NHL: Kelly point man on second T.O. team

One of the most interesting aspects of this week's report (David Shoalts, The Globe and Mail) that a group of businessmen is looking to bring a second NHL team to the Toronto area (myself, Sporting Madness) was the involvement of NHL vice president Bill Daly and NHLPA executive director Paul Kelly (pictured).

These rumours have been swirling for quite some time and were at the level of informal discussions between NHL governors back in October, but now they've progressed to formal meetings with two of the most important men in the league. Only Daly theoretically has any control over where a team might wind up. Kelly's involvement may prove even more crucial.

The key to this entire discussion is the economics. There's a good reason that the Leafs are far and away the most valuable team on Forbes' list, weighing in at $448 million. They're $37 million ahead of the next closest franchise, the New York Rangers, despite most of their revenues being in depressed Canadian currency and their costs being in U.S. dollars. Southern Ontario has an incredible population of hockey obsessives and the Leafs have a near-stranglehold over the market. They can charge whatever they like for tickets, merchandise and the rest, and you can bet that people will still queue up to pay it. A good deal of fans from Hamilton and St. Catharines make the pilgrimage down to Buffalo, but that's partly due to the lack of tickets available in Toronto.

However, some things are more important to the NHL than economics in the Gary Bettman era. Consider how Jim Balsillie's huge overbid to buy the Nashville Predators was turned down in favour of a smaller local offer that involved such men of integrity as Boots del Biaggio (Allan Maki, The Globe and Mail). There's a great deal of prestige at stake here; Bettman's legacy rests on trying to sell hockey in the United States, and moving a team back to Canada will undermine that, even if it makes solid business sense.

That's where Kelly comes in. The NHL and NHLPA are said to be partners under the current collective bargaining agreement, a vast change from how things have happened in the past (The Puck Stops Here). Yes, Alan Eagleson had plenty of influence on the business side of the league, but most of that wasn't from his role as head of the players' union and that didn't really work out too well for the players. Kelly has already demonstrated a willingness to comment on decisions that heretofore would have been the exclusive province of the league, such as European expansion and television deals (Sports Business Daily).

Because the players' fortunes are now directly tied to the league's revenues, he has a duty to lobby the NHL to make sensible business decisions. He also has a considerable amount of influence to use; the NHL will assuredly need the players onside in the current economic struggles, and you can bet that the NHLPA isn't overly happy that the league is propping up Phoenix.

The key difference between this later proposal and the earlier attempts at a team in Kitchener or Hamilton is the geography, which I detail in a couple of Google Maps here. This proposal would bring a team to Vaughan, which is north of Toronto's downtown. Hamilton and Kitchener are south of Toronto and closer to Buffalo, so a team in either area would have a sizable impact on the amount of people willing to cross the border to watch the Sabres.

The Leafs are in better financial shape than the Sabres and will still prosper with a second team in Toronto; their history and legions of fans will ensure that they can still charge the highest prices in town and arrange the best corporate sponsorships and television contracts. Thus, from the point of view of either the league as a whole or the players' association, this proposal would considerably strengthen one club (whichever of the troubled franchises moves into the GTA) without appreciably weakening any of the other franchises. That makes tremendous economic sense for all parties involved, and that gives Kelly and the players considerable motivation to convince Bettman that the health of the league is more important than saving face.

There's still a long way to go before this could happen. A new arena would be needed, and that's never a simple process, especially when a team is still a far-off prospect. The question of how much the new team would have to pay in territorial rights is also one that doesn't have a clear answer yet, and that could make a big difference. We don't even know if MLSE would give up their monopoly for any amount of money, and that may be the most important question, as Stephen Brunt points out.

However, there are a lot of people interested in this idea, including former Leaf Kevin Maguire, who's heading up the Vaughan group (Shoalts). Not all the owners are happy with Bettman's recent moves, and you can bet they won't be willing to prop up money-losing teams like Phoenix indefinitely when hugely lucrative markets like the GTA await.

This is where the support of Kelly and the NHLPA could be crucial; an alliance between the players and some of the owners might be enough to force Bettman to allow this and reduce MLSE's complaints to save his own neck. We also haven't seen the full impact of the economic crisis on the NHL yet, and the lack of playoff sellouts in some crucial markets (Greg Wyshynski, Puck Daddy) may be a troubling sign. If times get bad enough, Bettman may be forced to choose to save the league instead of his reputation, and pressure from Kelly may play a role in convincing him of the eventual necessity of this move. It won't happen instantly, but this makes far too much financial sense for it to be dismissed forever.

(Kelly photo from Puck The Media.)

Tech, Money & Sports: CBC is Sinking Man, And I Don't Want to Swim...

