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Edmonton, Katz Group Reach Agreement In Principle For Downtown Oilers Arena

The City of Edmonton and the Katz Group yesterday "reached an agreement in principle" to build a downtown arena for the Oilers, according to Gordon Kent of the EDMONTON JOURNAL. The deal, "approved by an 8-5 council vote following an hours-long meeting behind closed doors, closely follows a 17-part motion passed in April that laid out what the city wants to happen." The "maximum construction cost will be" $450M (all figures Canadian), which "will be covered by $100 million cash from Oilers owner Daryl Katz, $125 million from a ticket fee and $125 million from tax on surrounding development and other city funds." The provincial and federal governments "will be asked to put in the remaining" $100M. Kent notes Edmonton and the Katz Group "will jointly work on a design" for the arena. Edmonton "will own the 18,500-seat building, buying the land along 104th Avenue from Katz for the price he paid, but Katz will operate it, receiving all the revenues and covering the costs." Katz also will "receive the potential multimillion-dollar income from selling naming rights, and accept a 35-year location agreement keeping the Oilers in Edmonton." No deadline for completing negotiations was set, but Edmonton Mayor Stephen Mandel said that the agreement "doesn't mean easy sailing toward a final contract" (EDMONTON JOURNAL, 5/19). Mandel: "There's still a lot of work ahead to do. There will be lots of challenges ahead, but this is a vital part of our city. If you ask people what's important, they say the Oilers." Katz Group Exec VP/ /Sports & Entertainment Bob Black said, "From the beginning, we have approached this project with the twin objectives of creating a major engine to drive the revitalization of downtown and of creating a model for the long term sustainability of the Oilers in Edmonton. City council's decision is a watershed moment that puts us on a path towards achieving these objectives" (EDMONTON SUN, 5/19).

NOT THE RIGHT FIT
: The EDMONTON JOURNAL's Kent reports the Katz Group has "ruled out" funding the arena by "selling up to 2,000 seats in advance to people who could keep their spots as long as they want." Chicago-based Stadium Capital Financing Group had "proposed selling ownership of individual seats in the new facility for $278,000 to $418,000, raising up to $694 million that could go to arena construction, maintenance and the Katz Group." But Katz Group Exec VP & CFO Paul Marcaccio yesterday told the City Council that the group had "studied this idea as part of their early work on the arena project and decided it wouldn't work in Edmonton." Marcaccio said that one "problem is that it would require a facility larger than the 18,500 seats they determined is best for the local market." He added that the plan also "would charge seat owners at least $200 each for 60 concerts a year compared to the $60 average price for concerts at Rexall Place, without sharing any of that cash with promoters" (EDMONTON JOURNAL, 5/19).

CAUSE FOR CELEBRATION: Katz said that he is "hopeful he'll have his team playing hockey in the building by 2014 when the agreement with Edmonton Northlands expires." He said, "It's a great day for the City of Edmonton, a very significant day for the city. It's a great day for the Edmonton Oilers. It's been my dream. I don't know if it's going to be my legacy. I'm too young to be thinking about my legacy. But it's been a dream." In Edmonton, Terry Jones writes the agreement is "fair and reasonable in all directions and makes it a wonder it took so long and had to be so messy." Jones: "This day will always have a special place in the history of the City of Champions. It'll change the face and the image of our city" (EDMONTON SUN, 5/19). Also in Edmonton, David Staples wrote arena deals "work best when the private sector has major skin in the game." With "such a huge investment in Edmonton's downtown, the Katz Group will have a major incentive to to be creative and work like hell to make sure this project is outstanding enough to wow the public, thus making it more likely Oilers owner Daryl Katz will turn a profit." Staples: "At the same time, the public will benefit from the drive of the Katz Group businessmen, as they will create a major attraction for our downtown" (EDMONTONJOURNAL.com, 5/18).

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