL Commissioner Gary Bettman, whose image is "mud in 29 other NHL cities after the lockout, but ... has once again done right by Edmonton" (EDMONTON SUN, 1/24). In Vancouver, Cam Cole writes under the header, "Bettman Is Royalty, But Only In Edmonton" (VANCOUVER SUN, 1/24). In Edmonton, David Staples in a front-page piece writes under the header, "We Owe Thanks To Mandel, Katz And Bettman For This Arena Deal." Mandel and Katz have "taken a huge amount of abuse over a long period of time in regards to this arena deal, but now they have their win." Mandel "repeatedly pushed for the arena when few others would stand up" (EDMONTON JOURNAL, 1/24). The JOURNAL's Kent notes several Oilers players watched yesterday's discussions "from the front row of the council chamber" (EDMONTON JOURNAL, 1/24).
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