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Edmonton Oilers defy city council over funding impasse around new arena

EDMONTON - With the hopes for a new arena hanging in the balance, the Edmonton Oilers defied the mayor's expressed wish Thursday to have the team come to City Hall and publicly explain why it wants millions of dollars more from taxpayers.

In a letter to council, a spokesman for Oilers owner Daryl Katz says it makes more sense to hash out those issues in private with city bureaucrats before meeting publicly with Mayor Stephen Mandel and council.

"While we appreciate the mayor's invitation, we do not think such a meeting can be productive until we have reduced the outstanding issues," John Karvellas, a vice-president for the Katz Group, said in the three-sentence press release posted on the Oilers website.

"As we have said previously, we remain committed to working constructively with city administration to reach an agreement and would be pleased to go before council with administration to present a comprehensive and mutually supported proposal, or even a proposal with one or two significant issues still to be resolved.

"Then council can review the proposal and either approve or reject it as it sees fit."

Mandel said he'll take the message as a glass half full, given that the Oilers have agreed to keep talking.

"I think the public are really getting tired of this. I'm getting tired of it. I'm sure the Katz Group are, too," Mandel told reporters.

"Let's see if they can put pressure on themselves to make a deal, and whatever the differences are, see how they can close the gap."

Construction was to begin early next year on the proposed $475-million cost-shared arena in the city's downtown to replace aging Rexall Place.

That went off the rails last week when councillors were told in a closed-door meeting that the NHL team wanted millions of dollars in new concessions from taxpayers.

Councillors rejected that deal, and as word leaked out about the concessions, Katz and the councillors began sniping at each other in the media, prompting Mandel to formally ask the Katz Group on Tuesday to tell council in a public session what it wants.

"I no longer have any idea what he's asking for (or) how he's asking for it," Mandel told reporters on Tuesday.

"The time has come for them to come to us in public to explain to council."

In a formal request to the Oilers, Mandel made it clear the deal hangs in the balance: "We have now hit a significant crossroad, one which must be overcome if we are to move the deal forward."

The arena is being funded largely through taxpayer dollars.

Under the original deal hammered out last October, the Oilers are to pay operating costs for the facility along with $5.5 million a year for 35 years to fund its share of construction.

The Oilers would in return get all the profits from Oiler games, trade shows and concerts for 11 months out of the year. Katz would also get naming rights for the building, worth an estimated $1 million annually.

The team would also receive $20 million over 10 years from the city for advertising.

While the city's contribution is $125 million on paper, councillors have already been told that once land sales and interest are calculated, the real figure will be more than $300 million. On top of that there will be millions more to pay for a transit station and pedway to the rink.

But last week, councillors were told in the closed door meeting Katz now wants $6 million a year from taxpayers to offset the cost of running the building, along with other concessions.

In a letter to councillors the Katz Group said that the proposed 18,400-seat futuristic oil-drop-shaped arena, done over in wavy lines of zinc and glass, can no longer be built for the original price.

In follow up interviews with select media this week, Katz said the $6 million was always part of the deal and is vital to keeping the team viable in what he termed a "small market."

"To suggest I tried to change the deal at the last minute is really unfortunate," Katz told a sports radio show.

Councillors disagreed, noting the subsidy clause is not part of the October agreement. Katz says it was agreed to in earlier discussions.

Katz also said that the clock is ticking, that construction costs are escalating, and that he considers the team itself as currency.

"In our view it is the team that acts as a subsidy for a city's arena," Katz told a local newspaper.

He also said he was very distressed to see the secret discussions go public.

"None of this would have even come into the public vein but for the leak, which we're still trying to find out where it came from," he told the newspaper.

Katz has never directly threatened to move or sell the team if the arena deal falls through, but has said if the rink fails "all bets are off."

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