NHL to add four new teams for $1.4B by 2017 purple monkey dishwasher

If you loved last March’s unsourced rumors about how the NHL is ready to expand, expand, expand, you’ll love today’s similarly unsourced rumors about the exact same thing! Take it away, Tony Gallagher of British Columbia’s The Province:

Sources close to the situation have indicated Las Vegas is a done deal, the only thing to be determined being which owner will be entitled to proclaim that he brought the first major league sports franchise to Sin City…

A new team close to the newly renamed Arizona squad and California’s big three is all but assured, the only question being when and with which other city. Or should that be plural?

With all the activity going on in the Seattle area in the last little bit it would be quite a stretch to imagine that much time and effort being spent by so many wealthy men being frittered away for nothing.

(Is it just me, or does this entire thing read like a gossip column? I kept waiting for “What mid-sized city was spotted on the dance floor, cavorting with NHL deputy commissioner Bill Daly?”)

As Deadspin notes, Howard Bloom of Sports Business News then upped the ante by predicting that Quebec, Seattle, Las Vegas, and a second Toronto team will all be joining the NHL by 2017, in exchange for $1.4 billion in expansion fees.

This is simultaneously crazy and not-crazy. On the not-crazy side, $1.4 billion, people! In a world where Steve Ballmer is willing to plunk down $2 billion for an NBA team, and MLS franchises are going like hotcakes, it would be foolish not to at least consider taking some of the money that the world’s billionaires are waving around like drunken sailors.

On the crazy side, with the exception of Quebec, all of these are seriously problematic markets. Seattle doesn’t have an arena that really fits hockey, and any hopes of building one would depend on the NBA first approving a new basketball team for Seattle, which doesn’t sound like it’s happening anytime soon. Vegas is Vegas, which is a small, poor city with a bunch of people with lots of spending money visiting all the damn time, which isn’t a great recipe for season ticket sales. Toronto would run up against the Maple Leafs corporate buzzsaw, which would undoubtedly try to seize a chunk of that expansion fee as payment for incursions into its territory.

So, there are some stumbling blocks that make one wonder if Gary Bettman has really thought this thing out. (Not that thinking things out in advance has exactly been Bettman’s strong point in the past.) If the reports are true, and NHL officials are thinking clearly, it seems far more likely that this is a trial balloon designed to see what arena concessions they can get by waving a possible expansion team under a few municipal noses. Guess we’ll find out soon enough — 2017 isn’t that far away.

Markham council kills arena plan (mostly) dead

The Markham city council concluded its third straight night of hearing residents savage the idea of putting public money into a new NHL-ready arena last night, then topped it off by voting unanimously to withdraw from their agreement with developer Graeme Roustan. The council of the Toronto suburb also voted 11-2 that any future arena project would have to be paid for entirely with private money.

The writing has been on the wall that this could happen for a while now, since the council almost killed the plan back in August before giving Roustan one last chance to come up with a deal that made sense. Still, given that it was less than a year ago that the Markham council approved the Roustan plan despite plenty of public opposition, it’s a pretty remarkable turnaround. Apparently learning that a new arena wouldn’t actually guarantee an NHL team and that the proposed arena manager doesn’t think arenas can survive without pro sports dimmed their ardor.

And their ardor, at this point, is decidedly dimmed:

“What we’ve heard over and over again is residents do want an arena,” said councillor Carolina Moretti. “But they don’t want to pay for it.”…

“What is the rush?” [councillor Jim] Jones said. “We’re not going to get an NHL franchise any time soon, so let’s take our time and get it right.”…

“Publicly funded arenas have an abysmal financial record,” Councillor Valerie Burke said. “Nothing in this proposal or the amendment convinces me otherwise.”

There’s still a glimmer of hope for Roustan: The council approved sending his arena financial plans to city staff for further study, and voted to give the developer six months to come up with a new plan that involves no public money. But, seriously, for a deal that was awfully speculative to begin with, this puts it back at square one, if not square zero — Roustan hadn’t even managed public commitments for his half of the original arena deal, so it’s just about inconceivable that someone will throw the full $325 million at him now.

