The owner of the Edmonton Oilers wasn't blackmailing the city when he told councillors that the team won't play at Rexall Place past 2014, Mayor Stephen Mandel said Thursday.

Businessman Daryl Katz speaks at Wednesday's city council meeting. One councillor saw his group's statements as an ultimatum. (CBC)

Billionaire businessman Daryl Katz was just expressing a financial reality, Mandel said, amid heated discussions about whether to build a new downtown arena for the National Hockey League franchise.

"I didn't take it as a threat. I took it as a reality check of the problems NHL owners face in small markets," Mandel said.

At a council meeting Wednesday afternoon, Katz's advisers told municipal politicians the Oilers "will not invest in or otherwise support" a proposal to spend $200 million renovating Rexall Place, their current home. The team's financial woes "can only be addressed by a new arena," the advisers said.

At least one councillor took it as an ultimatum.

"I did take it as an ultimatum that either we do what's being asked, or there's a chance of the team leaving the city," said Coun. Tony Caterina, who sits on the board of the non-profit Northlands, which runs Rexall Place.

Katz has already had to apologize to the city for a lack of clear communication about his proposal.

Councillors learned many of the details about the plan through the media, including an announcement last month that Katz was negotiating with Hamilton to take over an arena there. Many saw that as a veiled threat to move the Oilers if councillors prevented him from getting his way in Edmonton.

'Both sides can live with'

The Katz Group says a new arena under its control and on downtown land it already owns is the only long-term option for the Oilers.

"You just want to see a result that both sides can live with and that the public approves of," commented Daniel Mason, a University of Alberta expert on sports revenues who has consulted for the city.

"At the end of the day, if everyone can look at the project and feel as though that they are comfortable and can live with what it is and are excited about it, then I think that's ultimately what we want to see in this case."

The plan for a new arena includes a surrounding entertainment, shopping and gambling complex and would cost an estimated $400 million to $450 million.

Katz told Wednesday's council's meeting he would put up $100 million toward the arena and $100 million for the rest. The city, provincial and federal governments are expected to cough up the rest.

All kinds of details would have to be negotiated as to who would own the facility, operate it, pay its mortgage and foot the bill for any cost overruns.

Northlands concerns

Another possible pitfall is what to do with Northlands.

The 140-year-old organization's revenues from events at Rexall Place could be lost to a newer, flashier downtown venue.

"Here we have a private company trying to make money, being compared to a non-profit society that's doing this for the community's benefit," Caterina said.

The city wants Northlands at the negotiating table with the Katz Group.

But before the bargaining even begins, city administration will study different arena deals from around North America and present their findings to Mandel and councillors.