Northlands wants share of arena revenues

The operator of Rexall Place has taken a hard line with Edmonton city councillors on its demand to run the new downtown arena and entertainment district.

Northlands says Edmonton's ability to draw concerts and events will be hurt if the non-profit organization is cut out of the project proposed by the Katz Group, which is owned by Daryl Katz, the pharmacy billionaire owner of the Edmonton Oilers. 

Northlands suggests it won't give up Rexall Place if it's excluded from the new arena project as it would have to downsize the number of events it offers if the revenue generated from non-hockey events like concerts is lost. 

"If a new arena was built without the involvement of Northlands, Northlands may have no choice but to continue to operate Rexall Place [under a new name we assume] in competition with the new arena in an attempt to retain some of its operating profit and to save its programming," Northlands says in the report released Friday by the city.

The report contains answers to more than 140 written questions posed by councillors to Northlands, the Katz Group and the city administration.

In another portion of the report, city administration states its preference for Katz Group's choice for the arena site, which would be just west of the intersection of 104th Avenue and 101st Street.

The city also believes the arena development will increase foot traffic and demand for businesses downtown, including those on Jasper Avenue.

The Katz Group also provided little new information on how the project will be funded, stating that much was still under negotiation with city administration. It did state it is seeking "a fair balancing of risk" with the City of Edmonton.

"Neither the city nor the Katz Group should bear risk disproportionately," the Katz Group said in the report.

Arena revenues needed to sustain team: Katz Group

Under the current deal at Rexall Place, Northlands earns all revenues from staging concerts and events. The Oilers receive revenue from hockey games, building advertising, suite rentals and parking north of 118th Avenue. 

Northlands, which has its roots in Edmonton's agricultural past and has some councillors on its board, shares the Rexall revenue with the city and pays the majority of the operating costs.

The Katz Group wants all revenue generated from a downtown arena it builds and operates and the city owns.

"It became clear to us that there are two key elements to creating a sustainable financial model in Edmonton: firstly, having the enhanced revenue streams that would come with a modern NHL arena; and, secondly, having control over non-hockey revenues in that facility," the Katz Group said in reply to a question from Coun. Ben Henderson.

"Long-term financial sustainability of the Oilers in Edmonton cannot be achieved without the Oilers being placed on the same footing as the Calgary Flames where non-hockey revenues go to sustaining the hockey team."

Daryl Katz doesn't want the team to continue playing at Rexall Place after the lease expires in 2014. When asked if Edmonton could sustain two arenas, the Katz Group's answer in the report was succinct: "No."

The Katz Group said it made a written offer to Northlands in September 2009, "which we thought would have given them a significant role in the arena but would also have allowed the Oilers to be competitive and sustainable." The details of that offer were not revealed.