It’s bound to be a disappointment for Greater Toronto residents who were looking forward to … having an alternative place to see Avril Lavigne concerts, maybe? Anyway, the swift crash and burn of the Markham arena should be a lesson to everyone everywhere that a sports venue plan has been declared a “done deal”: Until the money has all been committed, it’s never too late to call things off. You got that, Cobb County?

Markham arena developer threatens libel suit against anyone who says mean things about him

So many people have lined up to testify at the Markham city council’s hearings on developer Graeme Roustan’s proposed $325 million hockey arena — after Monday night’s packed hearing, 123 more speakers signed up to testify last night, and dozens were still waiting as the meeting dragged into the wee hours — that the council has delayed a vote until after a third straight night of testimony tonight. And in case you’re wondering, the populace does not sound too happy about the project:

“This process is a sham,” said Markham resident Norman Manara. “Put this project out of its misery.”

Mr. Manara’s comments were met with a standing ovation.

Roustan, meanwhile, has responded in the way that only a developer scorned can: by threatening to sue citizens for libel if they keep saying mean things about his project:

A lawyer for Graeme Roustan, president of GTA Sports and Entertainment … said “personal attacks” to his reputation on the coalition’s website or in a public meeting “are not appropriate.”…

“Please be aware that public statements by the [Markham Citizens Coalition for Responsible Government] or its directors that do harm to Mr. Roustan’s reputation, whether or not they are a repetition of newspaper reports or other sources, may constitute libel or slander and give rise to serious legal consequences,” the firm said in the notice.

“We would ask that on your website and in any public comments by your directors, the MCCRG adhere to standard practice and not pose open-ended questions or make statements based on misinformation that are harmful to Mr. Roustan’s reputation.”

This, needless to say, is just all kinds of awesome sauce, and was immediately seized on by MCCRG members to paint Roustan as a big meanie. (“Threatening residents where you want to do business is not a smart thing to do,” said group director and Markham Village City Ratepayers Association president Karen Rea.) Figure on him not getting a standing ovation at tonight’s meeting.

Meanwhile, at risk of being dragged before some bewigged Canadian libel court judge (do judges still wear wigs in Canada? aw, crap), Roustan’s financial plan got even shakier yesterday, as investment bank Canaccord Genuity, which a Roustan spokesperson had previously said was “supporting” the developer’s private share of the project, declared that it’s only an advisor, not an investor. So we have Roustan not revealing where he’d be getting his half of the money, and Markham still not clear on where it’ll get its share, and — wait, is that the libel police I hear? Forget everything I was just saying: This Markham arena is totally awesome sauce!

Markham rolls out same arena plan yet again, this time with more promises

There’s yet another Markham arena plan afoot, with Markham Mayor Frank Scarpitti signing two new memorandums of understanding on Saturday that developer Graeme Rouston says will make funding the project come “100 percent from the private sector.” And how does that differ from the last plan that was supposed to do the same?

The breakdown of payments now looks like as follows:

  • $162.5 million from arena developer GTA Sports & Entertainment, same as in the original plan approved in April 2012.
  • Another $32.5 million in future lease payments from GTASE, based on a future lease that will be written in the future.
  • $80 million promised by developers as part of a special fee on new development near the arena, though it’s unclear how the city can go about collecting this if the new development doesn’t actually happen.
  • $50 million from … we’ll get back to you on that.

In other words, it’s all pretty much the same plan that it’s been for almost two years, except that now GTASE and other developers are promising that they really will pay all this money, instead of … actually, they always were promising it, but I guess now they’re promising it on paper. Not necessarily enforceable paper, but paper nonetheless.

The Markham council is set to vote on this plan today or tomorrow, and though the Toronto Sun says it expects it to be “rubber-stamped,” National Post columnist Bruce Arthur says it shouldn’t be:

Between now and then, someone should tell them that they are risking an enormous amount of money for a project that is somewhere between risky and outright insane.

“We have never been encouraging of this project,” said NHL commissioner Gary Bettman, reached by phone on Saturday. “And we have repeatedly said that if this building is built, it should be built with the expectation that they will not get a team.”

On the bright side, the Toronto metro area is a huge market, and there’s some recent evidence that even second arenas in big markets can be a success. On the less bright side, building arenas on spec for teams that never arrive has worked out significantly less well, and hanging financial plans on speculative future housing development around an arena is — “between risky and outright insane” sounds about right. There is much for the Markham council to consider before they get out their rubber stamps.

