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Tensions escalate over new Edmonton arena

Edmonton OilersA deal between Edmonton Oilers (NHL) owner Daryl Katz and the city for a new arena has a proposed clause causing some nasty feeling: they want Northlands, nonprofit operator of Rexall Place, to sign a noncompete.

Such a deal is defensible from a business viewpoint if you are Katz: Arena Economics 101 says two facilities cannot thrive in most markets when in serious competition — or even friendly competition (i.e., Minneapolis-St. Paul, Kansas City, etc.). Competition leads to price-cutting and competitive bidding, both of which are good for promoters but bad for venue operators.

Northlands, whose officers are probably still upset they were cut out of any role in the proposed downtown arena, says it’s not interested in a noncompete and plans to continue business as usual no matter what. That’s not sitting well with city officials preparing to spend hundreds of millions on a new arena.

Things have been relatively unchanged on the Edmonton arena front in recent weeks; the project still faces a $100-million shortfall and provincials funds are being sought to address the deficit. While provincial officials have been loathe to discuss a direct arena subsidy, it’s certainly possible provincial money will be used to support infrastructure.

RELATED STORIES: Protesters object to Edmonton arena funding; Alberta: We’re open to some sort of Edmonton arena funding; Edmonton, Oilers reach agreement on framework of arena funding deal; Edmonton approves arena funding plan; Edmonton mayor lays out arena funding plan; Report: New arena needs 30-year commitment from Oilers; Complicating factor in Edmonton arena discussions: Northlands; Seat mortgages pitched for new Edmonton arena; City: New Edmonton arena would revitalize downtown; Oilers: No, we’re not moving to Quebec City; Oilers refine arena plan after public meetings; Katz ups arena offer to $200M; city willing to talk; Edmonton: New downtown arena financially feasible Katz: I will spend $100 million on new downtown arena; Edmonton: Cheaper to renovate than to build new downtown arena; Oilers arena zoning hearing delayed; Katz group submits arena application to Edmonton

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