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Edmonton Oilers owner Daryl Katz apologizes to fans over Seattle threat

EDMONTON - The owner of the Edmonton Oilers, feeling the heat from fans for threatening to move the NHL team to Seattle, apologized Saturday in full-page newspaper ads.

"I took for granted your support and your love for the Oilers," said Daryl Katz in the open letter.

"That was wrong, and I apologize.

"The simple fact is that the Oilers need Edmonton, and Edmonton needs the Oilers."

Katz and the city are deadlocked over funding for a new proposed downtown arena that is pegged at $475 million but—when loan payments, land fees and surrounding amenities are factored in—is actually over $700 million and rising.

The two sides are still negotiating to try and strike a deal before the city's deadline of Oct. 17.

They actually had a deal last October, with construction set to begin early in 2013.

But that went off the rails earlier this month when city councillors were informed in a closed-door meeting that Katz had re-examined the revenue numbers and now needed millions of dollars more per year in public subsidies to keep the team "viable" in the Alberta capital.

Councillors rejected the ask, and relations between the two sides turned bitter when word of the new Oiler demands leaked out.

Councillors said the Oilers were making unfair demands, while Katz said councillors were reneging on an earlier promise to deliver an extra $6 million a year to him to subsidize arena operating costs.

With both sides trading barbs in the media, Edmonton Mayor Stephen Mandel said publicly it was time for the notoriously reclusive Katz to come in public before city council to fully explain how much more money he wants and why he wants it.

Katz refused.

The acrimony peaked on Monday, when Katz and Oiler brass went to Seattle to meet with the officials about relocating the team to the Pacific Northwest. That same day, Seattle officials signed off on a plan for a US$490-million arena that both sides hope will be home to an NBA and an NHL team.

Even though it was last-minute Katz demands that derailed the current Edmonton deal, Katz said Monday it was the lack of a deal with Edmonton that forced him to look elsewhere to places like Seattle and beyond.

"This is only prudent and should come as no surprise," said the Katz Group in a news release Monday.

The Seattle talks brought anger and indignation in Edmonton, a city that lived through similar relocation threats from former Oilers owner Peter Pocklington in the 1990s yet still lives and breathes the NHL team.

Despite being at or near the bottom of the league for three years running, the Katz-led Oilers routinely sell out their current home at Rexall Place. The Oilers dominate sports coverage in print, broadcast and on the Web, even in the dog days of summer. To get to Rexall Place, Edmontonians take Wayne Gretzky Drive. To get into the city from the north, they take Mark Messier Trail.

Katz was excoriated in social media and in letters to the editor, labelled a traitor, an extortionist, the second coming of Pocklington, a soulless greedhead. Others told the lifelong Edmontonian and pharmacy billionaire to "hit the road" or "rot in hell."

In Saturday's ad, Katz said Seattle was the wrong message to send.

"I was upset when certain confidential information was leaked, and by comments that I thought were unfair and called my integrity into question," he wrote.

"I reacted by trying to send a message to (Edmonton) city leaders that they should not take my support for a new arena for granted.

"The best I can say is that I did it because I'm fighting for a deal that will enable the team to stay in Edmonton—and not because I want them anywhere else."

Katz admitted he needs to be more open.

"In hindsight I may have underestimated the degree to which it would be up to us to make the case for public funding," he wrote.

"Public communications is not in my nature. Chalk that up as a personal shortcoming."

Nevertheless, the letter still does not say if the team will—as the mayor asked—make its case in public or at city council as to why it needs millions of dollars more in public funds.

The letter also doesn't clear up whether the Oilers will still pursue other cities for relocation talks while negotiations continue with Edmonton.

The letter also doesn't state if Katz plans to apologize to Seattle officials for using the city as a catspaw in negotiations with Edmonton.

The Katz Group declined further comment Saturday, saying it wishes to let the letter "speak for itself."

The deal struck by Katz and the city in October 2011 called for a rink with a maximum cost of $450 million. That has since been revised on paper to $475 million, with the added cost shared by both parties.

The city's cost is officially $125 million, but councillors have been told that when land acquisition costs, surrounding infrastructure and loan payments are factored in, its share is actually around $400 million-plus.

Another $125 million will come from a tax on tickets (about $5 to $6 a ticket).

The Oilers were to put up $100 million in construction, but in that was changed in the October deal to the team paying $5.5 million a year in lease payments for three decades.

In return, the Oilers would run the arena, pay for its upkeep (estimated at $10 million a year), and keep all revenues from Oiler games, trade shows, concerts, and other events for 11 months out of the year. Concession sales alone are estimated at $20 million a year.

The team would also get naming rights for the rink (valued between $1 million and $3 million a year) and $20 million from the city over 10 years for unspecified advertising.

Even with all that, the project would still be short by at least $100 million. Both sides hope the provincial government will pony up that amount, but Premier Alison Redford has said such a direct subsidy to a for-profit enterprise like the NHL is not in cards.

Katz has said he's losing money on the Oilers in Edmonton and wants a public subsidy deal similar to the one given to NHL teams in Winnipeg and Pittsburgh.

Forbes ranks the Oilers in the middle of NHL teams with a worth of $212 million. Katz bought the team in 2008 for $200 million.

The proposed new arena would seat 18,400 with restaurants, shops and enough space to hold parties and even beach volleyball tournaments. Drawings depict a wavy, futuristic building of zinc and glass in the rough shape of an oil drop.

The Oilers have played in Rexall Place since it was built in 1974. It is one of the oldest rinks in the league.


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