Toronto okays $10m in city funds for soccer stadium expansion

Toronto F.C. won the first round in its quest for public money to expand BMO Field from 21,000 to 30,000 seats, as the Toronto city council’s executive committee voted overwhelmingly on Thursday to kick in $10 million toward the $120 million project. The city money would supposedly be repaid by added parking revenues from the expanded stadium, though if SBNation’s Toronto F.C. blog is correct, this is just a projection, not a guarantee.

In any event, Maple Leaf Sports and Entertainment, which owns the soccer team and is perpetually rumored to be interested in luring the Argonauts CFL franchise as well, still needs to get $10 million apiece from the province of Ontario and the Canadian federal government, neither of which is nearly as sure a thing as the Toronto money.

You can read more of the Toronto agreement here, though it doesn’t actually spell out all that much, and is of course completely mum on the provincial and federal funds, or on how (or whether) they’d be repaid at all. There’s still a long way to go for this project — and, since this is Canada, it’s an extra ten yards farther.


26 comments on “Toronto okays $10m in city funds for soccer stadium expansion

  1. http://www.thestar.com/news/gta/2014/03/22/mlse_boss_tim_leiweke_calls_rob_ford_out_over_bmo_field_opposition.html

    “Of course, I love (Toronto FC),” Ford told the Sun’s Joe Warmington. “But it’s the principle.
    It should be paid for by the private sector,” the mayor continued. “It would be nice if he wanted to expand (Ford-owned) Deco Labels and have the taxpayers help us out, but it doesn’t work like that.”

    Love how Leiweke tries to make this sound like a contradiction.

  2. Wow sounds like a great deal compared to deals made by shady Mayors in US cities. Fact is the support is to save Argos before they go out business. Canada looks at CFL like USA looks at baseball.

  3. @ Steven: No, not really. CFL teams, until the last few years, have always been financial disasters operating in a kind of benign muddling thanks to the efforts of local philanthropists or community groups. Thanks to the TV money, the Argos are probably in the best shape they’ve been in in decades.

  4. “The city money would supposedly be repaid by added parking revenues from the expanded stadium, though if SBNation’s Toronto F.C. blog is correct, this is just a projection, not a guarantee”.

    1. The $10m from the city is being paid back with interest from MLSE. It has nothing to do with parking revenue.
    2. Currently BMO Field renovations are split 50/50 by City of Toronto and MLSE. Next year that means a contribution from the city of $15m. If the roof and upgrades are done MLSE is taking over the city’s portion of the reno’s going forward.
    3. The Federal and Provincial $10m contribution is also a no brainer as well. Initially MLSE went to the City of Toronto and said they wanted to upgrade BMO for TFC and a Winter Classic using $90m of ALL PRIVATE MONEY. It was the three levels of gov’t who said they wouldn’t sign off on the deal unless the upgrades included the Argos and capability of expanding to 40k for the Grey Cup and other special events. MLSE said fine. Those additions cost $30m.
    TFC fans don’t want the Argos anywhere near BMO Field. MLSE doesn’t even want the Argos at BMO Field. It’s the gov’t that does. Whether the Prov/Fed gov’t gets their money back is up to them and the Argos – not MLSE.

    4. Tim Leiweke talked to the Toronto FC season ticket holders before the home opener. You should find that link. The city will pass this proposal in April by a margin of 42-2. It should be 44-0

  5. From the document before the Executive Council:

    City Council transfer the balance of the funds in the Soccer Stadium Capital Maintenance Reserve Fund (XR3601) to Exhibition Place on December 31, 2014 so that these funds can be used to offset reduced parking income during the stadium expansion construction and also to fund the cost of additional wayfinding signage for the parking lots.

    There is a rainy day fund that is now going over to the facility with no indication that it will be replaced. Somewhere in here is less money in the city’s pockets.

    There is no indication of what MLSE plans to increase its share of event revenue to the city to help repay this loan, or what the exact terms are that lead city staff to indicate that even adverse financial conditions will allow the city to recoup its money.

    And there is no discussion in public that I can find of whether a bigger stadium will cost the city anything extra under its current agreements.

    From a civic point of view I think the City of Toronto has done a poor job here of communicating exactly what is going on, and hiding behind Rob Ford, even if he is right twice a day, probably won’t help matters much.