Markham arena developers promise new plan that’s an awful lot like old plan

The Markham city council was set to vote yesterday on its deputy mayor’s proposal to put a stake through the heart of its beleaguered NHL arena plan, but instead delayed a vote for another month to consider a new funding plan that isn’t so built on thin air. And what would this new plan be?

Arena promoters GTA Sports and Entertainment had proposed a public-private financial partnership whereby the city and primarily developers would split the cost of the venture. The city would borrow $325 million and the private sector partners (GTA Sports and others including key local developer Remington Group) would pay back half over 20 years under the arrangement…

Taylor said under a new formula, Markham would borrow a maximum of $162.5 million while the private sector would secure financing for the other half with the aid of investment banking firms Jeffries LLC and Canaccord Genuity.

Furthermore, Taylor said the city was working for payments and guarantees from developers that would negate any levies on new homeowners plus assurances that the arena managers would be responsible for all operating and maintenance costs.

So… instead of the city borrowing all the money and GTA paying back half of it, GTA would borrow its share and pay it off itself. And as for the other half, the city would still have to repay it, but would get “guarantees from developers” that would — okay, that part doesn’t make any sense, as the whole point is for developers to charge special fees to new homeowners in the arena area and hand the money over to the city. And so far as I know the arena managers were always going to be responsible for operating costs — though not, as some critical councillors have pointed out, property taxes or sales taxes, something that’s unusual for Canada.

Anyway, it looks like GTA is going to try one more Hail Mary pass, or whatever they do in Canadian football, to get some more of the council on its side before the final vote. Check back in late November to see how that’s working out for them.

Markham deputy mayor to introduce motion to kill NHL arena plan — four weeks from now

The Markham, Ontario NHL arena proposal, currently on life support after it turned out the proposed developer doesn’t actually have an in on getting an NHL team, could have its plug pulled next month:

Jack Heath, originally a supporter of the GTA Centre in the Toronto suburb of Markham, has put forward a motion to effectively kill the financial framework for the arena. Heath will put his motion to Markham council Sept. 17, with a vote coming a week later.

Heath has actually been opposed to the plan since last fall, but with city council opposition to the plan at an all-time high, his motion could easily pass. Developer Graeme Roustan is reportedly readying a revised plan to present to the Markham council; if so, we’ll see how that goes over.

Proposed manager of Markham arena with no sports team says arenas can’t survive without sports teams

Oh, this is embarrassing:

A key partner in the proposed $325-million arena in Markham, which doesn’t have a main tenant, has downplayed a remark by the company’s chairman who indicated big sports and entertainment centres need major pro teams to ensure financial success.

That’s right, sports fans: Comcast-Spectacor (aka Global Spectrum) chair Peter Luukko told the Associated Press regarding the Phoenix Coyotes arena, which his company will operate under the terms of the team’s new owners’ new lease with Glendale, that “for any arena or stadium in a major market to be successful, it needs to have a major league sports team.” That’s the same Comcast-Spectacor that wants to manage the proposed Markham arena that was approved in January despite having no major-league sports tenant. It’s shouldn’t be an exactly surprising or controversial statement, given that Comcast-Spectacor’s competitors Live Nation had previously said that a Markham arena couldn’t work without the guarantee of a major pro sports team. But it is embarrassing, especially since, as Markham deputy mayor Jack Heath put it, “You can’t be selling one message in Phoenix and another one in Markham.” Oh, can’t you now? Clearly, Mr. Heath, you don’t know anything about the arena game.

Markham arena developer’s “NHL connections” turn out not to involve connections to NHL

Remember when two city councillors in Markham, Ontario were calling for an investigation of would-be NHL team owner Graeme Roustan, on the grounds that he hadn’t revealed his personal finances, has previously been found guilty of statutory fraud in an arena case in Texas, and lied about being a finalist to buy the Montreal Canadiens? And remember how the Markham council just went ahead and voted to give Roustan $162.5 million to help build a new arena anyway? Well now the NHL is getting into the game, asserting that — surprise, surprise — Roustan and Markham Mayor Frank Scarpitti lied about Roustan being a finalist to buy the Canadiens, as well as that he had the right connections to get an NHL team:

Minutes of a private council meeting show councillors saw documents of a “confidential nature” and other reports, including one from Mayor Frank Scarpitti, two months ago that upheld the business integrity of promoter Graeme Roustan.

