Why the MLSE sale likely ends the dream of a second NHL team in Toronto

TORONTO — An ownership shakeup in sports usually registers as a major story to the fanbase of the team involved and those interested in the business of the game. The one happening in Toronto right now has an implication for hockey fans that extends beyond that, though.

It likely kills a dream that has been part of NHL expansion discourse for decades.

At a time when multiple U.S. markets are positioning themselves to add NHL teams, the pending sale of Bell’s 37.5 percent stake of Maple Leaf Sports and Entertainment to Rogers for $3.48 billion (U.S.) douses water on any flame of possibly bringing a second franchise to Toronto, the city that fancies itself the center of the hockey universe.

How? Follow me here.

First off, in his 31 years as NHL commissioner, Gary Bettman has never seen doubling down on the league’s presence in Canada’s largest city as an attractive option. But, industry insiders tell The Athletic, if it was ever going to happen, it was because of the unholy alliance at the top of MLSE.

An eventual split felt inevitable almost from the moment the fierce business rivals jointly acquired a 75 percent stake in the country’s largest sports and entertainment company in December 2011. They often had to rely on MLSE chairman Larry Tanenbaum to help navigate differences during time shared in the ownership suite.

However, few expected one company would willingly sell its way out of the arrangement without an inducement. Something that went beyond the billions Bell will funnel onto its balance sheet when the deal closes in mid-2025.

Securing the right to operate a separate NHL franchise in the Maple Leafs’ backyard certainly would have qualified as such an inducement.

But now, the sale is happening, placing majority control of MLSE — which owns and operates the Leafs, the NBA’s Raptors and MLS’s Toronto FC — into the hands of one Canadian telecommunications behemoth while taking the other entirely out of the picture as an owner and operator of an NHL franchise (not to mention the numerous other sports properties under the company’s umbrella).

And a second Toronto NHL team is not part of the bargain.

It’s difficult to imagine any scenario that would lead to a reconsideration.

Remember that the league went to court in 2009 to effectively defend its unilateral ability to determine where franchises are operated, winning a case over Jim Balsillie that prevented the Canadian tech billionaire from buying the Arizona Coyotes out of bankruptcy and moving them to Hamilton, Ont.

With three teams operating in and around New York City and two in Greater Los Angeles, the NHL is mindful of further splitting the pie of available dollars in any market. Just because the Greater Toronto Area, with a population approaching 7 million people, could support another franchise doesn’t mean one would be a net win for the league as a whole, though. It would dent the Maple Leafs’ bottom line and potentially that of the Buffalo Sabres, too, if a new rival was suddenly in the market selling a regional media rights package, sponsorships, merchandise and 20,000 tickets to 41 home games every year.

Look at it as taking two steps backwards before one jump forward.

The Leafs can’t explicitly block another team from setting up shop in their region — NHL teams were once guaranteed an exclusive territory stretching in a 50-mile radius from their city’s corporate limits under the league’s constitution, but that was done away with years ago — but any expansion or franchise relocation would require a majority vote from the league’s Board of Governors.

It’s unlikely existing team owners would approve changes in Toronto Leafs ownership wasn’t in favor of, and there’s absolutely no chance Rogers would welcome new competition after purchasing a controlling interest in MLSE for a projected valuation of $9.3 billion (U.S.) unless they were paid an obscene amount to do so.

Existing NHL teams have been paid an indemnification fee in the past by a new rival setting up shop nearby. The New York Rangers received $4 million when the Islanders joined the league in 1972. The Rangers, Islanders and Philadelphia Flyers split $12.5 million when the Colorado Rockies relocated to New Jersey in 1982. And the Los Angeles Kings received half of the $50 million expansion fee forked over by the Anaheim Ducks in 1993.

Three decades later, how big would the indemnification offer have to be in Toronto for the Leafs to even think about it? Multiple billions? More?

And that’s merely one of the theoretical hurdles that would need to be overcome.

Among the most significant factors weighed by the NHL when looking at a potential expansion situation are the location, the strength of the ownership group, the quality of the arena facilities and whether it would make the league as a whole stronger.

Toronto 2.0 would have serious work to do to satisfy those criteria.

In addition to legitimate concerns about whether it would meaningfully improve the NHL’s overall bottom line, it’s hard to imagine Scotiabank Arena being able to accommodate another tenant with the Maple Leafs, NBA’s Raptors and a vibrant concert and show schedule already packing the building’s calendar. And there are no burgeoning plans in the region for another arena to be built.

All of this helps explain why Bettman has so consistently poured cold water on the possibility of a second Toronto franchise when asked about it during his tenure.

“The discussion takes place in your (media) world more than it does in ours,” Bettman told reporters in June 2023. “It’s a matter of speculation; it’s a matter of putting things out there. But in terms of the interest, the reality of what’s involved, it’s not something that seems to be resonating the way other markets and other ownership requests are resonating. For whatever reason — or reasons.”

Prior to the start of the Stanley Cup Final in June, NHLPA executive director Marty Walsh told reporters it’s not an issue he’d taken up with Bettman directly during his first year on the job.

“No, I never asked him that one, but a lot of people in Toronto have asked me about it,” Walsh said.

Consider it a reflection of how incredibly long the odds were. And now? Even longer.

Where once Balsillie was fighting to relocate an NHL team to Hamilton and other groups were trying to get big-league arenas built in suburban Markham or Downsview Park in north Toronto, the league has not garnered credible interest from a group interested in bringing a second team to the region for at least a decade, according to multiple league sources with direct knowledge.

There’s no reason to expect that to change.

So while well-heeled businesspeople in Atlanta, Houston, Arizona and even smaller markets like Cincinnati and Nebraska continue to jockey to land a future NHL franchise, Toronto will remain a Maple Leafs-only town.

(Graphic: Meech Robinson / The Athletic)