  6. OK, need to acknowledge have to go through remaining background documents that were part of motion before I can conclude some of what I wrote above.

  7. Once again, with feeling…

    Major renovations to a stadium that was built on the cheap in the first place is throwing good money after bad. I’m pleased TFC has been a (business – not competitive) success… many believed that the soccer team would be like all other “Toronto” soccer teams before it and either fail completely or fade into irrelevance, leaving BMO an empty operating burden on the taxpayer.

    That doesn’t seem to have happened, which is good. Having said that, it was a cheap stadium even by MLS’ modest standards of a decade ago. And many of the things that need to be changed to fix that can’t be done without significant demolition (like 50% or more).

    If you are going to spend $100m on a stadium why not build a new one that suits the primary tenant? And since most of the money invested appears to be MLSe’s (which surprises me, frankly), why don’t they just do that and leave BMO for the Argos, international rugby and soccer matches?

    Lieweke can say “we share with rugby and football in other markets” all he wants… the fact is that it won’t work with natural turf at this latitude (anyone watching last weekend’s TFC-DC fixture will see what the future holds all season long for natural grass @ BMO with a CFL team in residence). Most other MLS teams that share with other sports (with some degree of regularity, not one off championship games at seasons end) employ artificial turf.

    It is very difficult to see this not being “exhibition stadium mk II” – take a basic football stadium and modify it to suit baseball as well in the interests of ‘saving money’, making an avg football-only stadium into a facility that is absolutely awful for football and very bad for baseball as well.

    The soccer fans will be wild about the return of artificial turf (which, whether it is in the initial plan or not will ultimately happen) and the modifications for CFL necessary (which will, in all honesty, make it less suited to soccer).

    The CFL fans will probably continue to not show up to Argo games, and the Argos themselves will certainly not be in a position to pay for any of the renovations, nor even for the costs of converting the stadium from soccer to CFL football.

    Add to that the likelihood that there will be major cost overruns on this facility and you really do have to wonder if one dedicated stadium for each club isn’t only better, but cheaper.

  8. Ok, this is admittedly off topic but…
    Can someone please tell me why the CFL struggles from a financial and attendance standpoint, as compared to the NFL?

    I watch quite a few CFL games here in the states (NBC Sports network, Fox sports, etc. I find the CFL game more enjoyable, less ” scripted” and the Grey Cup games are usually pretty entertaining.

    So why is it such a poor relation to Hockey , soccer etc in Canada?

    Thanks for your indulgence.

  9. You’ve asked a really big question Tom… but I’ll try and address it concisely.

    In the 1960s and 70s, the CFL was often paying as much or more in wages compared to the NFL. Players went to Canada and made more money, as well as enjoying some of the social benefits of the country.

    In fact, as recently as 1981, a CFL team outbid the NFL for one of it’s stars (unfortunately, this turned out to be Vince Ferragamo)… while in 1991, Toronto outbid the NFL for Raghib Ismail. But these more recent items are aberrations, of course.

    The NFL is the primary sports TV property in the US (with apologies to MLB and the NBA) and the revenues reveal as much. The CFL, while it is Canada’s best football league, is not Canada’s primary sports property. In fact, it is some way down the ladder behind hockey and, in at least one market, MLB. The CFL does very good TV numbers in much of Canada, but not in Southern Ontario (where more than a quarter of the country’s population lives).

    Imagine the reverse question you’ve asked for NHL hockey and you’ll get a picture of why the CFL is so far behind the NFL economically. The Canadian NHL TV deal recently signed paid $5.2Bn for 12 years, compared to the US NHL deal, which is $2Bn for 10 years… and the US, of course, hosts 75% of the franchises. From a financial perspective, the CFL would be more like one of the secondary leagues that occasionally pops up in the US (WFL, USFL, WLAF, UFL…) – nowhere near a primary sports property.

    Canada also has about 1/10th the population of the US (if you include some of the people the US census admits live there but do not officially count)… so the numbers are statistically much smaller across the board. The CFL’s new tv deal (which I cannot find reference to online, annoyingly) provides each of the 9 teams with about $3.5m a year if I remember correctly… even accounting for the 10% population ratio, this is still some way from the $110m or so each NFL team gets from it’s collective tv deals.