The full measure of the most extensive financial cuts in CBC/Radio-Canada's history have finally been released today. We won't mince words: the news is bad all around. Every single sector of the CBC's operations has been hit hard by the $171 million shortfall the Corp(se) faces, and sports coverage is taking a major hit in all this.

First, the somewhat palatable news the CBC will completely drop all Blue Jays telecasts. While this is pretty crappy news for anyone who prefers broadcasts sans Jamie Campbell on Sportsnet, it's not as if the CBC was actively involved in baseball coverage as is. It's sort of tolerable, in other words.

The real bad news is the CBC's cutbacks to amateur sports coverage, namely a complete scaling back or wholesale cutting of international figure skating, the CONCACAF Champions League soccer, Skiing, World Aquatics and -- wait for it -- World Athletics.

There's no way to describe this other than bad for all those amateur athletes who depend on the CBC for coverage of events that private broadcasters would never, ever cover. Unlike professional sports (and in CTV's case, the Vancouver Olympics), there's little money to be made in covering alpine skiing events or track and field events (unless, of course, they're Olympic events, in which they're apparently ideal for TV, which just goes to show how hypocritical people are when it comes to the sporting events we watch and how hype is a dangerous thing).

I know there's CBC haters out there who will say 'hurray' for these cuts, as if the people losing their jobs -- all 800 of them -- don't matter. You're entitled to feel, sometimes rightly, that the CBC has a tonne of waste in it that needlessly and ineffectively spends taxpayer dollars for programming people do not want.

This being said, there's a real sense of loss today that not only are average people losing their jobs, but a part of Canadian culture has died today too. Amateur sports may not be sexy to beer companies or generate the same kind of knee-jerk lunacy that infects Canada like a sickness every four years during Winter Olympics hockey games, but it means a lot to a lot of people who struggle everyday -- mostly on below poverty-line wages -- to play, compete and strive for better.

Now, we've lost the ability to see those people compete. And that's just awful, awful news for all of us.

The real loser in potential Habs sale? Montreal soccer fans

Huge news today that Montreal Canadiens owner George Gillett is officially trying to offload at least a portion of the team [Sean Gordon, The Globe and Mail]. The timing's certainly unfortunate for the Canadiens, given their recent struggles and coaching turnover in the midst of what was supposed to be a glorious centennial season. It's likely that the sale won't matter all that much for Montreal hockey in the end, though; this is the league's most storied franchise and one that successfully dominates not just its local market, but its entire province. The idea of moving the team can't be in the cards, unless the dealer is an absolute moron.

The real potential losers here are Montreal soccer fans. Keep in mind that Gillett was responsible for much of the money backstopping the Montreal Impact's bid for MLS status. Given that the Globe story mentions that Gillett may also be looking to offload his interests in Liverpool FC and NASCAR, it's hard to see him having an interest in supplying the financing for Montreal to make another run at one of the 2012 expansion slots.

That's too bad, as the Impact will need all the money they can get. As the Canadian Guys pointed out on the weekend, Stade Saputo is not an acceptable MLS stadium in its current 13,000 seat incarnation. Renovations to make it a 20,000-seater were discussed this fall, but they're going to be expensive. Although Joey Saputo stated firmly after Montreal's withdrawal that the partnership "never, at any point, had any trouble whatsoever financing its bid," it's looking more and more like that may not have been the case; Gillett's troubles with Liverpool were in full swing by that point, and the economy was already in the tank. Of course, Saputo's words may well be technically correct; they may not have ever had trouble financing their proposal of $43 million Canadian (as reported by Ben Knight back in his Globe days), including construction costs, but it seems that they were unwilling or unable to come up with the $40 million U.S. franchise fee. You have to wonder if part of that was perhaps due to Gillett becoming uneasy about investing more in sports at a time when he was already facing a cash crunch at Liverpool.

This is not meant to paint Gillett as a villain. In fact, as portrayed in Stephen Brunt's columns, he comes off as the sort of man you'd want as an owner; not stingy with the wages or the stadium expansions and respectful of cherished traditions. His Liverpool counterpart Tom Hicks is quite a different story, but Gillett seems to care about sports and to do so for the right reasons. Obviously I can't know his motivation for trying to sell his sports interests now, but given the global economic turmoil, the possibility exists that it might not have been his choice under better circumstances. He was a great owner for the Canadiens, and he should be remembered as such; he also supported the idea of MLS soccer in Montreal and he deserves praise for that.

