Vaughan Sprawlers it is!
Business group meets with NHL to discuss second Toronto team
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DAVID SHOALTS
From Thursday's Globe and Mail
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April 23, 2009 at 1:58 AM EDT
A group of business people wants to bring a second team to the Greater Toronto Area, and the National Hockey League took the group seriously enough to grant it an audience.
The unidentified group met with NHL deputy commissioner Bill Daly in downtown Toronto last week, according to sources. The group proposes to build an arena at the intersection of Highways 427 and 7 in Vaughan, Ont., on land north of Pearson International Airport that's owned by businessman Victor De Zen.
The meeting was scheduled to last one hour but stretched to approximately 21/2 hours. The unidentified group also discussed its proposal with Paul Kelly, the executive director of the NHL Players' Association. Mr. Kelly and Mr. Daly declined to comment.
One source said the group's market research showed that a second team would not significantly impact the revenues of either the Toronto Maple Leafs or the Buffalo Sabres, provided that it is located in the northern part of the Metro Toronto area. Downsview and the area around Woodbine Race Track have also been considered by at least one business entity interested in bringing a team to the Toronto area.
It is known that Research In Motion founder Jim Balsillie has conducted market research toward bringing a franchise into the Toronto area. He attempted to acquire the Nashville Predators with the idea of moving it to Hamilton. However, the NHL is apparently unwilling to consider Hamilton as a location, in part because a team in that city would likely hurt Buffalo's operation.
Vaughan may be that much farther removed from the Air Canada Centre, home to the Maple Leafs in the downtown core, to make a second team acceptable to Maple Leaf Sports and Entertainment, owner of the Leafs.
MLSE's oft-repeated position is that it would not consider allowing another team into its territory until the league presents concrete data to demonstrate that the Leafs position in the marketplace would not be compromised.
The most obvious candidate for a move is the Phoenix Coyotes. The franchise is tied to an arena lease in Glendale, Ariz., until 2033, but the team is bleeding money with losses estimated to be in the area of $35-million (U.S.) this year. The NHL stepped in to keep the team afloat for the 2008-09 season, and there is some speculation that the league may attempt to negotiate a break-fee with Glendale in order to sell the club to a new owner.
One source at the NHL governors level said "there is something happening in Phoenix," but did not know specifics. League commissioner Gary Bettman did receive permission from the NHL governors recently to increase the league's line of credit to $190-million, in part to subsidize the Coyotes for at least one more season.
In Toronto, the group was told by Mr. Daly that the NHL is "not currently considering expansion nor do we have any intention or desire to relocate an existing franchise," according to a source.
However, the group is taking a long-term view, according to sources with knowledge of its plans. At least two years — more likely three to five — would be needed to build an arena and settle territorial-rights fees for the Leafs and perhaps the Sabres.
The total cost would be upward of $800-million — perhaps $200-million for the franchise, at least $200-million in territorial-rights fees and up to $400-million for an arena.
One NHL governor and one NHL owner, who both favour putting another franchise in Toronto, say economic conditions will prevent it for "the near term."
"The near-term I'd say is two years, minimum," the governor said. "I don't see this happening for at least four or five years. No one is lending anybody $400-million to build an arena, not even Canadian banks."
The NHL owner said Mr. Bettman has been "toying with the idea" of a second Toronto franchise but would open it to proposals from all parties in order to get the highest price.
Jim Leetch, CEO of the Ontario Teachers' Pension Plan Board, the majority owner of MLSE, said Wednesday he was unaware of efforts to put another team in the Toronto market. Other sources said neither MLSE nor the Buffalo Sabres were aware of the meeting with Mr. Daly.
It is possible the Ontario Teachers' Pension Plan would welcome a large rights-fees payment, as it grapples with a large shortfall in the pension plan.
Sources say Mr. De Zen has no interest in owning an NHL team but may be willing to participate in an arena deal. A source said Joseph Sgro, general manager of Mr. De Zen's company, Zzen Group of Companies, was represented at the meeting.
Mr. De Zen recently left a company that he founded, Royal Group Technologies Ltd., after a scandal over land deals. He faces fraud charges, and has denied any wrongdoing.
Globe and Mail staff writers Jane Taber, Andrew Willis, Paul Waldie, Jeff Blair and Roy MacGregor contributed to this report