    The only point I disagree with you on is soccer popularity. The game is growing here, but of the three professional clubs none outdraw the top CFL teams on an avg attendance basis. Barring the 1989-95 period, the top CFL teams have also outdrawn the Blue Jays with regularity. It’s really the TV money that skews the market (up in the case of the NFL, down in the case of the CFL…). HTH.

  10. John,

    Thanks for the info. I really find that I like the CFL game better than the NFL game. Maybe it’s the more wide open style that the bigger field and the 3 downs instead of 4 makes the teams play.

    I’ll also admit to planning and taking a vacation trip to Montreal a few years ago see an Als game – something I would not do for an NFL game.

  11. Tom – Lots of us think of the CFL game as being a ‘better’ game to watch. It just isn’t the “show” that the NFL puts on…

    In some ways, the NFL game is changing to be more like the CFL (fewer straight drop back passers, more short passing, talk of a slightly wider field etc)… but I suspect it will always be an order of magnitude more popular than the Canadian game no matter what changes are made.

  12. The thing is is that the highest rated mls games are near 300,000 viewers and argos games are always upwards of 700,000.

    There are way more argos fans in toronto than fake soccer fans for the worlds 17th best soccer league why should they get a field to themselves that they cant even support as is? Especially when it was formerlly the argos home to begin with. Guaranteed the argos bring way more money into bmo than tfc

  13. The cfl is really popular even in toronto. Millions of torontonians watched the 100th grey cup. Grey cup is the highest rated show all year most years except (and the american that posted will understand this more than most canadians) when they started airing the super bowl on ctv A network and the grey cup was moved to cable despite outdrawing the super bowl for years prior to the change. I found an article from cbc in 2006 about how twice as many people watched grey cup as watched super bowl in canada.

    Regular season head to head in vancouver showed the bc lions doubling up on seattle seahawks ratings at the same time on the same day in canada. 900,000 to 450,000. Now nfl in toronto is done and the argos are about to reignite the cfl in toronto

  14. correct me if I am wrong, but didn’t the NFL save the CFL from going out of business? And are demographic and trends showing that soccer will be 2ND to only hockey in one generation?

  15. Steve: It depends on your definition of save I guess… in the mid 90s the NFL did provide a $3m loan to the CFL. While the CFL paid it back, it is true that the league probably could not have survived (at least with 8 teams) absent that funding.

    Having said that, it was a loan, and one of the terms included was that NFL clubs would be able to sign CFL players entering their option year. So while it was a life saver, there were actual business terms involved and the NFL certainly did get something for their money (besides being paid back).

  16. Jordan:

    I appreciate the passion for the CFL, and I hope you are right about the Argos bringing in more money. If something does come of the MLSe purchase idea (some believe the NFL would make owning and maintaining the Argos in perpetuity a condition of granting a Toronto franchise… which someone at MLSe would have to own, because the company cannot be an owner itself), it’s possible that their marketing skills could improve the team’s fortunes and support.

    However, many, many people have tried to re-energize the Argos and make them a viable business. To date, every one of them has failed (including, in no particular order, Harry Ornest, McNall/Candy/Gretzky, TSN, real estate tycoons Sokoloski & Cynamon and finally, David Braley).

    RE: BMO: Don’t forget that the Argos were offered an opportunity to share that facility. They declined, saying they preferred to stay at Skydome. So MLSe built a soccer only facility. It didn’t have to be that way, all the Argo ownership of the day had to do was put a little money in (MLSe put in $10m, then immediately sold the naming rights for that much…) and it would have been a shared facility from day one. They didn’t. It wasn’t. Just like the York stadium that they didn’t want to put any money into.

    Sorry, but the Argos blew their chance to be there in 2006. It was short sightedness in the extreme. It’s going to cost a great deal more to accommodate them now, but since MLSe is paying…

  17. Thank you John. The NFL and MLB are in the business of saving other leagues out in an effort to claim their sports are international. MLB just did it in Australia and thus the real reason why the season opened down under. From what I understand the Argos have a drop dead date of 2017 if a new owner and park don’t pop up.

  18. @John Bladen – thanks for all the feedback re:CFL.

