Katz Group executive vice-president John Karvellas said in a statement Wednesday that the arena cannot be built for $450 million without sacrificing design.
"Two years of design and engineering work tell us it simply cannot be done without sacrificing the public's demands for an iconic arena that is well-integrated with surrounding neighbourhoods, or in a way that makes economic sense for both parties," the release read.
The Katz Group said they have invested millions into the proposed design, as well as $70 million to advance the related private sector development. The firm, which owns the Edmonton Oilers and is headed by reclusive billionaire Daryl Katz, said that spending goes beyond the city's demand it invests $30 million to the district before arena construction begins.
"Council is committed to the framework that we approved in October," said Mayor Stephen Mandel after a two-hour closed-door meeting Wednesday morning.
Mandel would not tell reporters how much The Katz Group asked for, saying the negotiations are private.
He was also reluctant to say if he was surprised by the request, but he did admit he was frustrated.
"Adminstration has been working incredibly hard, and so has the The Katz Group, to come up with a resolution and we haven't been able to do that."
The price tag on the arena is now $485 million.
Asked if the arena was in more trouble now than it was a week ago, Mandel said, "I'd have to say that will be determined over the next couple of days as to whether it is or not."
The mayor said the ball is now in The Katz Group's court.
"We hope that administration can get things back on track and get this moving ahead," he said.
The Katz Group did not respond to phone calls or emails from CBC News as of 1 p.m.