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NBL Canada St. John's Edge

Fast Facts About the New Basketball Deal with Mile One Centre

July 16, 2021 - National Basketball League of Canada (NBL Canada)
St. John's Edge News Release


St. John's, Newfoundland - In response to the fast facts published by the City of St. John's, Deacon Sports & Entertainment ("DSE") also has a set of fast facts on the "misconceptions" that the citizens and fans are experiencing since yesterday.

"The teams, not the City or SJSEL, chose not to sign the lease."

The idea that there was any choice in not executing a lease is preposterous. The Growlers and Edge initially invested millions of dollars in franchise fees and other set-up costs on the assumption a management deal would be reached for Mile One Centre. When a management deal could not be reached, the teams were then willing to commit to a 10-year lease at Mile One Centre with capital improvements for better in-game experience included.

The failure to sign the proposed lease from SJSE was not a choice. The lease contained terms and conditions that were unreasonably excessive for this type of agreement. The main point of contention was that SJSE wanted DSE to take on the past and future liabilities of Atlantic Sport & Entertainment under the lease, including a known liability of $1 million. Our dissatisfaction on this term was stated on several occasions with no remedy from SJSE. Given both teams have independent owners and management, this was an unreasonable requirement from SJSE which prevented DSE from executing the lease.

DSE currently operates three ECHL franchises in Newfoundland, Quebec, and Iowa and is proudly affiliated with the Maple Leaf Sports & Entertainment, Montreal Canadiens, and Minnesota Wild of the National Hockey League. We are invested heavily in this industry - why would we choose not to sign a lease?

"The teams were not blindsided by our decision."

DSE was absolutely blindsided by this decision. DSE was served notice of the tentative deal shortly before SJSE made the announcement. There were plenty of opportunities for SJSE to disclose their concurrent negotiations. In April, it was disclosed in multiple meetings with SJSE that DSE was actively working to secure a basketball franchise and yet SJSE chose to withhold their concurrent negotiations for an alternate franchise.

DSE was led to believe that we were the sole entity negotiating for a lease agreement, so it came as quite a surprise to learn that SJSE was not only negotiating with another party, but had already come to an agreement.

"The allegations of bad faith by the Board and Management of SJSEL are unfounded."

It was disingenuous of SJSE to negotiate with another party without notifying DSE and expecting DSE to solely take on the burden of resolving other company's debts - it was never a reasonable condition. DSE has paid all liabilities for which it was responsible but was unfairly coerced into solely resolving the dispute.

Nonetheless, the dispute over liabilities was eventually resolved in the current proposal to SJSE from DSE. In late June, DSE notified the Mayor that we had a solution to remedy the ongoing debts; DSE believed in good faith that we would then arrive at a lease agreement. DSE was shocked to learn that while we thought we were close to an agreement, SJSE had reached out to the NBL to advocate for the franchise rights for the Edge to be sold to the 2001 Investments Group rather than DSE, and had also represented to the NBL that SJSE would not be entering into a lease with DSE.

While DSE worked diligently for months to reach an agreement, there have been significant consequential losses to the organization. By preventing DSE from successful lease negotiations, SJSE restricted the ability of DSE to solicit revenue generation (sponsorship and ticket sales) and further inhibited operational planning (player contracts, league requirements, and travel plans).

The COVID-19 pandemic has been exceptionally difficult on all businesses; sports teams being some of the hardest hit. DSE sought stability and sensitivity from SJSE but are now met with perceived ill intent. Operating a sports franchise in Newfoundland and Labrador is much more expensive than in other jurisdictions, more so after losing a season and a half due to the global pandemic. DSE proposed a solution that would provide greater financial stability which could only be achieved by one ownership group. DSE invested millions to bring and keep the Growlers in St. John's, and SJSE and St. John's City Council are aware that the current proposal was feasible on the basis of DSE operating both basketball and hockey franchises out of the Mile One Centre.

SJSE states that in a comparison of both proposals, the DSE proposal was a worse deal for the taxpayers of St. John's. It is difficult to comprehend that two experienced professional teams (Edge and Growlers) will have less economic impact than that of having one new entrant. The decision from Council and SJSE will undoubtedly have an adverse effect on downtown businesses. This is especially true given that the new league will likely have a reduced number of games per season compared to the Growlers and Edge.

DSE was not given an opportunity to have a post-submission clarification meeting to answer any questions from SJSE on the financial impact of our proposal.

"We will not release the terms of the tentative deal until the final deal is signed."

DSE has been transparent with the facts of the proposal from the beginning and will continue to do so, making the current proposal available to the public for their independent review.

"There has never been a formal offer on the table to purchase Mile One."

DSE has expressed interest to purchase Mile One Centre on several occasions, however, there has never been desire from SJSE to receive or work collaboratively with DSE on a solution. As stated above, we are heavily invested in the sports industry and have many ideas as to improving the Mile One Centre experience, as we have done in other jurisdictions.

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