    Maybe I’m just a bit old fashioned – the more any of the major sports-football, baseball, hockey, auto racing etc becomes more of a “show” and less of a sport, the less interesting they become to me.

    Next on my “bucket list” Formula 1 at Circuit Gillespie Villeneuve! I love Montreal.

  19. My pleasure, Steven.

    And what you’ve described is the way I understand it too. IIRC, the NFL actually was concerned that there might be some “unwanted consequences” if they became essentially the only professional league in North America (though exactly what these consequences were, I could only speculate on).

    Yes, the Argos have been told they need to be out of the Dome by 2017 as I understand it.

    In MLB’s case, I honestly believe that they want to grow the game internationally. I’m not sure if this is Selig bargaining with God or if he actually believes baseball can catch on everywhere… but they are spending significant money to support the game outside North America. I think that’s great… I just wish they weren’t extorting most of that money out of (mainly US) taxpayers…

  20. I agree with you Tom. I can’t tell you that the ‘show’ doesn’t add something… but I actually miss the old wooden stand ballparks of my youth. The food there would probably kill you, the toilets definitely weren’t safe (even if you were sitting halfway up the 1st base line) but man, they felt like ballparks. The new palaces are fantastic in every way… but there’s something not quite right about a sandlot/dirtbag game being played in a place an Oil Sheik might hangout…. though I guess the players of today are a lot close to Oil Sheiks than they are to the paying fans…

    Montreal is a wonderful city… and while I’ve never been there during GP week, I’m reliably told it is as fantastic as they make it out to be….

  21. Everyone seems to be missing the biggest point here: MLSEL DOES NOT own the stadium. The City of Toronto owns it.

    MLSEL wants to kick in $90 million plus any over-runs.

    Believe it or not, there can actually be good deals on stadiums. This is one of them.

    http://www.thestar.com/news/city_hall/2014/03/25/bmo_field_plan_is_worth_a_look_james.html

  22. MLSE owns the operating rights, though. The city wouldn’t get any of the benefits of a bigger stadium.

  23. Not true. The city would benefit from additional parking revenues, hosting of Grey Cups, an NHL Winter Classic…

    It’s a harder case for the provincial and federal governments to each kick in $10 million, but the City of Toronto’s $10 million would be paid back – with interest. Considering it also allows them to avoid the $15 million in needed renovations (you really need to visit the stadium some time to fully appreciate how bare-bones it is), it’s actually fiscally irresponsible to say “no” to this.

    Strange, I know. But sometimes truth is stranger than fiction.

  24. I meant the city wouldn’t get any benefits from owning the stadium.

    As for “paid back with interest,” the agreement doesn’t actually say that — just that “MLSEL has agreed to modify the financial terms that govern income-sharing for the stadium” in such a way that city finance staff “forecast” that “the proposed $10 million investment will be fully recovered from incremental revenues generated during the term of the extended agreement with MLSEL.” That’s clear as mud — anyone know if it’s spelled out more than this anywhere?

  25. Okay, Steve, I see now from the Star article linked above:

    “Between 2014 and 2037, the city would be guaranteed $25.4 million in lease payments, plus an estimated $6 million in potential parking revenues. The $31 million total is $19 million more than the current income.

    “But because the city has to borrow the $10 million, it will cost nearly $15 million in principal and interest to retire the debt, leaving the city $4 million in the black.”

    Somebody doesn’t know how to calculate present value, looks like (a $1 million lease payment in 2037 does not equal $1 million in value now), so let’s do it for them: $25.4m in lease payments over 24 years is worth about $14.6m. The current $865,000 a year in rent payments would be worth $11.9m, so that’s an extra $2.7m in rent the city would be getting in exchange for its $10m. Even if the $6m in new parking money were guaranteed (it’s not) and were in 2014 dollars (pretty sure it’s not, though the Star doesn’t say), the city would still be taking a loss.

    Also, there’s no reason to believe that revenues wouldn’t go up some at an unrenovated field, even just because of inflation. So that extra $2.7m in value would be even less than that.

    This isn’t a terrible deal for Toronto by any means, and it’s certainly better for the city than it is for the province or feds. But from the numbers here, there’s no way the city will get repaid its costs via increased lease payments.

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