EDMONTON - Katz Group executives urged councillors Wednesday to avoid buying into a seat-selling scheme that could help finance a new downtown arena.
“The entire (idea) is based on speculation about the market for the product,” said Katz Group chief financial officer Paul Marcaccio.
“We prefer to rely on the years of experience of the Oilers organization in understanding their customers.”
Marcaccio — alongside vice president Bob Black — was speaking out about a seat selling proposal recently pitched by the Stadium Capital Financing Group.
The Chicago-based group tried to convince council last April their funding model involving Equity Seat Rights was the best solution to meet arena funding shortfalls.
The group suggested selling ownership of 1,500 new seats and 500 premium club seats in the new arena at a cost of $278,000 to $417,000 each, which could raise up to $700 million.
Of that $700 million, $550 million would be dedicated to funding the new proposed arena, $100 million would go to Oilers ownership and $50 million to building the reserve/community benefits fund.
The group also proposed building a new 20,000-seat arena instead of the 17,100 seats currently at Rexall Place.
But Marcaccio said the idea could never work.
“Given our expectation that 20,000 seats is excessive for this market, we expect there would be open seats (remaining) for most events,” he said.
That would discourage people from buying season tickets, he added, since there would be an understanding that there would never be a sell-out.
A bigger stadium would mean bigger expenses, Marcaccio said.
“The ongoing capital maintenance and repair costs of a much larger building would increase proportionately.”
Coun. Kim Krushell said she also had little faith in the scheme.
“From what you've described, it's not very viable, is it?” she said.
“And if it was, wouldn't you do it?”
Oilers owner Daryl Katz wants to move the team into a new $450-million arena downtown. In March, city council approved a framework, setting out the guidelines city administration will use in arena negotiations with the Katz Group.
Katz would contribute $100 million to construction costs, with another $125 million coming from a ticket tax. A further $125 million would come from property taxes on additional development surrounding the arena and other sources.
The funding for the remaining $100 million is still up in the air.