The Edmonton Indy will now be a thing of the past after the city has confirmed the race will not return to our city next year.

"I think the circumstance we faced today with the reality of what the race is going to require and the costs that we're going to incur that we made the right decision," Mayor Stephen Mandel told CTV News Wednesday evening.

The city had been in negotiations since the summer with Octane Racing Group to have them take over the event from Northlands.

A confidential document obtained by CTV News stated the group could not reach an agreement with the city.

Octane Racing released a statement Wednesday morning confirming the group will not offer fans an Indy racing event in Edmonton next year.

One key stumbling block between the two parties was an additional $2.5 million necessary to keep the race in Edmonton. That additional investment is something Mayor Mandel says council wasn't prepared to support.

"[Administration] knew how important it was to do it in the fiscal regime we set out, if they couldn't do that, then they needed to face realities that this couldn't be successful in Edmonton at this point in time."

The documents show there were two options to keep the race going. Octane preferred option one, which saw the race utilizing the same course at the City Centre Airport on Runway 12-30. But that option is not viable because it would involve a complete closure of the airport, including medevac service, while the race event was underway.

The second option, preferred by the city, moved the course to the now closed runway 16-34. Initial cost estimates for new asphalt and improvements were initially set at $1 million, but that cost is now projected to be $3.2 million.

"The City's final decision has made impossible for us - as professional and experienced motorsports promoters - to offer an event complying with our high quality standards, and able to satisfy the fans and the sanctioning organizations while maintaining the quality of the spectacle," stated the President of Octane Motorsports Events François Dumontier in a news release.

The original agreement with Octane Racing saw the city agree to $5.5 million payment over three years. Additional costs for developing partial grandstand and hospitality infrastructure at the facility and other upgrades would have put the city on the hook for additional money.

"The reality is this is a race that has a history of quite large deficits in terms of expenditures, it's a businesses decision at the end at the day both for them and us we couldn't make the money work. We just couldn't make the money work," said the city's chief financial officer Lorna Rosen.

The mayor has been a big supporter of the race as the event received world-wide exposure and brought in millions in economic spin-offs. But it cost taxpayers $12 million over the last three years to cover losses.

Dumontier says the group will now explore ways to have the 2011 event relocated to another venue. The group says it would still like to offer an event for fans in Western Canada, but at this point, Edmonton has been its only scenario.

The Indy Racing League also released a statement saying: "It's unfortunate that in a time when IndyCar is experiencing momentum and growth, the city would want to miss out on the opportunity to be part of it."

Octane and the Indy Racing League are now scrambling to find a new location.

The city did ask if they could not run the race this year, and instead have it return in 2012 when a plan is in place but the Indy Racing League said no.

The cancellation also means less money in revenues for hotels and restaurants in our city during the month of July. The establishments will be forced to re-work budgets for the coming year because many of the businesses say they structured their finances around the event and all the visitors that come with it returning.

With files from Kevin Armstrong and Joel Gotlib