NBL owner pays state $577 a week to rent stadium - ABC News & Headlines – Australian Broadcasting Corporation

Larry Kestelman, National Basketball League owner, pictured at the Derwent Entertainment Centre in 2020. (ABC News: Luke Bowden)

A report has found Larry Kestelman's company is effectively leasing the Derwent Entertainment Centre from the Tasmanian government for less than $30,000 a year — around $577 a week.

Mr Kestelman is a property developer and owner of the NBL, and is in talks to buy the venue and surrounding Crown land.

The report also found that despite years of negotiations between the Tasmanian government and Mr Kestelman's LK Group, there is no binding sale, no business case and no agreed master plan.

The Tasmanian government has effectively been leasing out a stadium to property developer and NBL owner Larry Kestelman for less than it would cost to rent most houses in the area, a parliamentary report has found.

The Public Accounts Committee found the proposed sale of Wilkinsons Point, home to the Derwent Entertainment Centre, to Mr Kestelman has exposed "serious and longstanding failures" in the management of a public asset and negotiations should be paused until some of its recommendations are implemented.

The Derwent Entertainment Centre, also known as MyState Bank Arena. (ABC News: Scott Ross)

The report into the sale of Wilkinson's Point found that despite six years of negotiations between the Tasmanian government and Mr Kestelman's LK Group, there is no binding sale, no business case and no agreed master plan.

It also found that the LK Group was effectively leasing the Derwent Entertainment Centre (DEC) for less than $30,000 a year.

"Larry Kestelman is a billionaire," Shadow Treasurer Dean Winter said.

The base rate rent for the DEC is $200,000 a year, adjusted for CPI.

But the Tasmanian government pays the LK Group $175,000, meaning Tasmania makes less than $30,000 a year, or approximately $577 a week.

Larry Kestelman and Tasmanian Premier Jeremy Rockliff at a JackJumpers game in 2022. (ABC News: Luke Bowden)

The report and Mr Winter accused the government of "overstating the revenue and failing to disclose the hiring fee" during the committee process.

"The $175,000 annual subsidy was completely hidden from the Parliamentary Public Works Committee during its 2020 review," Mr Winter said.

The committee said the agreement did allow for LK Group to pay a percentage rent subject to the performance of the DEC, but none had been paid.

The Tasmania JackJumpers celebrate their 2024 NBL Championship win at the DEC. (ABC News: Luke Bowden)

The committee found that the proposal to sell the land to Mr Kestelman began through Glenorchy City Council, before the state government took over when it acquired the DEC and the land surrounding it in 2020.

Since that time, the Tasmanian government has been working exclusively with the LK Group to sell the land with a price tag of about $6 million.

A report released later that year by the auditor-general found "significant shortcomings in advice and process" and a lack of a government business case to support the policy.

Then in an incoming government brief provided to Business and Industry Minister Felix Ellis following July's state election, the Department of State Growth warned that activating the site could cost taxpayers $100 million.

The departmental brief also detailed that there was "no certainty of development or contribution to costs from LK Group".

"The department's current recommendation is to cease negotiations on sale of land and consider offering the surplus land to open market," the note said.

The committee found a key area of disagreement was how much the car park would cost and who should pay for it.

The department estimated it would cost $100 million, while LK Group thought it would be about half that. It is unclear whether this has been resolved.

In April Mr Kestelman told the committee negotiations were suspended, in part due to the car park, and he was prepared to walk away if necessary.

In its report, the committee found that no agreement exists on how infrastructure costs will be shared between the government and LK Group, "notwithstanding years of negotiation on this point".

Wilkinsons Point sits on 15 hectares of Crown land, and is the site of the Derwent Entertainment Centre. (ABC News: Kate Nickels)

Mr Winter said the premier appeared to be "hell-bent on giving Larry Kestelman a good deal, but not at all interested in the interests of Tasmanians".

"Taxpayers face an estimated infrastructure footprint approaching $100 million for car parking, road realignments, and site servicing, with zero agreement on cost-sharing.

"This isn't commercial negotiation; it is complete mismanagement of public assets.

" You do not sell off $100 million in public liabilities for a $6 million headline price without a business case, without market testing and without binding development guarantees."

It recommended that the government pause negotiations until it completes a number of recommendations, including tabling a report that sets out the status of negotiations, any revised development proposal, estimated public costs and progress on the auditor-general's recommendations.

It also recommended that the lease agreement between the government and the LK Group be reviewed.

Asked about the report's findings, government minister Nick Duigan said the government remains committed to the opportunities.

"Wilkinson's Point represents a massive opportunity for Greater Hobart in terms of new housing, activating Dowsing Point," he said.