The question for any future Montreal bid for MLS status is if they can find someone willing to take Gillett's place, and they'll have to do it soon. As Ives reported, MLS wants to add two more teams in 2012. If we presume the same two-year gap between expansion announcements and starting play, that would mean that the next two cities would be decided about a year from now. That's not a lot of time for Montreal to find an investor willing to pony up the cash for stadium renovations and the full franchise fee. Plus, it may even be more expensive this time. Yes, Vancouver got in for $35 million in the end, but they had significant leverage on their side; there weren't a lot of promising bids left at that point, and as Marc Weber of the Vancouver Province pointed out, there's quite a difference between his estimate of the $24 million that Montreal offered (which may even be generous considering construction costs in Montreal) as a franchise fee and the $35 million the Whitecaps paid. Montreal has no such leverage, and they may even be starting from less than zero given the ugly public ending to their last MLS bid.

Meanwhile, the USL is looking less and less attractive for Montreal. Seattle's already left, and Vancouver and Portland are soon to follow suit; there go three of the marquee teams. Plus, Vancouver in MLS means there will be less Canadian media coverage of Montreal and the USL; they'll probably still get local write-ups, but the national soccer narrative is likely to focus on the MLS teams (especially if they get a good national TV deal). That doesn't mean that the USL won't still be viable, but it's going to look more and more small-time down the road. If I was a Montreal soccer fan, I would be hoping like hell that the Impact find a wealthy investor to replace Gillett and get a solid bid together for the 2012 round of expansion. If they don't, soccer in Canada may pass them by.

Was Montreal's bid axed by MLS?

Yes, the Grey Cup's set to kick off in a few hours (and I'll have a full preview up shortly), but that's not the only subject making news in Montreal. On Friday night, Duane and I both wrote here about how Montreal had seemingly dropped its bid for an MLS franchise, which seemed curious to say the least. New information has now arisen that muddies the situation further. Ben Knight of the excellent On Soccer blog over at The Globe and Mail has dug up a really interesting press release, presumably from the Montreal Impact, which suggests that they wanted to keep the bid alive but it was axed by MLS commissioner Don Garber. The release is after the jump.


Here's the release:

"RECTIFICATION REGARDING MONTREAL'S BID FOR MAJOR LEAGUE SOCCER

Following MLS Commissioner Don Garber's statements regarding Montreal's bid, the Montreal partnership group would like to bring one important rectification:

Montreal did not withdrew its bid from Major League Soccer but was informed that the league did not retain its bid. Out of respect for the Grey Cup festivities, the partnership group will not make any additional statements over the weekend. However, the President of the Montreal Impact [and] Saputo Stadium, Mr. Joey Saputo, who is spearheading Montreal's MLS bid, will meet the media: Monday, November 24, 2008, 10:30 am, Saputo Stadium, 4750 Sherbrooke Street, Montreal."

That's fascinating. According to this release, it wasn't that Montreal backed out; MLS decided not to consider their application. It's hard to imagine why at first, especially considering that most observers thought Montreal had the strongest bid of any city and was pretty much a lock. However, there could be concerns with the financial health of George Gillett's sporting empire, especially considering Liverpool's troubles [Ian Herbert and Andrew Warshaw, The Independent]. Joey Saputo, the owner of the Impact and Gillett's partner in the MLS bid, has also brought up the notion of staying in the USL, so perhaps Garber was concerned about Montreal's commitment to MLS.

We have conflicting statements, though. From the AP story with Garber's comments:

"Garber said that Montreal's delegation — led by Joey Saputo and George Gillett, who owns Liverpool FC in England's Premier League and the NHL's Montreal Canadiens — had informed him within the past week of possible trouble.

'Montreal has had to evaluate what kinds of private capital they needed to refinance their stadium to fund the expansion fee, and what kind of public support would be available,' Garber said. 'I'm not sure they were able to come to terms in this economic environment.'"

Garber doesn't directly say that Montreal withdrew their bid on their own, but that's certainly the logical inference, and it's the one the unnamed AP writer drew; his lede reads "Montreal withdrew its bid for a Major League Soccer expansion team, commissioner Don Garber said Friday in his state-of-the-league address."

Garber and Saputo (or whoever wrote the Impact's press release) could both telling the truth, though. Garber never said that Montreal abandoned their bid, even though he implied it. It's possible Saputo and Gillett wanted to keep the bid alive despite financial trouble, but Garber canned it after seeing the numbers.

Still, kicking Montreal of the bid process seems rather unusual, especially given the strength of their bid. Even if the league had already decided to go with a different franchises, retaining Montreal as an option would force the other markets to up the ante of their bids in an attempt to compete. If the press release is accurate, this decision doesn't seem to make business sense for MLS on the surface; less markets under consideration means less competition for the limited expansion slots, and more complaining about and reluctance to pay the sky-high expansion fees sure to be required. You have to wonder if there's more going on here. Monday's press conference will surely be illuminating.

(Cross-posted to Sporting Madness.)