Club Nomadic sues Mystic Lake's event company for breach of contract

Club Nomadic Entertainment Group filed a federal lawsuit Tuesday alleging that Mystic Lake Casino abruptly shelved its glitzy pop-up concert venue without notice just three weeks before Super Bowl LII — after promoters had already sunk $2.4 million into the nightclub.

A lawyer for Club Nomadic said it must now spend $1 million tearing down the 65,000-square-foot temporary structure built in the casino's parking lot for the event, meant to lure thousands of visitors to the Prior Lake complex a half-hour from U.S. Bank stadium in downtown Minneapolis.

Concerts by Gwen Stefani, Florida Georgia Line, the Chainsmokers and Kygo were moved inside the casino after the Shakopee Mdewakanton Sioux Community's events company announced Jan. 12 that the four-day event "would not be up to our standards of quality."

"It was a surprise when they canceled," said Josh Schiller, a New York attorney representing Club Nomadic. "They took aim at the quality of the building, which was erected but the interior was yet to be finished. That's what the designers do at the end."

Construction began last fall and was substantially complete ahead of a Star Tribune tour on Jan. 4. The venue's concrete floors, winterized metallic walls and VIP balconies had taken shape as crews worked to finish the stage and interior decor.

Club Nomadic promoters were racing toward a Jan. 15 completion date when their contract was canceled a few days before the deadline, court records show. Dakota February Events, Mystic Lake's production company, said Nomadic breached its contract by failing to obtain a certificate of occupancy by a Jan. 1 deadline. Nomadic blamed the casino's events company for intentionally delaying the project.

Nomadic said in one instance, Dakota failed to respond to its engineering submissions for more than 40 days. Promoters also complained that the building inspector, who works for the tribe, took a vacation during a critical period of the project.

Another major sticking point appears to be portable toilets.

Both parties had agreed that toilets should not be installed on the property until at least mid-January, about two weeks before the concerts began, according to the lawsuit. But the delay in delivering the portable toilets would also delay building certification, Schiller said, so Nomadic executives were shocked when the contract was yanked on those grounds.

"Construction of the venue was on track to be ready well before the events were to take place, yet Dakota terminated the contract and moved the events inside the Mystic Lake Casino, with no prior warning to Nomadic," Jack Murphy, president of Nomadic Entertainment, said in a statement.

The contract states that Nomadic would front the construction costs but recoup expenses and earn a profit from its share of ticket sales, sponsorships and food and beverage sales. Nomadic seeks undisclosed damages, attorney fees, and an injunction barring the casino from making critical comments about its performance as a result of lost revenue.

Dakota required Nomadic to put up a performance bond and has filed a $5 million claim against the surety company, Atlantic Specialty Insurance Co., which underwrote it.

Willie Hardacker, general legal counsel for Dakota February Events, a limited liability company owned by the Shakopee Mdewakanton Sioux Community, said in a statement that his client learned of the lawsuit from the news media. "However, we were fully within our rights to cancel the contract and will vigorously defend that decision," Hardacker said. "This will in no way impact guests visiting Mystic Lake or the entertainment scheduled on February 1-4."

Poor ticket sales likely played a role in scrapping the 9,000-person venue. Ticket prices, which started at $100 and reached past $10,000 with VIP options, had been heavily discounted in deals that started circulating in early January.

Schiller acknowledged that ticket sales failed to meet expectations. "Certainly we were all hoping the Minnesota Vikings would make it [to the Super Bowl], because that would increase everyone's eagerness to come out and party," he said.

In November, Mystic Lake's director of brand marketing, Johnny Mackin, said that the casino was making a big gamble on Club Nomadic. "It's the Super Bowl, so we're thinking super thoughts," Mackin said.

The casino touted its music venue as the south metro's largest recreational draw, offering the chance to hobnob with celebrities and gamble.

Nomadic Entertainment is also promoting another Super Bowl concert series Feb. 1-4 at the renovated Armory building near U.S. Bank stadium. That series, called Nomadic Live, features Imagine Dragons, Pink, Kelly Clarkson and Jennifer Lopez.

Nomadic has put on similar events at past Super Bowls. Last year in Houston, its pop-up complex hosted Taylor Swift and Bruno Mars — significantly bigger names than the ones they're bringing to Minnesota.

Liz Sawyer • 612-673-4648