St. John's city councillors have agreed to a $700,000 subsidy that will be given to the corporation that runs Mile One Centre, to defray the St. John's IceCaps' expenses over the next two seasons.

In a memo, city manager Neil Martin said the city has agreed to the subsidy to St. John's Sports and Entertainment and recommended that council do the same.

Council members did just that during a private meeting held Monday afternoon.

The money would amount to $350,000 per season.

Earlier this month it was announced that the St. John's IceCaps were given an extra and fifth season at Mile One through 2015-2016.

In the memo Martin said, "the cost to the IceCaps organization as a result of the negotiations with the Jets was an additional $1.5 million ($750,000 per year for each of the 2014-2015 season and the 2015-2016 season) plus they are required to cover the salary contract for an assistant coach."

"Throughout their discussion with the Winnipeg Jets the IceCaps organization maintained a dialogue with the city and, in particular, with respect to the city's willingness to cover some of the additional costs that would experience," the memo reads.

"The city has agreed to a $700,000 ($350,000 per year) contribution to partially cover the IceCaps additional costs," said Martin in the memo.

"The cost to the city will be in the form of an increased subsidy to [St. John's Sports and Entertainment] net of any additional revenues that may be generated," the memo reads.

IceCaps: support not a 'subsidy'

In a statement Monday evening, the St. John's IceCaps said council's decision to reduce the rental rate for Mile One is welcome, but "is not a 'subsidy' as has been reported, since the IceCaps will still pay a very substantial rental fee" for its games. 

"Previously, the IceCaps were paying one of the highest rental fees of any franchise in the AHL; a reduction in that rate was critical to offset the significant increase in costs to keep the Winnipeg Jets (the IceCaps’ parent club) in the city for an additional year," the statement said. 

"In fact, the reduced rental fee was essential in order to keep the Jets’ AHL franchise in the province." 

In his memo to council, Martin said councillors should approve the subsidy in order to "maintain the economic activity in the city and the downtown core generated by the presence of the team," along with giving the Winnipeg Jets the "extra time they need" to find a replacement team beyond 2016. 

Martin also noted that the revenue that will also be generated at Mile One during the next two seasons is another reason why councillors should approve the subsidy.

"It is recommended that Council approve a contribution to the St. John's IceCaps of $350,000 per year for each of the next two years with such contribution being realized by a reduction in the building rental fee and advertising/sponsorship payments made by the IceCaps to St. John's Sports and Entertainment Limited," Martin said in the memo.

In 2011 Danny Williams asked the provincial government to approve a subsidy to bring an AHL team to Mile One, with the Dunderdale government refusing to do so.

With files from Chris O'Neill-Yates