EDMONTON — There's little chance the Indy car race will return to Edmonton after being cancelled for 2011, a spokesman for promoter Octane Racing Group said Wednesday.

"It's just an impasse. I don't see how we can get back there," said Normand Prieur of the Montrealbased firm.

"We're looking at other possibilities for staging the race. We feel we can do something. I feel there's a market in Western Canada."

The city agreed last July to provide Octane with $5.5 million in sponsorship and $1.5 million worth of free police, fire, transit and other services over three years, but the two sides failed to reach a contract by the company's Oct. 29 deadline.

The sticking point was how to cover about $3 million in additional costs, mainly paving, to move the race to the east side of City Centre Airport from the previous course on the west side, so the sole remaining runway could stay open.

The city told Octane only in August it would have to create a new course on the property following the closure of runway 16-34, Prieur said.

"We're not the one that asked to go on the other location, and we're not the ones that made the move to shut down the runway without telling us," he said, adding planned redevelopment means they'd have to leave in 2014 anyway.

"(Octane indicated) since we're kind enough to agree to move ... provide us the necessary surface we need."

Company president Francois Dumontier and other officials came up with a proposed track following a September visit, but city staff weren't ready to ask city council for more money, Prieur said.

Their suggested track design on the existing concrete was "boring," while there would be minimal savings from being able to leave equipment on the site for three years instead of removing it after each race, he said.

Edmonton's chief financial officer Lorna Rosen, who handled the negotiations, said it became obvious last week that the gap between the two sides was too big, even though she felt the city had found about $1 million in savings.

"The reality is, this is a race that has a history of quite large deficits. It's a business decision at the end of the day, both for them and for us," Rosen told a news conference.

"We couldn't make the money work."

In 2008 and 2009, the city spent $9.2 million to cover losses on the Indy, which was run by Northlands.

Rosen estimated the deficit for the 2010 race at $3 million.

She called city council's sponsorship proposal "reasonable and prudent," given the previous expenditures on the race and the international media coverage it generates, particularly in Europe.

"But that (decision) was not one that was to be at any cost. They put a limit on the investment."

While Mayor Stephen Mandel isn't pleased the Indy has been cancelled, he said Edmonton residents have indicated this is something on which they don't want the city to spend heavily.

"Council at the time (in July) gave direction to administration based on a specific amount of money put into it. If we couldn't keep to those lines, I wouldn't be able to support moving forward with it," he said.

"Our citizens were clear that some money in Indy was great, but too much wasn't."

He doesn't know if the race is gone for good, saying staff will provide a report on the issue to next Tuesday's council meeting.

"I think it's a really great event for the city. I think it featured the city around the world in a very effective way," Mandel said.

"I think we're going to lose a lot, but at the same time, city council gave direction to administration to meet certain financial guidelines."

Tom Hinderks, chair of Race Week Edmonton, called the situation a "disaster" for his group, which attracted about 35,000 people to car shows, a soapbox derby and other festivities held around the Indy.

They're scrambling to find another central event on short notice that can act as a theme, but Hinderks isn't sure the one-year-old festival will survive.

Many volunteers are angry the city didn't tell them the Indy might be cancelled, he said.

"We really killed ourselves last year to develop Race Week. Why did we bother? A lot of guys are taking huge offence at that," he said.

"I appreciate things going on behind closed doors, but because we didn't know there's a problem, we can't fix it ... I don't know if we could have done something. I assume we could."

gkent@edmontonjournal.com