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NBL Canada St. John's Edge

Clarification Regarding Lease Agreements with Sports Teams

July 19, 2021 - National Basketball League of Canada (NBL Canada)
St. John's Edge News Release


St. John's, Newfoundland - Unfortunately, City Council and St. John's Sports & Entertainment have forced Deacon Sports & Entertainment ("DSE") to publicly clarify our position and correct their misrepresentations once again. We are disappointed with the overall process and the continuous public deception, but we will continue to correct the facts to protect our organization's integrity and reputation.

First, let's give context to the spirit and intent of the signed 2018-2019 lease agreement. In 2018 when the lease was signed, there were no past liabilities, no bad debts, no prerequisite to resolve a third-party $1 million dollar dispute, and no covid-19 pandemic - what we did have was a one-year lease which also contemplated our long-term management of the facility. We made a business decision to accept future liabilities for a one-year term with the understanding that we would negotiate a long-term management agreement in good faith. The City reneged on the management agreement. Following the one-year lease, we were unable to sign the 10-year agreement with the references to joint and several liability as indicated to SJSE on numerous occasions.

The City states in its most recent press release that "Misinformation is currently being circulated in the media, and it is important to clarify that the City did not change language in the Lease that referred to the obligations of the Teams. The idea that new language was slipped into the draft agreement is untrue."

Remembering that there were no past liabilities in 2018 but in 2021 there is currently a $1 million dollar known liability, the City imposed five prerequisites in a letter addressed to Deacon Sports & Entertainment dated February 26, 2021, whereby it states, "To be clear, no lease discussions or execution will occur without the following preconditions being fulfilled and required documentation submitted to SJSEL".

Teams will pay the outstanding amount of the LED Ring to EC Boone and resolve the outstanding litigation.

Teams will pay the outstanding amounts claimed by Mr. English.

Written commitment that there will be no representations or commitments made on behalf of SJSEL or the City to any Third Party with respect to these discussions.

SJSEL, the City, or the Teams will not announce any new deals or agreements in principles or understandings in the media until such time as the preconditions are met and the lease is executed by all parties.

There are to be no public discussions while preconditions are being met or until the Lease is signed, SJSEL, the City nor the Teams will be negotiating the Lease in the public.

Below is the corresponding new language which was slipped into the draft agreement which accompanied the February 26, 2021 letter. Examples include:

The Parties agree that the ASE and DSE shall pay all debts associated with the LED Power Ring to resolve the outstanding litigation, and the Home Team Dressing Room and New Home Team Dressing Room to Kevin English ($189,268.49). This is a condition that must be complied with prior to the first Home Game of the Teams or else the Teams will not be permitted to use Mile One as their home arena.

The outstanding litigation related to the LED Ring shall be resolved by the Teams without any financial contribution by SJSEL or the City. The Parties acknowledge that they are financially responsible for payment of all costs related to the purchase and installation of the LED Ring.

DSE believes that this latest release is no more than a deflection from the real issues at hand, which the City and SJSE refuse to provide a public response to:

The analysis used to determine that the economic impact of a 54 game hockey and basketball season is less than a 10 game quasi-basketball season

SJSE acted in bad faith throughout negotiations with DSE and Atlantic Sports & Entertainment especially as it pertains to interference in the NBL bid process and the choice to not-disclose that they were negotiating with a new tenant

The timeframe and process for proposal assessment

When were bids received?

When was the assessment completed?

When were decisions made at SJSE and City Council?

What information was provided to inform these decisions?

The prerequisites and terms proposed by SJSE for the 10-year agreement and subsequent February 2021 draft lease were unreasonable and egregious

We end by asking the public - If not the DSE proposal, then what?

DSE has a solution to solve a $1 million dollar third-party liability and two professional sports teams offering 54 games to the citizens of St. John's. A 54 game basketball and hockey season provides an injection of over $10 million dollars to St. John's and the surrounding area.

What you're left with is 10 games of quasi-basketball and a +$1 million dollar liability that ultimately belongs to the City. In the most recent release, the City states "the City, and residents are not held responsible for the debts of external groups, such as sport teams" - unfortunately, if SJSE doesn't accept the DSE solution, the City will be responsible for the debts of an external group.

DSE continues to engage in this battle of the media releases in the (perhaps naive) hope that there is some reality where together we can change the trajectory such that the Edge and Growlers return to their fans at Mile One Centre this year. As the prospect of that grows dim, we thank you for your outpouring of support and turn our focus inward to look at what comes next. All we want to do is provide family entertainment for the hockey and basketball fans of the city. We're sorry that it keeps coming to this.

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