Seattle feels Edmonton's arena pain
Pressure tactics over arena could hurt Katz’s relationship with Edmontonians, councillor warns
EDMONTON - A day after a visit to Seattle by Oilers owner Daryl Katz and team executives sent shock waves through Edmonton’s hockey-mad city, a councillor who helped negotiate a new arena deal in that U.S. city said people there understand the pain of losing a sports franchise.
Seattle city council member Mike O’Brien said his city’s tentative deal to build a new $490-million arena is contingent on the city getting an NBA franchise to replace the one it lost.
If hedge fund investor Chris Hansen cannot secure an NBA franchise to replace the SuperSonics, who departed for Oklahoma City four years ago, then the new Seattle arena will not be built.
O’Brien said Hansen would like to land an NHL franchise as well, but that is clearly secondary to an NBA team.
“There is no provision for an NHL-only scenario,” O’Brien said. “I don’t think we would move forward, (an arena) is certainly not contemplated in any of our discussions with just an NHL team.”
Katz, along with former Oilers star Wayne Gretzky, team executives Kevin Lowe and Craig MacTavish and club president Patrick LaForge, were in Seattle on Monday to tour the old Key Arena.
That high-profile visit provoked a powerful backlash in Edmonton, where four years of negotiations on a new downtown arena seem hopelessly stalled and on the verge of collapse.
“What’s going on in Edmonton kind of tears at me a bit, because it feels similar to the situation we were in four years ago when the Sonics, our NBA team, was heading out,” O’Brien said. “We had an owner who was demanding a certain amount of investment in a new stadium and the people just weren’t willing to go there.
“I think, in part, because it seemed to some it was just a ploy to move the team anyways, and there wasn’t a commitment to stay here. It was not fun being on the side losing a team.”
Four years later, Hansen has provided considerable comfort for Seattle council in the new deal.
The city will float a bond issue for $200 million for its contribution toward the arena, then recoup that amount by taxing any revenue generated inside the arena, including tickets, concessions, merchandise and so on.
Hansen has guaranteed that if that tax revenue is insufficient to cover those tax revenues, the company he will set up to operate the arena will make up the difference.
“So, that arena is guaranteeing to make all our payments,” O’Brien said.
Hansen has buttressed that with a personal guarantee to make up any shortfalls. He has agreed to have his personal wealth audited once a year. That audit has to demonstrate he has at least $300 million on paper, or he must put $30 million in a city bank account as a credit line.
Hansen’s guarantees were key in the arena deal passing by a 6-2 vote in Seattle city council. It is now Hansen’s responsibility to secure anchor tenants, something the city is not directly involved with, partly because Seattle still feels the pain many cities experience when they lose a beloved sports franchise.
“I would hate to see Seattle be on the receiving end of something where a city didn’t want to lose their team, O’Brien said. “Frankly, the professional sports model of getting cities to compete against each other on public subsidies to win teams, I think, is a model that hurts the public.
“I feel really good about the arrangement we have with Mr. Hansen, it’s a very fair deal for the public of Seattle. But, long term, we need to figure out the dynamics of professional sports so it’s not based on public subsidies. It (should be) based on what we all care about in sports — good teams, competitions, rivalries, all those things.”
Hansen could not be reached for comment Tuesday.
In Toronto, Gretzky told a radio station the chances are slim his former team will move from northern Alberta.
“Probably zero,” he said. “I just don’t see it happening.
“I think over time here cooler heads are going to prevail and Daryl and the city will hammer out a deal and get it done. I can’t see them moving. It’s one of the greatest franchises in all of professional sports. You don’t move a franchise like that.”
Coun. Ben Henderson said Katz could hurt his relationship with Edmonton residents if he uses pressure tactics to reach an arena deal.
The Katz Group issued a news release Monday that said the Oilers will stay in Edmonton if they can arrange deals similar to ones provided in the small-market cities of Winnipeg and Pittsburgh.
But nobody wants a return to the bad feelings that arose in the 1990s, when former Oilers owner Peter Pocklington talked about moving the team as he negotiated better terms for using the Coliseum (now Rexall Place), Henderson said. Pocklington mused about a new home in either Hamilton or Portland, and in 1997 a lease clause that mandated a new local buyer get first crack at purchasing the team was all that saved the Oilers from relocating to Houston.
“I’m not an expert, but I’m not sure Mr. Pocklington’s relationship with the people of Edmonton ever recovered from that,” Henderson said.
“I think everybody hopes that ultimately we can all be pulling in the same direction for the good of the citizens of Edmonton. … That’s certainly our job, but how you get there at this point I don’t know.”
Pittsburgh Penguins co-owner Mario Lemieux has admitted his trips to Kansas City and Las Vegas during talks in 2007 that led to construction of a new Pittsburgh arena were just a negotiating ploy.
“We had to do a few things to put pressure on the city and the state, but our goal was to remain here in Pittsburgh all the way,” he told the Pittsburgh Tribune-Review in 2008.
Katz did the same thing by publicly travelling to Seattle, Coun. Kerry Diotte said.
“This is history repeating itself. It’s the classic Mario Lemieux situation,” he said.
“I think the league wants a team in Edmonton. They fought to keep a team here. It’s healthy … This is one of the hottest markets on the planet.”
Mayor Stephen Mandel has set an Oct. 17 deadline for someone from the Katz Group to outline for city council exactly what the company needs to reach a final agreement on building, financing and operating a downtown arena.
The company is asking for a $6-million annual subsidy to help cover operating costs, although a framework agreement approved last October states the Katz Group is responsible for all maintenance, operating and repairs.
The company will keep the revenue from all events at the 18,500-seat facility.
Coun. Bryan Anderson said he wants the Katz Group to produce a two- or three-page outline of what it requires to move ahead with the project, calling the trip to Seattle a pressure tactic.
City manager Simon Farbrother said he knew Katz planned to visit Seattle, but the trip didn’t put pressure on their negotiations.
“It’s a big, wild world out there. It comes down to what happens in a lot of hockey markets across North America. Hockey seems to do pretty well in Edmonton.”
The two sides are working through some of the “less significant” issues and he expects those can be resolved, but anything left outstanding will be taken to city council, Farbrother said.
With files from The Canadian Press
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