Would a second NHL team in Toronto work?

TSN/Globe and Mail

7/8/2010 2:22:17 PM

It's six years and counting since they made the post-season, but in a hockey-mad country, no team has more demand or makes more money than the Toronto Maple Leafs.

"The amount of corporate sponsorship that the Leafs are able to achieve, without revealing the numbers - I would estimate you'd see thems probably being close to equaling all the teams across the country in total," said Mark Harrison, President of TrojanOne sports marketing.

NHL fervor can be found in any of Canada six NHL cities. What makes Toronto different is sheer size.

The Leafs are the richest NHL team there is. They charge the highest prices, rake in the most money and produce the biggest profits. According to Forbes magazine, the club pulled in $79 million US for the 2008-09 season.

That's what happens when you play in a Canadian market of 5.7 million people. A market that lines up to pay about $100 for an average ticket.

"It represents about 50 per cent of the Ontario economy," explained Mario Lefebvre, Director of the Centre for Municipal Studies at the Conference Board of Canada. "That represents 15 per cent of the Canadian economy."
To put Toronto's economic might into perspective, consider the fact that it has almost double the number of head offices that Montreal does.

More than three times Calgary's total.

And roughly nine times that of Ottawa.

So how much unsatisfied demand in there for NHL hockey in the greater Toronto area? We did some research.

"There's massive appetite for a second team in Toronto," said Global managing partner Don Mayo. "There's about 800,000 people in the Greater Toronto Area (GTA) right now that have NHL hockey as a passion that haven't been able to attend a hockey game in the past two years."

Having the NHL's largest Canadian market all to themselves has been very good for the Leafs. But would they be hurt if another team set up shop nearby? The fact is, some of the richest franchises around share markets with other teams in the same sport. The New York Yankees, New York Rangers, Los Angeles Lakers and Chicago Cubs are all prime examples - and none seem to have suffered one bit.

"I would expect that Toronto's got enough capacity for at least two teams, maybe two-and-a-half," said Harrison.

"They could put a second NHL team in, possibly even a third NHL team in with the demand in the GTA area," added Mayo.

And the National Hockey League's assessment?

"I have no idea," said NHL commissioner Gary Bettman. "It's not anything we've looked at."

Seeing two very opposite perspectives on this subject should not come as much of a surprise.

"There's a lot of research around two franchises, one league, same city, said sports business expert Norm O'Reilly. "And there's two camps. Camp A says its great, there's nothing better than to have a rival down the street. It grows for both. There's another camp that says the opposite. Being a monopoly in your environment is the way to be."
Though the Maple Leafs turned down a request to discuss this issue on camera, their own words suggest they believe they can veto another NHL team in their territory.

In November of 2006, the team sent a letter to the NHL expressly stating their belief they could veto any team coming into anywhere within 80 kilometres of downtown Toronto - a position actually opposed by the NHL.

"We don't believe they have any rights in that regard," said Bettman. "We were very clear in our court filings to that affect. Whether or not a franchise moves to another location is a league decision."

So does the veto exist or not? It's a murky legal question and one without a clear answer.

"I don't think the Leafs are admitting anti-competitive behavior simply by asserting they may have a veto right," explained Kevin Wright, a competition lawyer for Davis LLP. "Whether the exercise of a veto is anti-competitive will depend on a number of factors in a given case. So if you're sitting in the Leafs' shoes, you would want to assert your rights - to protect your interests."

And those interests go well beyond hockey. Maple Leaf Sports and Entertainment owns the NBA's Toronto Raptors, Major League Soccer's Toronto FC and runs an entertainment business out of the Air Canada Centre. Research shows another NHL team would take a significant bite out of all that.

"The Maple Leafs would be fine," said Mayo. "The biggest impact would be on other sports teams such as the Raptors, FC or the Blue Jays. Because there's only so much money in a marketplace, it would also impact cultural and other events. People don't have unlimited funds."

One way around the Leafs' perceived right to protect their territory - in theory - is with money. But paying off the Leafs, paying an expansion or relocation fee and then building an arena would add up to a very expensive proposition.

"You're talking about a pretty big number," said O'Reilly. "It's probably pushing a billion dollars if I forecast it in my mind. That's what it's going to cost."

Professor Norm O'Reilly's Scorecard for Toronto

Market Attractiveness

Economy: A-

Demographics: B+

Market Size: A+

Corporate Presence: A+

Overall Score for Market Attractiveness: A+

Franchise Viability

Arena and Location: F

Competition and Barriers to Entry:  F

Potential Owner: ?

Final Grade: D-

Watch for more tonight on SPORTSCENTRE, and all this week at and in the Globe and Mail.

Coming Friday: Why Not Quebec City?