National Music Centre defends its for-profit King Eddy live music venue

The National Music Centre in Calgary says its recently opened live music bar doesn't constitute unfair competition in a struggling scene where multiple small venues have closed.

The King Eddy's opening stung for several Calgary bar owners, especially afterthree music venues were shutteredin June, citing high rent, wages, taxes and soft weekend crowds. Several members of the music community took to social media to decry competition from the King Eddy.

But the president and CEO of the National Music Centre is in turn defending its decision to open a for-profit bar, less than two kilometres from two of the city's remaining music clubs.

"I think we've got to work hard to build a music city," Andrew Mosker told the Calgary Eyeopener Tuesday. "We're fulfilling a promise that we made in buying the King Eddy at market rates. We're helping artists."

'Not a fair situation'

The National Music Centre (NMC) is a non-profit organization with a museum facility, for which it received roughly $90 million in public funds to build in Calgary's East Village. Part of that construction included the meticulous refurbishment of the historic King Eddy building, which was a hotel and blues bar before it closed in 2004.

Now nearly 15 years after being condemned, the bar reopened Friday as a permanent club with a full service kitchen and bar and live music most nights. It soft launched over the Calgary Stampede with a range of country musicians, mostly local. This week, its shows include a Tribe Called Red and John Wort Hannam.

"I do have sour grapes," Blues Can owner Greg Smith said. "This is not a fair situation. I'm being asked to compete with somebody who doesn't have anywhere near the expenses that I have."

Smith and another owner of a longtime Inglewood music venues, Ironwood Stage & Grill, say they're at risk of closing already and the newly opened, for-profit business, owned by the non-profit, is targeting the same artists and audiences.

"We're all hurting right now, I mean, hurting beyond hurting," Smith said. "We're living day by day. You know, 'Is this the day I tell all my staff not to show up anymore?'

"And then in the midst of this, we get these fat cats rolling into town saying, 'Oh yeah, we're just going to do the same thing you do, but we don't have to worry about any of those issues.'"

Ironwood Stage & Grill owner Pat McIntyre said that instead of supporting the city's music scene, the National Music Centre is directly competing with their businesses by opening a bar offering similar lineups, menus and sometimes for cheaper prices or at times for free.

"I fully expected the Eddy to reopen with live music but unable to offer the same sort of creature comforts that we do by having a full restaurant and bar," he said.

McIntyre said he would prefer a style closer to that of Inglewood'sFestival Hall, which offers rental space for concerts and events, allowing external caterers to bring in food and beer supplied by a specific local brewer.

"So I expected it to sort of operate the way Festival Hall does, which is they have live music, which is great and creates a more vibrant music scene, but they shouldn't be competing with us."

Festival Hall is operated by the Folk Festival Society of Calgary, which is a charity.

McIntyre said he was specifically told eight years ago that the King Eddy venue wouldn't directly compete with his business.

Listen to the music club owners on the Calgary Eyeopener:

However, the National Music Centre disputes the claims. Mosker said he feels his organization had been transparent for years about the centre's plans for a club including offering food and liquor like a regular bar.

"I think the National Music Centre, because it had received public money and has raised money privately through corporate sponsorship and a number of other places, it is competing on a level playing field," Mosker said.

"Because what we have done to address this issue is, we have created a separate company because [Canada Revenue Agency] CRA's tax rules do not allow charities to run for-profit businesses."

Public records show that at the end of May, the NMC registered a for-profit company, King Eddy Live Music Limited. Six NMCboard and staff members are involved formally in the company as directors or officers, the centre says.

Mosker said that company will run the for-profit business activities. No portion of public funds allocated to NMC will go to the company, he said.

Listen to more from Andrew Mosker responding to King Eddy criticism:

He called the strategy for the non-profit to own a business to run the for-profit venture "a standard, well-known practice that a lot of charities do across this country."

"It is wholly owned by the NMC. If it makes money, its net profits go back to the NMC," he said.

The King Edward Hotel opened in 1905. In 2004, the building was condemned, displacing 24 residents and closing the renowned bar.

Now that the bar is open and run by the company, no public money will go to running it as a venue, Mosker said. He also said he would be willing to "open the books" for the bar.

"We're fulfilling a promise that we made in buying the King Eddy at market rates," Mosker said. "We're helping artists and we're also welcoming others to participate in that."

The King Eddy has secured a line of credit from its bank to pay for kitchen equipment and all other startup costs, according to NMC.

'You need diversity'

The club owners said even if the bar doesn't receive operating money from the non-profit, having had a strong footing with a new building puts the venue ahead. Smith said he believes that may leavethe Eddy able to pay more to musicians, as well.

That's at the heart of the worries, said Tom Phillips, a Calgary singer-songwriter. Hehas frequently played at the Blues Can, the Ironwood andMikey's on 12th, and he also performed atthe King Eddy during the Stampede.

He said the general worry is that, if the Eddy is able to offermore money to musicians than the other clubs can, regular acts will be drawn away from those longstanding bars.

"But if those clubs aren't there at all, it might leave the National Music Centre, and that's it. And, you know, you can't play there all the time, and you need diversity," Phillips said.

"I know the National Music Centre wouldn't be attempting to destroy music clubs in Calgary but it could happen."

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With files from Lisa Robinson and the Calgary Eyeopener.