Muzik club owner pulls bid for new terms on lease

The owner of the Muzik nightclub at Exhibition Place is backing away from his bid to sweeten the terms of his long-term lease for the city-owned site.

Club owner Zlatko Starkovski – in the news recently for his late-night phone calls to Mayor Rob Ford and his opposition to all-ages dance events at Exhibition Place – had wanted new terms for his lease on the Horticultural Building to better guard against competition. His club, which counts celebrities and Mr. Ford among its clients, is in the midst of a major outdoor renovation to create a pool-side cabana bar with capacity for 5,654 people.

The board of Exhibition Place was set to consider his request at its meeting Friday, but Mr. Starkovski announced his change of heart in a tersely worded e-mail to Dianne Young, chief executive of Exhibition Place, and board chair Councillor Mark Grimes.

"Could you please pull my item from the Board of Governors agenda and from consideration. Kindly confirm," reads the message sent last week.

No explanation was given for the move and the club and its owner did not reply to requests for comment.

Area Councillor Mike Layton, a member of the Exhibition Place board, said he planned to oppose the request and hopes the matter is now closed.

"Why would we needlessly open up the lease," he said.

The club signed a 20-year deal with Exhibition Place in 2003. Mr. Layton and Councillor Gord Perks, also a board member of the board, have asked to see documents related to that agreement, but Mr. Layton said he does not anticipate any chances will be made.

"I'm not sure we have any options," he said. "My understanding is that the lease holder is living up to his side of the agreement."

Earlier this month, The Globe and Mail revealed that Mr. Starkovski has had a stormy relationship with the owner of a Toronto strip club that led to related bankruptcy protection proceedings, later settled, involving a company owned by Mr. Starkovski and set up to operate Muzik. The Telios family, which owns the Club Paradise strip club, were early financial backers of Mr. Starkovski until a bitter court battle in 2010 over a $740,000 debt.

Court documents related to that dispute include a 2010 affidavit by Mr. Starkovski that revealed he was paying below market rent to the city – a sliding scale with fixed rent that tops out at $10,000 a month this year, with possible additional payments if sales hit a certain threshold. An accompanying 2010 real estate appraisal, commissioned by Mr. Starkovski, described the location as a "jewel," estimating a "realistic" market rent for the venue, excluding the area outside, was $85,000 a month.

Mr. Layton said the deal was signed "at a different time," and that the club owner has invested in improvements to the building as well as paid rent.