The minutes, obtained by the Star, also say Roustan was a finalist in bidding for the Montreal Canadiens in 2009 and someone with the right connections to secure a franchise for the 20,000-seat arena project…

Frank Brown, group vice-president of media relations for the NHL, said the league and Bettman have never endorsed Roustan as a franchise owner or indicated any positive view about a second NHL club in the Toronto area market.

“In summary, insofar as these minutes refer to the league and to the commissioner, we do not believe they are accurate,” said Brown.

This isn’t all that big a surprise, since it looks like the Toronto Star obtained the minutes, asked the NHL, “Hey, did you say this guy could get an NHL team?” and the league replied, “Hell, no, Markham is still Maple Leafs territory until we say otherwise.” Still, given that the minutes indicate that Roustan wasn’t actually promising any financial backing for the arena, and that his main role was to “provide the connection with the NHL and bring a team to Markham,” the fact that he doesn’t actually have any connections to bring an NHL team to Markham would seem to be a wee omission.

There’s still no actual construction agreement for the Markham arena, and no word from the council on how negotiations are going. Two councillors complained earlier this year about all the arena meetings taking place in closed sessions; you’d think city councils would learn their lessons eventually about private meetings, but apparently not.

Markham refusing to release arena economic projections, citing gag order from developer

Wondering what’s been up in the Markham arena controversy since councillors in the Toronto suburb gave preliminary approval to the $325 million arena plan in January? For one thing, the city council is refusing to release the consulting reports that it says provided the economic rationale for committing $162.5 million in public funds to the project:

[Graeme] Roustan, chief executive officer of GTA Sports and Entertainment, has insisted that estimates from project partner Global Spectrum show the facility could attract 131 events and 780,000 users annually — numbers sufficient to make it economically viable. But some industry players say those numbers would be impossible to achieve without a major league sports tenant.

Councillors have seen the reports but signed confidentiality agreements that prohibit them from disclosing or discussing the contents. They had also agreed not to disclose information about the project for two years after Roustan approached them with a public-private partnership plan for an arena in early 2011.

Both the Markham Village Ratepayers Association and the Toronto Star have filed freedom of information requests for the documents, but have been refused on the grounds that they contain sensitive financial information. It will now be up to the province of Ontario to rule on whether Markham has to release the documents.

Markham residents spend 8 hours hating on arena deal, council okays it anyway

As noted yesterday, the Markham city council met last night to debate whether to rescind approval of a funding plan for a $325 million arena in that Toronto suburb — and it turned into a marathon, with developers and local residents debating the merits of the plan until 3 am. And while those testifying were by all Twitter accounts overwhelmingly opposed to the deal — tweet of the night: “A Grade 11 kid is talking to Markham council now and showing a much better grasp of economics than the mayor” — the final vote was 7-6 to confirm the council’s support of the arena financing plan, after councilor Logan Konapathi unexpectedly switched his vote to nix the nixing of the deal.

If this sounds like the council had its mind made up before the eight hours of testimony, you could certainly make a case there. Though most of the press coverage focused on the impact of the testimony of the very first speaker: former NHL players’ union chief Paul Kelly, who was brought in by Graeme Roustan (Kelly got to go first, it was explained, because he “had a plane to catch”) and who all but promised Markham an NHL expansion team if it builds a new arena:

Kelly revealed that while he ran the union, the NHL not only wanted to expand the league to 32 teams, but had directly discussed doing so with him…

“I’ve discussed it with many owners, the commissioner and many players,” Kelly said in a conversation after his presentation. “That’s given me a strong sense that at some point there will be a second team [in the greater Toronto area].

Kelly added he believes expansion will take place in the next two or three years, “most likely” to Quebec City and Toronto.

All that was missing was Kelly intoning, “If you build it, they will come.” Oh wait:

Whether this is what swayed the council from its prior opposition or not, the Markham arena plan lives to fight another day. There’s still a lot to figure out — whether the special development fees that the city plans to use to fund its half of the arena project are possibly unenforceable, for one — but if the council can resist being schooled on arena economics by smart high school students till all hours of the night, that’s a sign that the lure of even a vaguely rumored NHL franchise is strong indeed.