Northlands must be part of new arena, CEO tells council
"One of the most important aspects of the Northlands' business model is we deliver a social return on these investments back to the community," Andersen said. "We're very different from that of a strictly profit-motivated private business."
Non-profit Northlands runs Rexall Place, the current home of the Edmonton Oilers.
But Oilers owner Daryl Katz wants to move the team to a new downtown arena once the team's lease at Rexall expires in 2014, in an arrangement where he earns all the profits generated by a development built and operated by him — including the money from concerts and events which Northlands earns right now.
In a news conference afterwards, Anderson said while Northlands would make a modest profit without that revenue, they would be forced to keep running Rexall Place if they were cut out of the downtown arena operations, even though Edmonton can't support two arenas of that size.
"If we were forced in that position, then we'd defend our business," he said.
But Mayor Stephen Mandel said the two-arena scenario will never happen.
"Northlands is a very practical group of people and if council decides to build a new arena we'll find a way to create the income and sustainability of Northlands," he said.
"There's no way we're going to build something without sustaining Northlands. and so there won't be two arenas."
Northlands contributed to Oilers' success
In his presentation, Anderson played up Northlands' expertise in putting on concerts and events in a profitable and efficient manner, while offering a broad range of events at the arena.
"As well-respected as we are internationally, we are a local organization and we have a deep history here in this market and understand its needs and we can respond accordingly," Anderson said.
Andersen told councillors his organization played a big role in the financial stability of the Oilers.
He said Northlands helped attract an NHL franchise to Edmonton by building the Coliseum — now named Rexall Place — as well as playing a role in the Edmonton Investors' Group successful 1998 bid to keep the Oilers in the city after previous owner Peter Pocklington threatened to move the team.
"It was Northlands, along with the city, who came together at that time to structure a deal in the Coliseum that would ensure that hockey was financially viable in Edmonton," he said.
"One of the key things Northlands did in 1998 was to take on a part of the Coliseum business that was not profitable and we did this because the hockey franchise did not want to bear the financial risk or burden."
At the time, the non-hockey part of the business was losing money. Northlands took it over, and turned into a money-making business, which generated $6.2 million in profits last year, Andersen said.
Today, the Oilers' operate under a highly favourable deal at Northlands, Andersen suggested.
The Oilers pay $1 of rent this year, and contribute $1.1 million a year towards the $17.1 million needed to operate Rexall Place each year.
In addition to operating Rexall Place, Northlands also organizes Capital Ex and the Canadian Finals Rodeo, as well as numerous trade shows in their exposition centre.
The organization also runs a post-secondary endowment fund as well as a charity and events to benefit children.