Edmonton and NHL Oilers agree to resurrect deal for new $601M arena

City administration recommended Option A, pictured here, for the proposed downtown arena in an updated to City Council on Wednesday, Jan. 23. Supplied.

EDMONTON -- The Edmonton Oilers are getting a new downtown arena.

The NHL team and city councillors agreed Wednesday to resurrect a previous deal that collapsed three months ago when Oilers owner Daryl Katz demanded $6 million more a year from taxpayers.

Edmonton Mayor Stephen Mandel says the new deal is airtight.

"It's 100 per cent. A deal is done. Council has approved it. All the other stuff is just going through some steps," Mandel told reporters after the 10-3 decision by councillors.

"I'm absolutely confident that we will go ahead, and at some point in time all of us will go to a new arena with great pride.

"It will be the nicest, most dynamic arena you've ever been to."

Katz was not at the decisive council meeting, but his negotiator, John Karvellas, said his boss recognized the negotiating logjam had to be smashed.

"We were at the end of the line," Karvellas told reporters. "It was time that we needed to conclude a deal and I think Daryl felt exactly the same way.

"I made the comment to him that we're not going to have any more chances. If we're going to make a deal with the city we have to bring it home, and I think he made some very significant compromises."

Katz dropped the demand for the extra $6 million a year and abandoned a demand that the city break its tendering policy and move its staff into a proposed new Katz office tower beside the rink.

In return, city councillors agreed that taxpayers, instead of the Oilers, will be on the hook for major repairs and renos at the $480-million facility.

That's a $30 million boost from the original price tag of $450 million. When surrounding infrastructure is factored in, the bill for the entire project is to reach $601 million.

Construction is slated to begin in the fall and the arena should be ready for pro hockey by 2016. The rink is a futuristic design of glass walls and wavy horizontal lines.

Katz sent out a news release after the vote.

"This is a milestone agreement for a world-class facility that will drive the ongoing revitalization of downtown Edmonton," he said in the release.

"It also helps to ensure the Oilers' long-term sustainability in Edmonton. This has been a challenging process for all concerned but we are confident we will all look back on the end result with pride and satisfaction at what we have achieved.

"I want to thank city council and city administration for their work on this file. This is a great day for Edmonton and we are excited to get to work on realizing this incredible opportunity."

Coun. Kerry Diotte, one of the critics of the deal, said he wants a new arena, too, but said this deal is not good for taxpayers.

"A lot of people run very successful businesses in this city, but they don't get public money to build their factories, and essentially that's what we're doing for the Oilers," said Diotte.

"We're building them a place to play (and) they get all the revenue from it."

Edmonton taxpayers will pay $219 million toward the 18,559-seat facility. The Oilers' share will be $143 million. Another $125 million will come from a ticket tax that wouldn't exceed seven per cent of the total cost of a ducat.

Another $107 million is still being sought from the province, along with $7 million from the feds.

Coun. Tony Caterina said the missing $107 million is the elephant in the room.

Premier Alison Redford's government has been adamant in its refusal to promise any direct funding for an arena.

"That's sort of the big question mark here," said Caterina, who wondered if alternative funding solutions, like a lottery, would work.

"We tried a lottery once with Calgary (Flames) and Edmonton (Oilers) that was unsuccessful," said Caterina.

Mandel, however, said he's confident that the money will be there, noting Alberta Finance Minister Doug Horner has suggested alternative funding scenarios for all communities trying to build rinks or other public amenities.

The deal would see the city build the arena and own it, but lease it to the Oilers.

The Oilers would, in turn, hand over $6 million a year in lease payments and pay for the day-to-day upkeep of the building.

In return, Katz would keep all the profits from tickets, concessions and parking for all events -- Oilers or otherwise.

Katz would also receive $2 million a year from the city in return for advertising for 10 years and would keep naming rights for the building (estimated at $1 million to $3 million a year).

The Oilers would stay in Edmonton for 35 years, and councillors were told NHL commissioner Gary Bettman was in the Alberta capital last Friday with a promise to put that guarantee in writing.

Before the vote, the Oilers were leaving nothing to chance.

They brought in star players Jordan Eberle, Taylor Hall, Shawn Horcoff, Ryan Smyth and Nick Schultz to sit in the front row of chambers.

"I've seen the outlines of what the rink is going to look like and it looks great," Eberle told reporters during a break.

"Everyone involved with the organization loves playing here," he said. "As far as having a new arena, it's just going to add to that (experience)."

The rink will replace Rexall Place, which was built in 1974 and sits in the city's industrial north end. It's one of the oldest facilities in the NHL.

Katz is currently a tenant of an arm's-length city board at Rexall and says the Oilers need revenue streams from areas like concessions to be viable. He has said he is losing millions of dollars a year, but city council has not been able to see the numbers to test that assertion.

The Oilers are ranked in the middle or higher among revenue-producing teams in the NHL.

The agreement ended five years of haggling and bargaining that at one point last fall prompted Katz to woo officials in Seattle about relocating the team to the Pacific Northwest.

Katz quickly retracted that threat and apologized to Edmonton fans after he was vilified and excoriated on social media.