Second Toronto team looking more likely with new Markham arena

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Publicly, investors and city council members are saying an NHL team isn’t essential to the success of the planned 20,000-seat arena in Markham, Ontario. The new building in the Greater Toronto Area can make money hosting concerts and cultural events, they say.

“[An NHL team would be] icing on the cake, according to the community,” lead investor Graeme Roustan told the Economist & Sun. “But I can’t place a bet of that nature – it’s way too risky.”

But let’s be honest – everyone involved wants an NHL team for the building. That’s the ultimate goal. Always has been.

From the Economist & Sun:

…a confidential report obtained by the Economist & Sun this week revealed that Markham is concerned concerts and events may fail to support rent without a franchise and hopes to negotiate a termination clause if Mr. Roustan fails to deliver an NHL team within a reasonable time after the facility opens.

So why doesn’t Markham just come out and say it wants a team? Easy. Because the NHL doesn’t like it when that happens. Behind the scenes is where the league likes to discuss these things.

Markham will face two significant challenges in attracting an NHL franchise.

1. There aren’t any available.

Not at the moment anyway. The Coyotes and Islanders are the two most likely to relocate, but there’s no guarantee they will. The NHL will fight hard (and has fought hard) to keep those franchises from moving.

Then there are the other potential markets like Quebec City and Seattle that have expressed interest in getting a team.

It’s always possible the NHL could expand. In fact, that’s the most likely way Toronto would get a second team, since the expansion fee would be enormous.

2. Maple Leaf Sports & Entertainment.

Toronto may be the biggest hockey market in the world, but why would the Leafs’ owners want to give up their monopoly?

Sure, they’d still be able to sell out the ACC, but another team could theoretically put downward pressure on ticket prices, and that would have a negative effect on profits and franchise value.

Despite reports to the contrary, the NHL says the Leafs couldn’t block a second team.

“They can be dead-set against it, but that doesn’t mean they can stop the league from putting a franchise here if the league thinks it makes sense,” deputy commissioner Bill Daly said in 2009. “It’s a majority vote.”

It’s likely the Leafs would still be compensated should the NHL decide to place a second team in Toronto, but how much compensation would be appropriate? That’s where the hang-up would be.