Northlands wants $250M for arena non-compete clause

CBC News has learned Edmonton Northlands wants $250 million from city taxpayers before agreeing to a non-compete clause with The Katz Group on the new downtown arena.

CBC News has been told by two reliable sources that Northlands President Richard Andersen recently sent a letter that one source characterized as "angry" to City Manager Simon Farbrother suggesting the non-profit corporation needed $250 million to bow out of the concert business

But in an interview with CBC News, Andersen said Northlands has made no such demands.

He said the $250 million figure came from in an email sent to Farbrother on May 18, after Northlands was asked to estimate what the organization would need if it was forced to agree to a 35-year non-compete clause.

Andersen provided his email to CBC News. Using a firm but professional tone, Anderson told Farbrother that Northlands would require a $250 million cash buyout, starting with $175 million [$5 million a year over 35 years] plus additional costs for inflation and interest.

"If the city has made a decision to build a new arena and in the process turned their back on Northlands longstanding role in managing and leading this process, then the simple answer is we need to be compensated to replace the revenues and net contribution we are being asked to give up," he wrote.

Andersen claims the city never replied and shortly afterwards, entered into an arena framework agreement with the Katz Group.

"We certainly never made a demand or would we, and we've been clear — we're not interested in anything but running the arena business," Andersen said.

Farbrother would not comment on the contents of the email from Andersen. But when asked if $250 million was an unfeasible number, Farbrother replied that was "a reasonable observation."

Northlands willing to talk, with city at the table

Northlands operates a lucrative concert business at Rexall Place, the current home of the Katz-owned Edmonton Oilers.

The NHL team will move to the new downtown facility once it is built. The Katz Group is demanding Northlands get out of the concert business, which has been cited by company officials as a key condition in reaching a deal on the arena construction and operation.

Mayor Stephen Mandel said that so far, Northlands hasn't agreed to negotiate.

"Northlands has not been willing to sit down — I wouldn't say sit down — to come up with something that is reasonable," Mandel said. "They gave a letter to the city manager that had a number in it. But I'm not going to publicize what that number was."

Andersen said another letter was sent to the city last month asking for clarification on what his organzation is being asked to do.

"Essentially, somebody wants to buy our business ... and we worked hard to buy this business, it just didn't happen," he said.

"If somebody wants to buy a business, then whoever wants to buy it comes and makes an offer."

Steve Hogle, a spokesman for The Katz Group, would not comment on Northlands' demand. Last week, Katz Group vice-president John Karvellas said the deal is at risk if an agreement is not reached with the city by Oct. 31st.

Mandel said he is frustrated by the situation.

"We thought that Northlands would be reasonable in this, that they would come to the table and they haven't," he said. "And it's frustrating that what's lost in this whole idea is what's good for Edmonton."

But Andersen says Northlands is willing to talk to The Katz Group — with the city at the table.

However, city councillors are adamant that talks have to take place between the Katz Group and Northlands and the city will not be involved.