The Canadian National Exhibition has struck a deal with its landlord at Exhibition Place that will make it independent of the City of Toronto.

The operators of the historic 18-day fair say they reached an agreement Friday with the Board of Governors of the city-owned lakefront property.

The deal will see the CNE pay the city higher rent but allow the fair to retain any profits and invest them in future years, CNE President Brian Ashton told The Star in a telephone interview.

Ticket prices will remain the same, Ashton said. As an independent entity, the CNE will be freer to negotiate its own deals with suppliers and become more efficient, he explained.

“If we became more independent, I felt strongly that we’d be much more nimble at how we provide the CNE,” Ashton said.

The deal, which has been approved by the CNE Association and the Board of Governors of Exhibition Place, still has to go to city council March 5 and 6.

If approved, it would become effective April, 2013.

“The independence of the CNEA is good for both the CNEA and Exhibition Place,” said Mark Grimes, chair of the Exhibition Place board of Governors. “The agreement will protect the Board of Governors and the City against any negative financial consequences and at the same time allow the CNEA to reach financial and organizational stability for the new independent organization.”

The CNE had been seeking a new arrangement with the city for some time, said former CNE board president Joe Pantalone. But negotiations got going in earnest after consulting firm KPMG recommended last September the city strike a new deal with the fair operator as part of a wider report on divesting non-core services.

“Rather than being a program of the city it’s going to be an independent tenant, like the Royal Winter Fair,” Pantalone said. “At the end of the day as far as the general public is concerned, they shouldn’t see any difference, which is terrific, because the CNE is one of those festivals that has defined the city for over 135 years.”

Under the current arrangement, the CNE has turned over $5 million in profits to the city in the past 10 years, Ashton said. In return, the city covered any losses the fair incurred, he said.

In the past decade, the fair has only lost money once, in 2003, the year that a frightening new disease, SARS, hit Toronto, and a major power blackout delayed the fair’s opening.

In fact, attendance is up since the start of the recession as more Greater Toronto Area families opted to vacation at home and were looking for something fun to do with their kids, Ashton said.

In addition to handing over its profits, the CNE also pays rent for the premises, which will rise to $3.2 million a year from the current $2.4 million, he said.

Exhibition Place wanted more, Ashton said, arguing that $4.8 million a year would more closely reflect the “market rates” it charges trade shows and other commercial tenants.

But Ashton said the CNE argued the fair isn’t like any other event.

Founded in 1879 to encourage the development of agriculture, manufacturing, industry and commerce and the arts, it’s the seventh largest fair in North America.

Held over 18 days leading up to and including Labour Day, the fair features games, mid-way rides, a working arm, sporting events, concerts, international food, and a three-day air show, attracted 1.31 million people last year.

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Prior to 1983, the CNE was more involved in running the Exhibition grounds, Pantalone said. But the governance structure changed that year giving greater control of the site to the city, he said.

The change made it easier for Exhibition Place to obtain funds to finance new buildings, such as the Direct Energy Centre, which have attracted new events and sources of revenue, Pantalone said.

“Exhibition Place has been in the black in the last few years. While Ontario Place across the street has been in the red because similar investments aren’t being made,” Pantalone said.